Splashing it around

The great government MOP 5000 giveaway is a drop in Macau’s budget surplus ocean, but is it the best way to spend MOP 2.6 billion?

In his indiscriminate flinging of cash at Macau residents, no doubt Chief Executive Edmund Ho Hau-wah won many supporters.

But for some the handout, that will cost MOP 2.6 billion, was a shameless spend, spend, spend bid to defuse rising social tension and refashion the image of a government that has been tagged by many residents as lacking vision and uncaring.

It can be argued that it’s not economically irresponsible. Macau’s booming economy means that spending is not a problem. Noone is questioning that. It is more questionable whether the spending is responsible and equitable and what impact it will have on inflation. In making the announcement in April, Mr Ho said the subsidy was an “immediate solution” to inflation. Since then Secretary for Economy and Finance Francis Tam Pak Yuen admitted the MOP 5000 payout for Macau’s 480,000 permanent residents and MOP 3000 for the 66,700 non-permanent residents could boost inflation. Mr Tam added at a press conference last month that the July 1 handout was “appropriate” as the “government is sharing its financial surplus with residents in need”.

Many believe the handout isn’t so much about investing in the city or in the needy, as investing in silencing the masses as inflation continues to climb and income inequality grows. The timing of the announcement, just days before May 1, a day traditionally marked by protests and anti-government sentiment, has also come under question. Vice-rector for Research and International Relations at Macau Inter-University Institute (IIUM), Professor Ivo Carneiro de Sousa, described the subsidy as a “political decision” that would do nothing to address social problems. “It will help families with solving contractual problems, like paying school tuition, the mortgage or other bills,” Professor de Sousa said. “It does not address the problem in the economy.”

Professor de Sousa said while many people were quick to criticise the move because it did not take into account income inequality, he said it was important to note that Macau did not have the framework in place to do this. “It is strange; normally you should give more to the poor and less to the rich, but in Macau there is no financial system to do this,” he said. “There is no system to say clearly who is rich, who is middle-class and who is poor, so if you are going to do this, handing the same amount to everyone appears the only way. You can determine income in the public service… but because of the tax system we do not have the basic tools to do this.”

Assistant Professor of Economics at Macau University Henry Lei Chun-kwok said there was no doubt the subsidy was an absolute bonanza for the poor, but he too questioned the long-term benefits. Dr Lei said while you would be hard pressed to find many people in Macau who disagreed with the handout, he believed there were better ways to spend the money.

“People, including myself, have no reason not to support the idea as we are all beneficiaries,” Dr Lei said. “It will help in the short term but the price level of everything in Macau is going up so fast which means a decrease in quality of life and purchasing power in the long term. Solving this by giving away 5000 patacas is a policy with a big question mark over it.”

There is no doubt that inside the dense economic jungle that is the gaming sector boom, there has been a pot of gold for many, but not for all. Hard as it is for some to believe the MOP 5000 subsidy is equivalent to more than 60 per cent of the medium wage in Macau which stood at MOP 7926 in December last year. Couple this with a consumer price index (CPI) jump of 8.72 per cent in April when compared to the same period last year, and it is not surprising sections of the community are struggling to make ends meet. According to figures from Macau’s Statistics and Census Bureau the cost of food and non-alcoholic beverages in Macau jumped 18.6 per cent in April this year over that of last year, the price of health services went up 13.9 per cent and transport increased 10.99 per cent. The price of canned meat jumped 80 per cent, rice 62 per cent, fresh beef 68 per cent and vegetables 21 per cent.

As the cost of living continues to skyrocket, more and more people are crossing the border to the mainland to shop. Dr Lei said meat and vegetables could be purchased for about half the price of what the same items cost in Macau. “There is a huge price gap between Macau and Zhuhai, that is why you see so many people crossing the border with their shopping carts,” he said. “The Chinese government has imposed controls on price rises so it only makes sense for people to take advantage of that if they need to.”

According to Dr Lei it is definitely not just inflation that is driving up prices in Macau, but also shopkeepers eager to cash in on residents’ ability to pay. “It is not all imported inflation, shops know many people can afford to pay more and so they charge more,” he said. “The biggest problem here is that it has a big impact on the poor. There is no doubt that across the board prices have increased much faster than what CPI indicates.”

