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Four Years After Macao's Handover : An Analysis (Mar 2004)

● The public approves of the Macao SAR government's administrative capability.

● Streamlining of Macao's industry structure did not impede economic growth.

● Judiciary function remains independent but public security problems are looming.

● The international community remains generally positive about Macao's development.

● Interactions between the Mainland and Macao are frequent; Macao is quite dependent on the Mainland.

● There were seven controversial events within the four years since the Macao handover.

● There are close civilian interactions between Taiwan and Macao, but official relations need more latitude for development.

I、 Overview

Boosted by positive factors such as personal tours promoted by the Chinese mainland in the past year, the lottery tour, which is Macao's leading industry, showed outstanding results. Although Macao was affected by the SARS epidemic in the first half of 2003 and economic growth slowed down temporarily, Macao's overall economic performance surpassed those of the past. With a stable economic environment, Macao residents and the international community remain generally recognize the Macao government's overall administrative performance.

There is judiciary independence, but the overall crime rate has risen slightly relative to the early time of the handover. Macao has closer interactions with the Mainland in various areas. In helping establish "The Service Platform for the Economic Co-operation between the Mainland and Portuguese Speaking Countries," "The Economic Co-operation Platform for Western-Guangdong," and "The Global Chinese Entrepreneurs Networking and Co-operation Platform" for the Mainland, and after signing the Closer Economic Partnership Arrangement (CEPA) with the Mainland in October 2003, Macao has become a dependable economic intermediary among the Mainland's regions. As a result, the Mainland has praised highly for Macao's performance four years since the handover.

Taiwan and Macao continue to have close civilian interactions, but the development of substantive relations is still limited to practical issues of mutually beneficial nature. The Chinese Communists are the obstacle to the development of comprehensive substantive relations between Taiwan and Macao. So far, it is still difficult to find any room and possibilities for a breakthrough or expanding further relations.

The following is an analysis of the general situation in Macao during the past year:

1. The public remains positive about Macao SAR Government's administration.

The Macao SAR government's performance, under the low profile and pragmatic leadership of Chief Executive Edmund Ho Hau Wah, is smooth going. During the SARS outbreak in the first half of the year, the SAR government obtained information and prepared countermeasures in advance to reduce the degree of impact of the outbreak on Macao. In all previous public surveys, an average of more than 70 percent of respondents expressed satisfaction over the SAR government's performance, and satisfaction rating for Chief Executive Edmund Ho Hau Wah was even above 80 percent.

In his fifth policy address to the Legislative Assembly on Nov. 19, Ho reported on the government's sustained drive for reform and "one-stop" service, as well as efforts exerted to increase government efficiency for the past year. Because Macao had been used to the operating style of Portugal government for a long period of time, the Macao society believed that there was need to improve the administrative efficiency and quality of civil servants in current government agencies.

2. Streamlining of Macao's industry structure did not impede economic growth.

Boosted by the many benefits of personal tour promoted by the Mainland, Macao's lottery tour industry showed outstanding results. Statistics show that as of the end of November 2003, tax collection from the lottery exceed MOP9 billion, up MOP7.64 billion from the annual tax collection the previous year and accounted for more than 70 percent of the Macao SAR government's revenue.

Because the lottery and service industries have become Macao's primary economic drivers, liberalization of gaming concessions in the future will stimulate tourism development even more, drawing more foreign tourists and consumers, and subsequently, further promote Macao's economic growth. Although the streamlining of industry structure and the sustained high unemployment rate (approximately 6.3 percent) have not impeded Macao's economic growth, the government must confront the challenging issue in the long run.

Macao belongs to a mini island economy; hence, its internal economic production is inadequate, and it has to rely heavily on external sources. From October to November 2003, the Mainland authorities sponsored the Forum for Economic and Trade Cooperation between the Mainland and Portuguese Speaking Countries in Macao, and signed the CEPA with the Macao government. On Dec. 3, the Mainland authorities officially approved the Cross-border Industrial Zone between Macao and Zhuhai, an undertaking that will help Macao attract more foreign investments. How to employ this advantage to enhance its industry structure and increase external competitiveness in the future will be a serious task for the Macao government.

3. Judiciary function remains independent but public order and security problems are looming.

Macao has maintained its rule of law and an independent judiciary since the handover. Its mutual external judicial assistance with other areas is also being promoted. For instance, Macao has working relations with the Mainland and Hong Kong in terms of civil as well as criminal judicial assistance; it also hopes to sign relevant agreements on judicial assistance. In October 2003, authorized by the Mainland authorities, the Macao government signed the "Readmission Agreement Relating to People Without Resident Permit" with the European Union after consulting with the E.U. for two years. This demonstrated the Macao government's sincerity to collaborate on matters relating to repatriation of illegal immigrants.

Yet the implementation of the laws in Chinese language has continued to elude the Macao SAR government. In its report on human rights on March 31, 2003, the U.S. State Department pointed out that the use of Portuguese in Macao's court verdicts and the scarcity of bilingual legal talent might impede judicial development in Macao.

