Effortlessly attractive – Macau Focus

May 08, 2014 | BY

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Gonçalo Cabral, legal adviser to the Macau SAR Government, spoke to China Law & Practice about the enduring success of Macau's gaming industry and its reliance on the Chinese market



What is the main focus of your work?

I'm a legal adviser to the Secretary of Economy and Finance, who is one of five members of the Macau government – excluding the Chief Executive – and is in charge of a large portfolio of services and industries like gaming, trade, IP registration, labour, tax services, banking, insurance and so on. I may be asked to issue legal opinions or to draft legislation proposals concerning any matter under our umbrella. I also often represent the government in court within judicial reviews.

What are the biggest recent changes to Macau's laws in the efforts to attract investment?

We have not had to make big amendments in a direct effort to attract investment because since the new gaming law was enacted in 2001, when the government decided to put an end to the monopoly of the gaming industry [Law 16/2001], investment has been pouring into Macau without our having to try very hard.

How does Macau construct its laws? Is there a model jurisdiction it follows?

We belong to the family of jurisdictions under continental law; our legal system is based on Portuguese law, which has been mainly influenced by French, German and Italian law. These laws have historically been the biggest influences to our system, not to mention Roman law, which is the basis of all continental legal systems. But of course in forming regulation nowadays, we very often look to what is going on around us, namely Hong Kong, Singapore and Japan.

How is the IP regime in Macau developing?

Macau follows the main treaties in IP law: the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works and the TRIPS Agreement. The Copyright Ordinance was also amended in 2012 to put it in harmony with the WIPO Performances and Phonograms Treaty and with the WIPO Copyright Treaty. The registration of patents and trademarks is under the umbrella of my boss and enforcement is in the hands of the Customs department. One other interesting consequence of the development of the gaming industry was the remarkable increase in registration of patents, especially in gaming machines and devices (games as such cannot be patented). There were very few registrations of patents before the end of the gaming monopoly.

We are not part of any international treaties that allow for international registration. You cannot file for registration of any Macau IP rights abroad – you must file your application here.

What are the biggest sectors/industries for Macau-China investment?

The key industry is gaming and everything revolves around gaming, like the hotel and retail (especially retail of luxury items) industries. There are others, for example we still have a textiles industry, but the other industries pale in comparison. The weight and value of Macau's gaming industry is now seven times the value of Las Vegas.

The industry and economy of Macau are totally dependent on the mainland people and consumers. They make up the major proportion of people that visit Macau every day, and therefore we are totally dependent on the economy of China and all things China, including the peoples' purchasing power, their ability to travel to Macau and the number of exit visas granted by the mainland government.

What are the challenges to investing in Macau?

There aren't so many challenges but one is a shortage of labour. There is no freedom to hire as many non-resident workers as some casinos and businesses would like. Foreign non-resident labour hiring requires government authorisation, which is issued at the government's discretion in light of factors such as the situation of the local labour market, the situation of the economy, the type of company that is applying and the number of residents it already employs. Whether the hiring of non-resident workers is possible or not is up to the Human Resources Bureau, also under the Secretary for Economy and Finance, and the trend is to not authorise as many as the local businesses request. So it can be a little bit difficult or tricky to some businesses in managing available labour. On the other hand, our territory is very limited and prices have gone up in the past 10 years. The prices of real estate, the rents of housing and commercial premises and everything else is much more expensive now, which also creates difficulties for SMEs that at times cannot pay the commercial rents and salaries charged in Macau.

We have unfair competition law, but not antitrust law. We have some general principles about competition in the Commercial Code, but nothing full-fledged – it is just private law. There is, consequently, no public authority to monitor monopolistic practices. The issue has been raised a few times in the past but I am not aware of any intention to introduce such kind of legislation, which in my opinion would be very important.

What is your outlook for investment in Macau?

Every economy goes through cycles and we have been in this positive cycle for over 10 years. Macau is totally dependent on China, and I see Macau investment continually rising unless there is a problem in the mainland. While China does well, without any economic or public health crises, and grants exit visas in great numbers, the economy in Macau will continue to flourish. Prices, salaries and rent will continue to increase. There are dozens of hotels in Macau to be opened in the next few years. So things will keep growing until something happens in China. That will be felt here in Macau.

The legal system in Macau has been favourable to all overseas investors who have come here. Certainly, we could do a few legislative reforms, for instance we should reform the tax system because it's old fashioned and unwieldy, but there have been no real complaints against it. Such a reform could be worked on without even raising tax rates but it's nothing urgent.

Overall, taxation is low, the degree of economic freedom is high, the gaming industry has been doing tremendously well and so we have received investment from all over the world without having to try hard. That's the reality here.

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