After sovereignty of Macao was returned China, the Government established an economic policy to “place the gaming and tourist industries at the head of the main economic push, closely followed by the service industry, with the parallel development of other sectors”. The implementation of CEPA in 2003 and the launch of the “individual travel” scheme for Mainland visitors operated in co-ordination with the liberalisation of the gaming industry in 2002, which drove forward the tourism, gaming, wholesale trade and construction industries, allowing the Macao's overall economy to enter a new phase of development. Gross Gaming Receipts increased by 29%, 43% and 8% respectively in 2003, 2004 and 2005; in addition, Gross Domestic Product went up by 14.2%, 28.3% and 6.7% over the same period.

1) Improving conditions for industrial diversification

Macao's vibrant economy allows for a growth spurt for industry. “The Historic Centre of Macao” has been successfully listed as a UNESCO World Cultural Heritage Site, the continuous development of Macao's flight destinations and the establishment of various low cost aviation companies have added significant advantages to Macao's economy and tourism. In terms of accommodation, according to information provided by the Land, Public Works and Transport Bureau, the number of hotels under construction in the second quarter are 19 (with a total of 17,133 rooms), this will double the number of hotel rooms in Macao on completion.

In the Convention and Exhibition sector, many foreign funded Convention and Exhibition companies have set themselves up in Macao, bringing with them management experience, professional personnel and branded exhibitions. In respect of venues, with Macao Stadium, Fisherman's Wharf Convention and Exhibition Centre and the Venetian Macao-Resort-Hotel gradually coming into operation a total of over 100 thousand square metres of convention and exhibition facilities will be available. The Macao Trade and Investment Promotion Institute not only actively encourages and arranges for Macao's enterprises to exhibit abroad and overseas enterprises to exhibit and sell here, but also provides various training, research, study tours and professional exchanges, so as to cultivate local convention and exhibition talents and raise the level of Macao's Convention and Exhibition industry.

2) “Supplement III to CEPA” Brings Positive Factors for Macao's Industrial Diversification

Irrespective of developing Macao into a Gaming and Entertainment City, a Regional Service Platform or a Convention and Exhibition Centre, it all needs a influx of foreign enterprises and personnel, CEPA is beneficial allowing Macao's enterprises and products to enter the Mainland on the one hand and facilitating Mainland enterprises and personnel to come to Macao on the other.

The Supplement III to CEPA was formally signed on 26 June. In the Service Facilitation area, the Mainland added 13 measures (for details please refer to appendix 1) to the original commitment to opening up services in the areas of legal, construction, convention and exhibition, audiovisual, distribution, tourism, transport and individually owned stores. In terms of Investment Facilitation, to support and align with Macao's industrial structure diversification, the two sides included the Convention and Exhibition sector in Industrial Co-operation and protection of Intellectual Property Rights in the Trade and Investment Facilitation area.

“SUPPLEMENT III TO CEPA” BRINGS POSITIVE FACTORS FOR MACAO'S CONVENTION AND EXHIBITION SECTOR AND TOURISM

Regarding the Convention and Exhibition sector, CEPA allows Macao service providers to set up wholly-owned convention and exhibition companies in China. Supplement III to CEPA goes further to “allow Macao service providers to set up wholly-owned, equity joint venture or contractual joint venture enterprises on the Mainland to provide services to organise exhibitions in Macao and Hong Kong”, facilitating the organisation of Mainland enterprises to participate in exhibitions in Macao and further expand the source of exhibitors and purchasers, giving more room for Macao's convention and exhibitions companies to develop their business. By virtue of the fact that China's Convention and Exhibition level is higher than Macao's and the strengthened co-operation under the framework of CEPA, will, without a doubt push forward the development of Macao's Convention and Exhibition industry. The next 10 years will be the golden time for developing Macao's Convention and Exhibition. Provided that the Government's Policy Guidance and the business community work in co-ordination to train personnel and cultivate brand name, together with the influx of enterprises and personnel brought by CEPA, Macao's will be in a good position to become an Asian Conference and Exhibition Centre.

