Market Calls on Government to Expedite Rescue Measures

The current financial crisis has made the global economy falter. The stock market gloom is ominous enough, with the Hang Seng Index recently suffering its biggest single-day slump of 6,000 points to 11,000. Consequently, the Macao Association of Real Estate Development has proposed a series of rescue measures, including the reduction of stamp duty for locals buying property in the next two years, priority to deserving property projects, the urging of private projects to start as soon as possible, and government subsidies for shop rentals, etc. It is hoped that the government adopts measures as soon as possible to avoid a repeat of the 1993 property slowdown, which led to a long-tern economic recession.

The measures recommend (i) a 2.5% reduction in stamp tax for locals buying property in the coming two years commencing November this year (reducing the current tax to 0.65%), which, upon expiry, may or may not be continued; (2) for those private developers who have capital for residential property development, the government should accept their deposits and approve their projects as soon as possible, while exempting them from related taxes and fees so that developers can start their projects earlier to help offset the imbalance of the industry slump due to the falling number of private construction projects; (3) the government should consider subsidising the airlines, by way of air ticket allowances, in order to promote the local tourism, convention and exhibition industries. The government may also attract more visitors via PR companies in the US, Europe, the Middle East and Asia, which are the primary sources of Macao’s tourists.

It is also suggested that a 50% subsidy on rent be provided to small and medium enterprises, reducing or exempting their property taxes, while strictly enforcing relevant rental regulations and laws and eventually revitalising the rental market. It is also proposed that the government reward real estate agencies that bring transactions to a conclusion with 5% transaction volumes each quarter, and introduce an immigration mechanism for attracting talent and capital.

Some local analysts comment that Macao relies as much on the economic environment of neighbouring areas as it does on international and regional economic factors. The market anticipates the Mainland loosening the FIT scheme by the end of next year, if not by the middle of next year.

It is claimed that relaxed visa restrictions will bring immediate economic benefits. Visitors to Macao via the FIT scheme totalled 371, 000 in September, some 39% down on August (603,000). According to the statistics, there are 7,000 fewer visitors to Macao on average every day, which in turn is having a serious impact on the retail and F&B industries. The financial crisis has worsened the situation, thus it is incumbent upon the government to make appropriate adjustments.

Others say that the tightening of the FIT scheme was designed to prevent the Macao economy from overheating. However, now things have changed in the market the government should adjust their policies accordingly. At the very least, visa restrictions should not be further tightened. Rather, they should be loosened in the near future to save the market from a slump.