Dr Lei said the price levels in Taipa were typically about 10 per cent more expensive than those charged in Macau. He said many shopkeepers justified this due to the higher cost of rent in Taipa and having to pay travel allowance for staff. “They observe a higher purchasing power in Taipa, so the prices are more expensive,” he said. “Shops’ input, rental, salaries and other expenses are rising so they adjust the price levels about two to three times a year. Even McDonalds increased the cost of its set meals by about MOP 2 this year, which is almost 10 per cent.”

According to Dr Lei for a family of four living in the northern part of Macau, the MOP 5000 subsidy would be enough for about one month’s expenses. “There is no doubt for a low income family this is going to be a huge benefit and the MOP 150 a month the government is giving towards electricity will also help,” he said. “But CPI is growing too fast so it will do little to help the next month or the month after that.”

There is not just the problem of inflation, personal debt levels in Macau are also on the rise spurred on by the boom in property prices. As wages increase and unemployment remains low, consumer confidence is growing. Figures from the Monetary Authority of Macau (AMCM) show a significant increase in loans to Macau residents over the past few years. The total amount of loans and advances to the private sector jumped more than 60 per cent from about MOP 43 billion in January 2006 to more than 70 billion in January this year. The number of car loans increased about 30 per cent in the 12 months to December 2007. At the same time the value of goods bought in department stores increased about 30 per cent and the value of watches, clocks and jewelry bought in Macau more than doubled. In the past three years the total assets of Macau’s 27 banks rose by more than 60 per cent, total credit by 46 per cent and deposits by 60 per cent. From 2004 to 2006 bank profits jumped an astounding 184 per cent.

Professor de Sousa said while there was clearly more money in Macau due to the gaming industry boom, the benefit to the “low and average class” citizens had been limited. “The textiles industry has disappeared very fast, traditional shops are disappearing and the workers do not have other skills,” he said. “It is difficult to integrate this type of worker into the new Macau.”

Despite the government’s rhetoric on the subsidy being an immediate solution to inflation, Professor de Sousa said there was a better way to spend the money that would benefit people long term. “The only alternative is to invest in education, invest in human resources,” he explained. “To increase the skills and qualifications of the working population so they can compete in the workforce.”

Professor de Sousa said the government also needed to address the problem of how to take the “huge economic” growth in Macau and create economic development. He pointed to Dubai as an example of what could be done. “The only other case you can compare Macau to is the rapid growth in Dubai,” he said. “They are trying to build an international airport to rival Hong Kong and Singapore… Macau needs a strategy like this to take the extra money it has and to invest in becoming an international city.” According to Dr Lei the government needs a “long-term and consistent” approach to dealing with social and economic problems. “We need to think long term and not just use a piecemeal approach,” he said. “Learn from other countries and work out a good balance between equity and efficiency.”

by Donna Page
photos by Rui Rasquinho

Cashed up

Closer takes a look at how typical Macau residents plan to spend their MOP 5000.

The Lam Family

As a family of three generations, the Lams are considered a typical Macanese family. Even though the whole family of ten, with a soon-to-be-born baby, are all from Macau with Chinese origin, the family name appears on their ID cards in the Portuguese name of Oliveira Lam. The grandfather, Manuel, now 69 years old, explained that the name Oliveira was added because of his father’s Portuguese Christian Godfather. “He adopted my father as his godson, and decided to give my father his name also. Since then my father has passed that name to me and me to my children,” he explained.

Lucia Lam, the first born daughter, teased her father and said, “That was because it was fashionable to have a Portuguese name at that time I bet.” And Joaquim Lam, the first born son, also laughed, “You know once my bank called me and spoke to me in Portuguese, thinking that I must be Portuguese with a family name like that. It was so embarrassing when I had to tell the person that in fact I don’t speak Portuguese at all.” But all jokes aside, the name Oliveira might indeed have had its influence. The three generations of the family have worked in public departments, following a Portuguese- Macanese tradition as civil servants before the handover in 1999.

