2012 Investment Climate Statement - Macau

2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012

Openness to Foreign Investment

Macau became a Special Administrative Region (SAR) of the People's Republic of China (PRC) on December 20, 1999. Macau's status since reverting to Chinese sovereignty is defined in the Sino-Portuguese Joint Declaration (1987) and the Basic Law, Macau's constitution. Under the concept of "One Country, Two Systems" articulated in these documents, Macau is promised a high degree of autonomy in economic matters, and its economic system is to remain unchanged for fifty years. The Government of Macau (GOM) maintains a transparent, non-discriminatory, and free-market economy. Macau has separate membership in the World Trade Organization (WTO).

The GOM hopes to diversify Macau's economy by attracting foreign investment and is committed to maintaining an investor-friendly environment. Corporate taxes are low. The tax rate is 12 percent for companies whose net profits exceed US$37,500 (300,000 Patacas). For net profits less than US$37,500, the tax ranges from three percent to 12 percent. The top personal tax rate is 12 percent; however, the tax rate of casino concessionaries is 35 percent on gross gaming revenue, plus a four-percent contribution for culture, infrastructure, tourism, and a social security fund.

In 2002, the GOM ended a long-standing gaming monopoly, awarding two gaming concessions to consortia with U.S. interests. This opening has encouraged substantial U.S. investment in casinos and hotels, and has spurred exceptionally rapid economic growth over the last few years. Macau is positioning itself to be a regional center for gaming, incentive travel, conventions, and tourism.

Macau and the PRC implemented a free trade agreement, the Closer Economic Partnership Arrangement (CEPA), on January 1, 2004. The agreement is similar to the Hong Kong-PRC CEPA. As of 2011, it provided tariff-free access to Mainland China for all Macau-origin products and preferential treatment for 46 service sectors. The Macau government plans to achieve “basic” liberalization of trade in services between Macau and the Mainland by the end of the Chinese National 12th Five-Year Plan period in 2015. In 2005, the Government inaugurated a cross-border industrial zone located between the northern part of Macau and Zhuhai. Manufacturers have begun operating in the industrial zone, including one U.S. manufacturer of gaming tools.

Macau is heavily dependent on the gaming sector and tourism industries. In addition, a single product category, textiles and apparel, accounts for approximately 20.8 percent of its goods exports. Macau's textile and apparel exports decreased by 15.5 percent for the first nine months of 2011, a continued result of the elimination of the textile quota system at the end of 2004.

Foreign firms and individuals are free to establish companies, branches, and representative offices without discrimination or undue regulation in Macau. There are no restrictions on the ownership of such establishments. Company directors are not required to be citizens of, or resident in, Macau.

The GOM is liberalizing the telecommunications sector under a law passed in August 2001. Macau has liberalized the mobile phone market and Internet services. It has issued three mobile telephone licenses to two foreign companies and one local firm. In March 2005, the GOM issued a license to a company operating a Code Division Multiple Access (CDMA) network. In October 2006, the GOM issued three 3G licenses, and 3G operators began providing their services in October 2007. In November 2011, Macau Chief Executive Fernando Chui announced plans to liberalize the fixed-line public telecommunications network, which is monopolized by Companhia de Telecomunicações de Macau (CTM) under a concessionary contract, which expired at the end of 2011. The GOM plans to publish the new regulations as well as to launch an open tender for the fixed-line public telecommunications networks in the first half of 2012.

Certain residency requirements are imposed on three professional services sectors as described below:

  • Education - an individual applying to establish a school must have a Macau Certificate of Identity or have the right to reside in Macau. The principal of a school must be a Macau resident.
  • Newspapers and magazines - applicants must first apply for business registration and register with the Government Information Bureau as an organization or an individual. The publisher of a newspaper or magazine must be a Macau resident or have the right to reside in Macau.
  • Legal services - lawyers from foreign jurisdictions who seek to practice Macau law must first obtain residency in Macau. They also must pass an examination before they can register with the Lawyer's Association, a self-regulatory body. The examination is given in Chinese or Portuguese. After passing the examination, foreign lawyers are required to serve an 18-month internship before they are able to practice law in Macau.





TI Corruption Index



Heritage Economic Freedom



Conversion and Transfer Policies

Profits and other funds associated with an investment, including investment capital, earnings, loan repayments, lease payments, and capital gains, can be freely converted and remitted. The domestic currency, Macau Official Pataca (MOP), is pegged to the Hong Kong Dollar at 1.03 and indirectly to the U.S. Dollar at an exchange rate of approximately MOP 8.02 = US$1. The Monetary Authority of Macau, the de facto central bank, is committed to exchange rate stability through maintenance of the peg to the Hong Kong Dollar.

