WTO says Macau's trade and investment regime "remains among the most open in the world"
Macau's trade and investment regime remains among the most open in the world, the Secretariat of the World Trade Organisation (WTO) says in its second Trade Policy Review of Macau.
"Neither the Asian crisis, nor Macau's reversion to China in December 1999 has materially altered the Territory's trade and investment regime, which remains among the most open in the world," says the review, which also points out that Macau's handover to China "had little, if any, effect on the Territory's trade and trade-related-policies."
The review was released by the WTO in Geneva on March 21. The Secretariat's first report on Macau was published in 1994. According to the review, the Macau Special Administrative Region (MSAR) has retained its status as a free port and is exempted from all taxes imposed by the Central Government in Beijing.
The report points out that since the handover the authorities of the MSAR "have succeeded in sharply reducing crime, much to the benefit of tourism; they have also taken steps to build a more robust civil society, with local people seemingly participating more in public life than previously."
The trade policy review points out that trade is "critical" to Macau's economy, with exports and imports of goods and services equivalent to roughly 80 per cent and 50 per cent of the gross domestic product, respectively, in 1999.
According to the review, the pegging of Macau's legal tender, the pataca, to the Hong Kong dollar "severely limits the authorities' scope for controlling the money supply. The outcome is relatively high real interest rates."
The reviewers caution that "one possible major disadvantage is that the effective appreciation of the pataca and high real interest rates may hamper both the Territory's economic recovery and the Macau Government's efforts to diversify the economy." The review praises Macau for its "traditional practice of prudent fiscal policy."
The review also says that the Macau Government's "approach has long been to let free and open markets be the main determinant of the allocation of resources within the MSAR and thus its economic development," adding that one of the main developments since the Secretariat's first review of Macau in 1994 has been the strengthening of protection accorded to intellectual property rights.
The reviewers also say that the openness of Macau's economy to trade "has undoubtedly fostered competition as far as goods are concerned". They stress, however, that services accounted for 90 per cent of the gross domestic product and 69 per cent of employment in 1998.
The review emphasises that, according to the Macau Government, "initiatives are under way with a view to improving competition in certain services, notably telecommunications and gambling."
Macau Bank of China says two to three per cent GDP growth "should be attainable"
The Economic Research Department of the Macau branch of the Bank of China says that "considering all factors, Macau's economy is expected to continue to improve, growing at a faster pace, and the Macau Government's preliminary forecast of a growth of between two per cent and three per cent in 2001 should be attainable."
The report praises the Macau Government for "great improvements" in Macau's overall social and economic environment since its return to the Chinese Motherland in December 1999, namely in the area of public security.
According to the report, Macau's economy is moving towards "partial recovery." However, the report acknowledges that the property market remained weak in 2000, "due to the accumulation of huge quantities of vacant flats," and that banking operations continued to be under great pressure, "because of weak credit demand and increasing funding costs."
The report also says that China's entry into the World Trade Organisation will provide Macau companies with "enormous opportunities" to invest in the Mainland. However, the report cautions that "Macau needs to explore new ways to strengthen its intermediary role between the Chinese Mainland and the international market."
The report concludes that while Macau's economy will on the whole show "greater improvement" in 2001, more efforts are necessary for Macau to maintain its growth."
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