Statistics show that there were a total of 7,482 criminal cases in the first three quarters of 2003, up 10 percent for the same period from the previous year. This might be related to the opening of Macao to personal tours by Mainland people. Crime trends are moving toward youth and organized crimes, which will be potential concerns for public order and security in the Macao society.

4. The international community remains generally positive about Macao's development.

In their annual reports, the U.S. and the European Union express positive attitudes toward Macao's situation since the handover. As of the end of October, 2003, 43 countries have given exemption of visa for entry to Macao SAR passport holders. In mid-September 2003, the Asia-Pacific Group on Money Laundering held its 6th Annual Meeting in Macao, which showed Macao's proactive determination to cooperate with the international community. Others events such as the "Forum for Economic and Trade Cooperation between the Mainland and Portuguese Speaking Countries" and the "5th Conference of Supreme Court Presidents in Portuguese Speaking Countries and Regions" held in Macao also demonstrated the SAR's internationalization efforts.

Although the European Parliament believes Macao is a suitable channel for the European Union to develop relations with the Mainland, the Union intends to watch closely the development of the legislation of Article 23 of the Basic Law by the Macao SAR government. The Union also put forward the necessity of improving the quality of Macao's public servants. In its 2002 annual report on human rights, the U.S. State Department expressed concerns over Macao's legislation of Article 23 of the Basic Law. Furthermore, in its annual report in 2003, the U.S. also pointed out that Macao's future development might be affected by the limitations on the right to propose bill by SAR's Legislative Assembly and the limited capacity of its residents to influence the government's policies.

5. Interactions between the Mainland and Macao are frequent; Macao is quite dependent on the Mainland.

For four years since the handover, the Mainland and Macao have kept close economic, social, civilian, and government departmental interactions. The Mainland is using trade cooperation, such as personal tour, sponsoring trade forum of Portuguese-speaking countries, signing the CEPA with Macao, and approving the development of the Hong Kong-Macao-Zhuhai Bridge and the Macao-Zhuhai cross-border industrial zone to cultivate Macao's role as an intermediary in regional and international trades. Although the aforementioned different measures are beneficial to economic development in Macao, they also add to Macao's reliance on the Mainland.

The Mainland has high praises for Macao's performance in the past four years since the handover. Macao is using Hong Kong as a predecessor for reflection under Chief Executive Ho's stable administration and with coordinated assistance from political operation of social organizations. Unlike Hong Kong's chaotic situation, the SAR has no incidents on the legislation of Article 23 of the basic Law and on the long-term high unemployment rate. These boosted the Mainland's confidence on Macao's future.

6. There were seven controversial events within the four years since Macao's handover.

According to media report, within the four years since the handover, there were seven controversial events related to freedom, human rights, and the rule of law, which challenged Mainland's promise of keeping Macao unchanged for 50 years. In the past year, in addition to the clash between the Mainland's Gongbei border guards and the democracy advocate Lee Kin-yun and the seizure of photographic equipment of the journalists on the spot, there was also the incident where Hong Kong's Anti-Tung Solidarity convener Shiu Yeuk-yuen and April Fifth Action member Lui Yuk-lin were refused entry by the Macao government. The incidents showed that there is need to continue monitoring Macao's human rights and freedom issues.

II Taiwan and Macao Relations

I. Continuing close civilian exchanges

Because of proximity between Taiwan and Macao, Taiwan residents do not need visas to visit Macao; equally, Taiwan has been lenient to Macao residents visiting Taiwan, which promote close exchanges between people of both areas. During the first half of 2003, a decrease in the number of exchange became apparent due to the SARS epidemic outbreak. From January to November 2003, approximately 768,000 people from Taiwan visited Macao, down 34.86 percent from the previous year. Nonetheless, the number of Taiwan tourists still rank third among the number of foreign tourists visiting Macao, next only to Hong Kong and the Mainland.

From January to November 2003, the total trade between Taiwan and Macao amounted to US$290 million, up 3.52 percent for the same period from the previous year. There are few direct Taiwan investors in Macao. Most use Macao as a springboard to invest in Zhuhai or Western-Guangdong, which shows that there is need to boost Taiwan's trade relations with Macao. With closer trade arrangements between Macao and the Mainland in the future, whether Macao will generate beneficial conditions to attract Taiwan investments is something to watch for.

II. Official relations need improvement

Taiwan representative office in Macao started issuing entry visas to Macao residents and foreigners, and issuing and changing tourist visas of Mainland residents visiting Taiwan on Feb. 27, 2003. Reactions from different sectors in Macao were positive. This bore positive significance in improving the service efficiency and status quo of the Macao Affairs Office of the Mainland Affairs Council. Macao's SAR government also coordinated closely with Taiwan in the cooperative prevention of SARS and mutual assistance in judicial cases. The good interactions are building a foundation for better official relations between the two areas.

To foster mutually beneficial relations between Taiwan and Macao, Taiwan will continue to proactively promote exchanges of the various sectors in Taiwan and Macao in the future. Taiwan hopes the Macao SAR government will, bearing pragmatic thoughts of building a mechanism for normalizing relations, establish an agency in Taiwan to foster good interactions between the two areas, and provide assistance and services to Macao residents working and studying in Taiwan.