Occupying a small peninsula and two islands off China’s southern coast, Macao is the most densely populated region in the world, with around 700,000 inhabitants, yet still makes room for a huge number of visitors every year. In the first three quarters of 2024, more than 25mn passed through – an increase of nearly a third compared with the same period of 2023 – attracted by its historic centre, its many shopping malls and its fine food offerings, not to mention the mega-entertainment developments of the “Las Vegas of the East”.

Tourism and, in particular, gaming have long been the dominant motors of Macao’s economy, which is currently booming. According to IMF figures, the region ranks second in the world, and first in Asia when it comes to its per capita GDP (accounting for purchasing power parity) of $134,100. While it has long-standing commercial ties with nine Portuguese-speaking countries (Angola, Brazil, Cabo Verde, Guinea-Bissau, Equatorial Guinea, Mozambique, Portugal, São Tomé and Principe, and Timor-Leste) with a combined population of more than 300mn, its largest trading partner is the EU. In 2023, trade between the two amounted to $5.5bn. Total inward direct investment in 2023 totalled $48bn, a year-on-year rise of 4.2 per cent. According to Macao’s official data, its GDP has expanded by 11.5 per cent year-on-year in real terms, and private investment has risen by 17.5 per cent during the first three quarters of 2024. 

A GROWING ECONOMY

Macao is now seeking to grow its economy across a broader range of sectors, in search of a more sustainable long-term industrial structure. It has many attractions for outside investors because of its status as a Special Administrative Region (SAR) of China, operating under the “One country, Two systems” principle, which brings a safe and stable environment and a growing economy. It also has a free port, a separate customs territory and a simple, low-taxation system; both individuals and companies pay a maximum of 12 per cent tax, plus there is a wide range of tax exemptions and incentive schemes.

Macao has launched its 1+4 blueprint for economic diversification. In addition to supporting the region’s already highly successful tourism and leisure sector, this strategy aims to develop four major industries in the SAR: traditional Chinese medicine and big health; financial services; advanced technology; and a broad sector comprising exhibitions and conventions, commerce and trade, and culture and sports industries.

SERVICES FOR INVESTORS

Leading the way in attracting more investment and activity in these areas is the Commerce and Investment Promotion Institute of the Macao SAR (IPIM). This provides a one-stop service for investors, offering comprehensive support and assistance, including information and advice, and notary services for business registration. Global companies that have benefited from IPIM’s help while establishing operations in the region include Apple, Muji, Galeries Lafayette, Five Guys, Haidilao and Korean Air.

“During the first 10 months of 2024, the one-stop service completed 240 investment proposals,” says Vincent U, President of IPIM. “The assisted proposals created 1,414 jobs and involved investments amounting to $428mn, in which around 50 per cent of the investment proposals are the 1+4 industries, and that reflects investors’ confidence in Macao’s business environment and development prospects.”

Another distinctive feature of Macao’s business environment is the rapid development of its meetings, incentives, conferences and exhibitions (MICE) industry, which has received a number of international awards in recent years. IPIM provides a one-stop service for MICE event organisers who are interested in hosting conventions and exhibitions in Macao. In addition, it offers an online business matching service for domestic, overseas and local investors, to help companies to open up markets. They can promote their own schemes or look for cooperation projects on the platform and be paired up with suitable companies. Those from Portuguese-speaking countries benefit from a commercial and trade co-operation service platform with China which facilitates business in both directions.

The shift in Macao’s focus is already showing signs of success. “We are seeing significant activity in the key areas identified in the economic diversification programme,” says Vincent. “We believe we are well on the way to creating a sustainable business environment for the foreseeable future.” 

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