Council of the
European Union
Brussels, 15 March 2021
(OR. en)
7034/21
COASI 38
ASIE 9
CFSP/PESC 250
PE 24
WTO 68
COHOM 61
ECOFIN 248
MACAO 1
COVER NOTE
From:
Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director
date of receipt:
12 March 2021
To:
Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council
of the European Union
No. Cion doc.:
JOIN(2021) 5 final
Subject:
JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE
COUNCIL - Macao Special Administrative Region: Annual Report for
2020
Delegations will find attached document JOIN(2021) 5 final.
Encl.: JOIN(2021) 5 final
7034/21
FCA/ar
RELEX.1B
EN
HIGH REPRESENTATIVE
OF THE UNION FOR
EUROPEAN
FOREIGN AFFAIRS AND
COMMISSION
SECURITY POLICY
Brussels, 12.3.2021
JOIN(2021) 5 final
JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
Macao Special Administrative Region:
Annual Report for 2020
EN
EN
JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
MACAO SPECIAL ADMINISTRATIVE REGION:
ANNUAL REPORT FOR 2020
Summary
Since the handover of Macao to the People’s Republic of China in 1999, the European Union
and its Member States have closely followed political and economic developments in the
Macao Special Administrative Region (SAR) under the ‘one country, two systems’ principle.
The EU supports the ‘one country, two systems’ principle and its implementation, and this
annual report on developments in Macao is issued in line with the commitment given to the
European Parliament in 1997.
In 2020, the ‘one country, two systems’ principle continued to be implemented as foreseen in
the Basic Law of Macao.
The rights and fundamental freedoms of the people of Macao continued to be generally
respected and the rule of law was upheld under the ‘one country, two systems’ principle.
Macao’s media continued to express a broad range of views, though there were concerns
about increasing self-censorship.
While the Basic Law and other legislative acts do not provide for the introduction of universal
suffrage, the EU encourages the Macao authorities to foster greater public involvement in
elections for the position of Chief Executive and for the Legislative Assembly.
On the economic front, the government took effective measures to contain the spread of
COVID-19, but the SAR’s economy was heavily impacted by the pandemic and GDP fell
sharply. This is largely explained by the fact that, despite the government’s efforts to diversify
Macao’s economy, it still relies heavily on gaming and tourism. Travel restrictions meant that
a record low number of tourists visited the SAR during the year.
There were some legislative steps forward on important social issues, such as minimum
wages, maternity and paternity leave and laws governing employment agencies.
While the government rolled out support measures for the population and companies, and the
labour market held up well, an economic recovery in the SAR will largely depend on when
and in what numbers mainland Chinese tourists return to Macao. In the longer term, economic
diversification and regional integration remain the key strategies.
I. Political and Social Developments
There were no major changes in the senior ranks of the government of Macao during the
course of the year.
National security remained a prominent issue in the discourse of the Macao government, with
the central government encouraging adjustments to legal and enforcement mechanisms to
1
safeguard national security. In October, the Judiciary Police set up a new national security
unit, consisting of an information division, a crimes investigation division, an operational
support division, a general affairs division, a terrorism crimes alert and investigation division,
and a cybersecurity division. On 16 November, the Chief Executive said in his Policy Address
that the government would formulate a law to protect confidential documents and would draw
up a plan detailing unspecified new procedures in the context of the National Security Law.
At present, there are no indications of plans to emulate the approach taken in Hong Kong in
establishing a mainland law enforcement apparatus in the Macao SAR.
The Chief Executive launched a number of reforms of public administration. He announced
plans to restructure a first batch of government offices, including merging the Education and
Youth Affairs Bureau and the Higher Education Bureau. The government pledged to enhance
digital governance and to improve the recruitment mechanism for civil servants.
The government took steps to strengthen protection of labour rights. The Legislative
Assembly adopted an Employees’ Minimum Wage Law on 16 April and the law came into
force on 1 November, the first such comprehensive minimum wage law in Macao. The law
stipulates that employees in the private sector – except domestic helpers and disabled workers
– must receive a statutory minimum wage of MOP 32 per hour. The minimum wage will be
reviewed every two years, and the government also stated that it would make good on any
shortfall in wages accorded to persons with disabilities.
The Chief Executive indicated that the government would introduce legislation on trade
unions to protect the rights of workers, after the repeated rejection of measures proposed by
pro-democracy lawmakers.
A new law regulating employment agencies was passed on 4 September and will come into
effect in March 2021. The law seeks to protect both potential employees and employers, with
a specific focus on those coming to work from abroad. For example, the fee charged to
potential employees should not exceed half of their first month’s basic salary as stated in their
employment contract.
Statutory maternity leave was increased in 2020 from 56 to 70 days. The new legal provisions
also establish five days of paternity leave, up from two days of leave with no pay. Macao’s
maternity and paternity provisions nonetheless remain ungenerous by global standards.
A new public housing regime became effective in August, and has helped more than 2 200
qualified households to improve their living conditions. An amendment to the Economic
Housing Law adjusted the application process for the Home Ownership Scheme and
established a new resale regime. Additional subsidised housing is also foreseen.