Although Macau imposes no restrictions on capital flows and foreign exchange operations, exporters are required to convert 40 percent of foreign currency earnings into MOP. This legal requirement is not applied to tourism services.

Expropriation and Compensation

The U.S. Consulate General is not aware of any expropriation actions. Expropriation of property may occur if it is in the public interest. In such cases, the Macau SAR Government will exchange the private property with an equivalent public property based on the valuation and conditions of the property. The exchange of property is in accordance with established principles of international law. There is no remunerative compensation.

Dispute Settlement

The U.S. Consulate General is aware of one investor-state dispute involving U.S. or other foreign investors or contractors and the Macau SAR Government. In March 2010, low cost carrier airline Viva Macau was reportedly forced to cancel flight services related to an alleged credit dispute with its fuel provider, triggering events which led to the airline’s de-licensing. Macau courts declared the airline bankrupt in September 2010. Viva Macau’s major shareholder, a U.S. private investment company, has appealed in Macau courts seeking a judgment whether a GOM administrative act led to Viva Macau’s demise and, if so, if such an act was legal. The Court of Second Instance is expected to hear Viva Macau’s appeal in 2012. Private investment disputes are normally handled in the courts or via private negotiation. Alternatively, disputes may be referred to the Hong Kong International Arbitration Center or the World Trade Center Macau Arbitration Center.

Macau has an arbitration law (Decree 55/98/M), which adopts the United Nations Commission on International Trade Law (UNCITRAL) model law for international commercial arbitration. The Macau SAR Government accepts international arbitration of investment disputes between itself and investors.

Macau's legal system is based on the rule of law and the independence of the judiciary. Macau has commercial and bankruptcy laws (Decree 40/99/M). Courts in Macau include the Court of Final Appeal, Intermediate Courts, and Primary Courts. There is also an Administrative Court, which has jurisdiction over administrative and tax cases. These provide an effective means for enforcing property and contractual rights. Commercial and bankruptcy laws are written under the Macau Commercial Code (Decree 40/99/M). Macau's dramatic economic expansion in the last few years, combined with a shortage of qualified jurists, have put a strain on the operations of the judicial system, leading in some cases to delays in case resolution.

Performance Requirements and Incentives

To attract foreign investment, the Macau SAR Government offers investment incentives to investors on a national treatment basis. These incentives are contained in Decrees 23/98/M and 49/85/M and are provided so long as companies can prove they are doing one of the following: promoting economic diversification, contributing to promotion of exports to new unrestricted markets, promoting added value within their activity's value chain, or contributing to technical modernization. There is no requirement that nationals own shares. These incentives are categorized as fiscal incentives, financial incentives, and export diversification incentives.

Fiscal incentives include full or partial exemption from profit/corporate tax, industrial tax, property tax, stamp duty for transfer of properties, and consumption tax. The tax incentives are consistent with the WTO Agreement on Subsidies and Countervailing Measures as they are neither export subsidies nor import substitution subsidies as defined in the WTO Agreement. Financial incentives include government-funded interest subsidies. Export diversification incentives include subsidies given to companies and trade associations attending trade promotion activities organized by the Macau Trade and Investment Promotion Institute. Only companies registered with Macau Economic Services may receive subsidies for costs such as space rental or audio-visual material production. Macau also provides other subsidies for the installation of anti-pollution equipment.

Right to Private Ownership and Establishment

Macau law and regulations provide for the right of foreign and domestic private entities to establish, acquire, and dispose of interests in business enterprises.

Protection of Property Rights

Macau is a member of the World Intellectual Property Organization. Macau has acceded to the Bern Convention for the Protection of Literary and Artistic Works. Patents and trademarks are registered under Decree 97/99/M. Macau's copyright laws are compatible with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and government offices are required to use only licensed software. The Macau SAR Government devotes considerable attention to intellectual property rights enforcement and coordinates with copyright holders. Source Identification Codes are stamped on all optical discs produced in Macau. Macau Economic Services uses an expedited prosecution arrangement to speed up punishment of accused retailers of pirated products.

The GOM, through the enforcement efforts of Macau Customs, has worked to combat optical disc piracy in recent years, resulting in the closure of all illicit optical disc production lines in Macau. Macau Customs also maintains an enforcement department to investigate incidents of IP theft. Macau Customs works closely with Mainland-Chinese authorities, foreign customs agencies, and the World Customs Organization to share best practices to address criminal organizations engaging in IP theft. Piracy of television signals (and much U.S.-origin program content) remains a problem. The Government does not have a clear position on criminal liability for commercial end-use piracy of copyrighted works. The Consulate General has raised these issues with the GOM.