A former SAAM (The Macao Water Supply) clerk, Manuel is retired now. And his 63-year-old wife, Maria, still works as an assistant at the Kum Iam Statue under the management of the Cultural Institute of Macao. Together they have three children, Lucia, Joaquim and Fernardo and soon to be four grandchildren. The grandparents are now living in an apartment in the northern part of Macau with a modest but stable income from the government. Talking about the announcement of Edmund Ho’s decision to distribute MOP 5000 to each of Macau’s permanent residents, Manuel said that it was “pure luck”. “Even if they decide not to do anything to improve the situation of Macau, we have no power to interfere in anyway,” he said. “Now that they decided to give out some money, it’s more of a bonus than nothing.” Then Maria added, “We will save the money and spend it only when it’s necessary. In terms of social justice, I don’t feel quite

right about it, but you know, money is money, it’s still useful.”

The eldest daughter of the Lam family, Lucia, works as a supervisor at the office of the IACM (Instituto para os Assuntos Civicos e Municipais). Her husband, Billow, works in the government department of Finances (Direcçao dos Serviços de Finanças), also as a supervisor. The couple have twin 3-yearolds Crispin and Keyne. As the children are still young and certainly have no notion of how to spend the money, their parents have decided to use part of their MOP 5000 subsidy to fund a family trip. And part of the money will go as a donation to charity. “There are people who would need the money more than us,” Lucia said. And for Billow who works in the finance department of the government, the subsidies are “the citizens’ rights”. “They are tax income anyway. You think Edmund Ho is giving out the money from his own pocket, of course not. This sum of money will be taken out from the tax treasury of the government, and it’s righteously our own money,” he said. “But it’s true too. Some people would need this money more than us, that’s why we would like to donate part of it.”

Joaquim Lam is the second son of the Lam family, together with his wife, Grace, they have a one-year-old son, Jeremy. And Grace is 8-months pregnant with the couples’ second child. Joaquim works as a tax inspector in the finance department and Grace works as a technician at the Health Department. Joaquim explained that since their children were still very young, they would like to save the money for their future schooling. “To raise a family is not an easy task,” he said. “We need to plan for the future.” And Grace added, “I have a feeling that the distribution of 5000 patacas is in reality of very little use. It would be more useful if we can use that sum of money to build a public facility so that everyone can share. And of course, we can also donate it so that more needy people can benefit.” For Fernado, the youngest son, the money has little significance. Not being married yet, Fernado is the only one in the family who does not work in government department, but rather in a casino. “I can’t think of any reason to spend the money. And I can’t grasp the real meaning of such a decision from the government,” he said. “So I would either save it for future use or simply donate it to the poor.” As a typical example of a middle class family, the Lam family seems to place little importance in the government

handout taking into account the current social situation in Macau. The Lams would prefer to see the government adapt a more long-term strategy to improve the over-all standard of living in Macau.

The Ox Warehouse Family

Ah Zhog is 72 years old and works as a guardian at the local art space of the Ox

Warehouse. As a non-lucrative art association, the Ox Warehouse is dependent on scarce government subsidies to maintain its management. Living with his wife, Ah Zhog earns a modest income of MOP 2600. With the swiftly rising inflation in Macau, an extra MOP 5000 will be of great help. “Of course it’s going to be useful. My children have already their own children and they have to take care of their own family,” he said. “So this money I will use bit by bit on my own daily life.” Working under the same establishment, Ah B is a technical assistant in the Ox Warehouse. The 26-year-old earns a monthly income of MOP 8000. “5000 patacas is certainly not enough! What can I do with it?,” Ah B asked. “I can’t buy myself an apartment with that little sum of money, so the problem remains the same.” As for Iris, who works as a graphic designer in the art space, the money will be spent together with the whole family. “We are four in the family and we have decided to spend the money to buy an electrical massage chair so that all of us can use it,” she said.

The Students

Jolian, Joandra and Christina are all first-year design students at Inter-University Institute of Macau (IIUM). For them the MOP 5000 subsidy will come in very handy. Jolian, 21, has a part-time job in a casino. Apart from his university fees that are paid by his family, Jolian has to earn his own pocket money. “I did not quite believe that was true when I learnt about the 5000 patacas subsidies,” he said. “But then I didn’t feel much about it either. It’s simply not enough to do much. So I will keep it as a back-up of my pocket money.” For Joandra and Christina, who also have part-time jobs, the subsidies will be used for a very useful purpose. “We have decided to buy a good reflex camera with this money so that we can practise photography,” Joandra said. And Christina added, “The 5000 patacas is in fact like the water of the river that is too far away from the burning house. It’s not really useful for the current problems in Macau.”

text and photos by Alice Kok