Macau is one of the favorite tourist destinations in China; famous for its luxury hotels and grand casinos. Macau has left Las Vegas behind in terms of gambling business; recording business that was four times bigger in Las Vegas. As gambling is illegal in the mainland China; Macau is the desired choice for big time gambling. There are many middlemen or “junkets” in China who bring prospective gamblers to Macau, help with the accommodation; junkets get a big commission grim the casinos. The revenue gambling generated for Macau in the year 2012 was 303 billion Macau patakas. The junkets have added to the problem of shadow lending in China, which could led to big deficits in the economy later.
The casinos at Macau want to encourage people who want to gamble for fun and have cash ready to make their payments; “Casinos are trying to attract mass market” (Macau’s Gambling Industry,The Economist, December 10, 2011). Macau is place where many defaulters and black money hoarders launder their unaccounted money. No doubt is gets revenue for Macau. In the year 2013 Macau was voted as the fastest growing economies because of revenue generated by the casinos. It has created a lot of job opportunities for people in Macau. With hotels and casinos opening up every month; adequate staff is required to meet the visitors. Jobs in Casinos do not require high education and offer good salaries in comparison to other jobs. Legalized gambling in Macau makes it the hub of gambling business.But there is a flip side as well; people who stay nearby have become addicted to gambling and spent their salaries on it. The families of such gamblers suffer a lot of social and economic issues.
Local business has a tough time due to Casinos. Casinos try to keep customers in the gambling areas and provide food, drinks, accommodation and even shopping. This takes profit away from the businesses nearby.
The economy of Macau gets huge gambling related taxes; it accounted for 85% of the total government revenue in 2013. Major visitors to Macau are from mainland China. The traditional manufacturing industry in Macau has slowed down since 2005 due to the termination of Multi Fiber agreement. The challenges of handling an economy like Macau that is totally dependent on gambling revenues are many. Diversification is needed to provide other employment opportunities and to bring up the manufacturing sector like the apparel exports once again. Restaurants and gambling alone account for 41% of the total occupational workforce. This proves the dependency of the people on the gambling sector. Macau is dependent on Hong Kong and China for fresh water and natural resources; it needs to promote its apparel industry to move towards being a balanced economy. The social and economic effects of gambling can harm the economy in future.
The revenues from the gambling industry should be utilized in investments that can create lasting value for Macau. Macau has been showing symptoms of Dutch Disease a phenomena that shows deindustrialization, increase in nominal wages, real exchange rate appreciation and decline in an ignored sectors exports. A lopsided economy that depends on one sector for revenue can suffer a blow when the given sector goes through recessionary trend. Still, the development of Macau from a fishing village to a global gambling hub is commendable; with the best of hotels and restaurants in the world.
Bibliography
- The Economist. “What an offshore gambling Mecca reveals about business in China.” A Window on China. December 10, 2011.Retrieved from
http://www.economist.com/node/21541417