Starting January 1, 2010, the Macau SAR Government sped up the registration processes for trademarks and patents by doubling the publication frequency of applications. In 2010, the GOM introduced to the Legislative Assembly a draft bill to revise the existing copyright law and extend the protection to Internet and digital technology. Discussion of the bill adjourned for 10 months as the government sought clarification on some technical terms, but resumed in December 2011.

Transparency of Regulatory System

The GOM has transparent policies and laws that establish clear rules and do not unnecessarily impede investment. The basic elements of a competition policy are set out in Macau's 1999 Commercial Code.

Efficient Capital Markets and Portfolio Investment

Macau allows free flows of financial resources. Foreign investors can obtain credit in the local financial market. At present, there are twenty-eight financial institutions in Macau, including twelve local banks and sixteen branches of banks incorporated outside Macau. In addition, there are eleven moneychangers, two cash remittance companies, two financial intermediaries, six exchange counters and one representative office of a financial institution. These institutions provide a range of credit instruments. Banks with capital originally from Mainland China and Portugal had a combined market share of about 76.5 percent of total deposits in the banking system at the end of October 2010. Total deposits amounted to US$35.8 billion in October 2011. In September 2011, banks in Macau maintained a capital adequacy ratio of 14.34 percent, well above the minimum eight percent recommended by the Bank for International Settlements. Accounting systems in Macau are consistent with international norms.

In December 2009, the Macau Monetary Authority signed a memorandum with the People’s Bank of China to develop the Renminbi (RMB) settlement mechanism for cross-border trade. According to the memorandum, the quota on the value of RMB exchange for each individual transaction increased from RMB 6,000 (US$878) to RMB 20,000 (US$2,928). The list of designated merchants who are allowed to exchange RMB for Pataca from Macau banks is expanded to include institutions that provide telecommunications, education, and exhibition/convention services. In addition, Macau residents are allowed to use RMB cheques to pay for consumer spending in Guangdong Province up to RMB 50,000 (US$7,320) per account per day. Since 2010, the People’s Bank of China has been providing the cross-border settlement of funds for Macau residents and institutions involved in transactions for RMB bonds issued in Hong Kong. Macau residents and institutions can purchase or sell, through Macau RMB participating banks, the RMB bonds issued in Hong Kong.

Macau has no stock market, but companies can seek a listing in Hong Kong's stock markets and the Macau and Hong Kong financial regulatory authorities cooperate on issues of mutual concern. Under the Macau Insurance Ordinance, the Monetary Authority authorizes and monitors insurance companies. There are eleven life insurance companies and thirteen non-life insurance companies in Macau. Total gross premium income from insurance services amounted to US$398.0 million in the first nine months of 2011.

Offshore finance businesses, including credit institutions, insurers, underwriters, and offshore trust management companies, are regulated and supervised by the Monetary Authority. Profits derived from offshore activities are fully exempted from all form of taxes. In October 2011, the Legislative Assembly approved in principle the draft bill on the deposit protection scheme. The bill proposes banks to compensate depositors up to a maximum of MOP 500,000 (US$62,500) in case of a bank failure. To finance the deposit protection scheme, the GOM will inject MOP 150 million (US$18.75 million) into the deposit protection fund, while banks will need to pay an annual contribution of 0.05 percent of the amount of protected deposits held. Lawmakers are currently reviewing the bill.

Competition from State-Owned Enterprises

Macau’s gaming sector accounts for over 70 percent of the local economy, and the GOM has no ownership in any gaming companies. Several economic sectors – including cable television, telecommunications, electricity, and airport/port management are run by private companies under concession contracts from the Macau SAR Government. The GOM holds a small percentage of shares in these government-affiliated enterprises ranging from one to ten percent. The government set out in its 1999 Commercial Code the basic elements of a competition policy with regard to commercial practices that can distort the proper functioning of markets. Court cases related to anti-competitive behavior remain rare.

Corporate Social Responsibility (CSR)

The six gaming concessionaires that dominate Macau’s economy pay two percent of gross gaming revenues to the government to fund cultural and social programs in the SAR. Several operators also directly fund gaming addiction rehabilitation programs. Some government-affiliated entities maintain active CSR programs. For example, electric utility Companhia de Electricidade de Macau sponsored Macau’s regional Special Olympics program in January 2010, and the company’s volunteer programs include education programs and repair services provided free-of-charge to underprivileged residents. Since 2007, the Junior Chamber International Macau (JCIM) has held the Corporate Social Responsibility International Forum to promote CSR programs, with the number of participating companies rising every year.