In respect to the Tourism sector, CEPA allows for the setting up of individual proprietorship travel agencies in China by Macao entrepreneurs. Supplement II to CEPA reduces the annual turnover requirement for Macao's invested Travel Agencies in China to US$25 million for sole proprietorship (other foreign investment is US$500 million) and US$12 million for joint-ventures (other foreign investment is US$40 million). Supplement III to CEPA was a breakthrough in China's present laws and regulations as it opened up, on a pilot basis, the most prominent group tours to Hong Kong and Macao allowing them further development, these opening measures allowed Macao to take the lead in exploring the Mainland tourist market.

APPENDIX 1:
SUPPLEMENT III TO CEPA MAIN CONTENT OF COMMITMENTS
FOR FURTHER LIBERALISATION

Area Specific Commitments
Legal services
There will be no requirement on the number of full-time lawyers employed by Mainland law firms that operate in association with Macao law firms (offices); there will be no residency requirements on the Mainland for representatives stationed in representative offices of Macao law firms (offices) on the Mainland; to allow Macao residents who have acquired Mainland lawyer or legal professional qualifications and hold Mainland lawyer's practice certificates to engage in activities as agents in marriage and inheritance cases relating to Macao in the capacity of Mainland lawyers and to allow Macao lawyers to act as agents in civil litigation cases on the Mainland in the capacity of citizens.
Construction
To allow Macao service suppliers to set up wholly-owned construction engineering cost consulting enterprises on the Mainland; for applying qualification when setting up construction engineering cost consulting enterprises on the Mainland, the performance of the Macao service suppliers in both Macao and the Mainland is taken into account in assessing the qualifications of the enterprises.
Convention
and exhibition
services
To allow Macao service suppliers to set up wholly-owned, equity joint venture or contractual joint venture enterprises on the Mainland to provide services for organising exhibitions in Macao and Hong Kong.
Audiovisual services
The State Administration of Radio, Film and Television will delegate to the provincial radio, film and television administration the authority of examining the finished tapes of Mainland domestically-produced television dramas produced by the production organisations under the provinces, autonomous regions or municipalities and participated in by artistes or production crew from Macao.
Distribution services
For any Macao service supplier which opens more than 30 stores on the Mainland, if the commodities for sale include books, newspapers, magazines, pharmaceutical products, pesticides, mulching films, chemical fertilisers, staple foods, vegetable oil, edible sugar and cotton and the above commodities are of different brands and come from different suppliers, the Macao service supplier is allowed to become the controlling shareholder, with the proportion of capital contribution not exceeding 65%.
Travel Agency
To allow Macao travel agencies set up on a wholly-owned or joint venture basis in Guangdong Province to apply on a pilot basis to provide group tours to Macao and Hong Kong for the residents of Guangdong Province (residents registered with permanent residence in Guangdong Province).
Air Transport Services
To allow Macao air transport sales agencies to set up wholly-owned air transport sales agencies on the Mainland. The registered capital requirement will be the same as that for Mainland enterprises.
Road transport services
To allow Macao service suppliers to set up wholly-owned enterprises on the Mainland to provide the following road transport related services: road freight transport depots, and workshops for the repair of motor vehicles and motorcycles.
Individually owned stores
To allow Macao permanent residents with Chinese citizenship to set up, in accordance with the relevant Mainland laws, regulations and administrative regulations, individually owned stores in all provinces, autonomous regions, municipalities directly under the Central Government on the Mainland without being subject to the approval procedures applicable to foreign investments, to provide the following services (excluding franchising): cultivation; animal husbandry; aquaculture; computer repair services; technology exchange and promotion services. The number of employees for each store shall not exceed 8 people.

This article was prepared by IPIM’s Research and Information Division.