Political Violence

Macau is politically stable. The U.S. Consulate General is not aware of any incidents in recent years involving politically motivated damage to projects or installations.


Macau's anti-corruption agency is called the Commission Against Corruption (known by its Portuguese acronym CCAC). The CCAC’s highest profile case was Macau Transport and Public Works Secretary Ao Man Long’s 27-year prison sentence in 2008. Ao was convicted of accepting bribes from real estate and construction companies in exchange for contract approvals in 20 public works projects.

Until 2009, the CCAC's overall effectiveness remained constrained by legislation limiting the scope of its authority to government-sector corruption. In August 2009, the Legislative Assembly passed an amendment that empowered the CCAC to also investigate private-sector corruption.

Bilateral Investment Agreements

Macau has signed investment protection agreements with Portugal and the Netherlands.

OPIC and Other Investment Insurance Programs

Overseas Private Investment Corporation (OPIC) coverage is not available in Macau.


Macau's unemployment rate in October 2011 was 2.4 percent, down from a high of 6.1 percent in 2003, primarily due to the increase in gaming facilities and hotels. Foreign businesses cite the constant shortage of skilled workers – a result of the past decade’s boom in entertainment facilities – as a top constraint on their operations and future expansion. The government is studying proposals to resolve the human resources problem. For example, Macau has labor importation schemes for unskilled and skilled workers who cannot be recruited locally. In November 2011, Macau Chief Executive Fernando Chui announced that the GOM had submitted a request to the Central Government to allow the importation of domestic helpers from Mainland China.

The GOM has also put measures in place to replace some foreign workers with Macau residents. In 2009, the Legislative Assembly passed a bill that established criminal penalties for employers of illegal migrants and prevented foreign workers from changing employers in Macau. The Government has used the proceeds of a tax on the import of temporary workers for retraining local unemployed people.

Foreign-Trade Zones/Free Ports

Macau is a free port; however, there are four types of dutiable commodities: liquors, tobacco, vehicles, and petrol. Licenses must be obtained from the Economic Service Bureau prior to importation.

There are a number of significant infrastructure projects in Macau, including:

-Light Rail Transit (LTR) System: In 2003, the Macau Government proposed to build a 21-km LTR, which will connect Macau Peninsula, Taipa, and Cotai with 21 stations to relieve traffic congestion. After years of research, the GOM commenced the first phase in November 2011. The GOM expects to complete the LTR by February 2015 and to increase the number of passengers from 8,000 in the early stage of operation to 14,200 by 2020.

-Hong Kong-Zhuhai-Macau Bridge: The construction of the Macau section of the 29-km bridge started in December 2009. The bridge is expected to better link Hong Kong, Zhuhai, and Macau with the less developed western part of the Pearl River Delta region. The bridge is scheduled for completion in 2016.

-Pac On Ferry Terminal: A new ferry terminal at Taipa is due for completion in mid-2013. It will become Macau’s main maritime border crossing with a capacity for 15 million passengers a year.

Foreign Direct Investment Statistics

According to the Direct Investment Statistics 2010 compiled by the Statistics and Census Service, there were 1,896 foreign direct investment companies in Macau, employing 98,933 workers. Hong Kong was the largest foreign investor in Macau, accounting for 37.5 percent of total foreign direct investment. Officially, the United States now exceeds Mainland China as the third largest foreign investor in Macau, accounting for 16.2 percent of foreign direct investment (US$2.2 billion). Some observers, however, have estimated the figure of U.S. investment to be as high as US $8 billion. Major U.S. investments include the hotels and casinos operated by Sands, Wynn, and MGM.

Table 1: Stock of foreign direct investment by country/territory, 2010


US$ Million

% Share of Total

Hong Kong



Cayman Islands



United States






British Virgin Islands









Source: Statistics and Census Service

Table 2: Stock of foreign direct investment by industry, 2010


US$ Million

% of Total




Banks and securities



Wholesale and retail






Industrial production






Transport, storage and communications



Hotels and restaurants



Cultural, recreational and other services






Sources: Statistics and Census Service
Note: Total does not sum due to rounding.

Web Resources

Macao Special Administrative Region Government: www.gov.mo

Macao Trade and Investment Promotion Institute – IPIM: www.ipim.gov.mo

Macau Fair & Trade Association: www.macaufta.com

Macau Government Tourist Office: www.macautourism.gov.mo

World Trade Centre Macau: www.wtc-macau.com

Monetary Authority of Macao: www.amcm.gov.mo

Commission Against Corruption of Macau – CCAC: hwww.ccac.org.mo