The Macao SAR government took swift and decisive steps to control the spread of COVID-
19, including ordering casinos to suspend operations for two weeks in February and
introducing protective measures when operations resumed. Over 20 million facemasks were
made available to the public at affordable prices under a government scheme. The rules for
entry into Macao were adjusted to prevent the import of cases in the early days of the
pandemic, with the entry of non-Macao residents from overseas destinations barred from 25
2
March. On 4 February, ferry services between Hong Kong and Macao were suspended; on 5
April, bus services between Macao and Hong Kong were suspended until further notice.
The mainland Chinese authorities resumed issuing visas to allow residents to visit Macao for
leisure travel purposes from August. Overall, the COVID-19 outbreak resulted in 46
confirmed cases and no deaths.
In October, in a speech delivered at the opening ceremony of the Legal Year 2020/2021, the
President of the Court of Final Appeal of Macao referred to challenges faced by the SAR’s
legal system. He highlighted the continuing influence of the Portuguese system in the context
of the implementation of ‘one country, two systems’, while also expressing the view that
Macao and Portugal shared different ethical standards, moral values, customs and culture.
The government is continuing to install large numbers of surveillance cameras, with 4 200
cameras expected to be in place by 2028, according to official plans. The authorities argue
that such surveillance is justified because it supports the fight against crime.
Rights, freedoms and equal opportunities
Rights, fundamental freedoms and the rule of law were generally respected to the extent
guaranteed in the Basic Law of Macao and in conformity with the ‘one country, two systems’
principle.
There continue to be no moves to establish an independent human rights body in response to
the recommendation issued by the UN Committee against Torture in December 2015.
Press freedom was generally respected, though self-censorship is a feature of the media
landscape. The Macau Portuguese and English Press Association (AIPIM) released a
statement on 18 March voicing concern at the inclusion of Macao and Hong Kong in the
Central Government’s decision to ban American journalists from three US media outlets from
working in China. The AIPIM statement also raised worries over the negative impact of the
escalating tensions between the United States and China on press freedom.
In October, the early closure without explanation of the World Press Photo Exhibition
2020
prompted statements of concern, including from the AIPIM. The exhibition included
depictions of the social unrest in Hong Kong. The AIPIM stated that ‘If [this] is a result of
pressure related to some photographs on display, then we consider it to be a serious and
worrying incident that signals an erosion of freedom of expression’.
Freedom of assembly continued to be generally respected in Macao
, though the COVID-19
outbreak had an impact on the exercise of various freedoms. The Macao Journalists
Association (AJM) said that government departments should not have cancelled all press
conferences on the grounds of controlling COVID-19. The group urged the Government
Information Bureau to balance the need for a free flow of information with that of combating
the epidemic.
The Public Security Police Force rejected the application from the Democratic Development
Union to organise the annual candlelight vigil to commemorate the Tiananmen crackdown,
3
citing concerns about controlling COVID-19. A separate application to hold a photo
exhibition was also rejected. On the night of 4 June, two daughters of pro-democracy
lawmaker Au Kam San were detained for allegedly holding an illegal gathering. In a report
submitted to the United Nations Human Rights Committee, NGO Macau Conscience
expressed worries that the government was abusing public health concerns to ban all forms of
memorial events.
Macao has not effectively enforced
freedom of association and collective bargaining as
enshrined in International Labour Organisation (ILO) conventions. The EU continues to
encourage Macao to do so, including through the planned legislation on trade unions.
Macao continues to make efforts to address
trafficking in human beings. However, Macao
was placed on the US Tier 2 watch list, with the State Department’s annual report noting that
Macao did not fully meet the minimum standards to eliminate trafficking and that local
authorities had not demonstrated increasing efforts compared to the previous reporting period.
The EU stands ready to intensify cooperation with Macao in this field.
Macao has not yet adopted comprehensive anti-discrimination legislation.
Discrimination on
the grounds of sexual orientation and gender identity continues to cause concern, notably
in employment, education and healthcare.
Macao continued efforts to address
corruption, including through the work of the
Commission Against Corruption (CCAC). The CCAC annual report was released in May
2020, detailing the body’s work to tackle corruption in the public and private sector. The
Chief Executive pledged to improve people’s awareness about clean elections and to ensure
the election of the 7th Legislative Assembly (due to take place in 2021) could be conducted in
a fair, just, open and corruption-free environment.
II. Economic Developments
The COVID-19 pandemic has had a dramatic impact on Macao’s economy. While the
government has successfully kept the pandemic under control in the SAR, the travel and
health restrictions – in both Macao and China – meant that, for most of the year, only a very
limited number of people visited the world’s largest gaming hub.
As a result, Macao’s GDP contracted by 48.1% in first quarter, 68% in the second quarter and
63.8% in the third quarter of 2020 year on year (y-o-y)1. Tourist arrivals fell by 85% during
the year and only 5.9 million visitors entered the SAR (in comparison to 39.4 million in
2019).
Traditionally, about 70% of the tourists visiting Macao are from mainland China, which
means that an economic recovery in the SAR will largely depend on Chinese tourists
returning. The issuance of individual visas for mainland Chinese to enter Macao was largely
suspended in the first half of 2020. Issuances of visas resumed in stages from August and, by
mid-September, they had resumed for the whole of China. While this allowed some
1 These and following are the latest statistics available at the time of writing.
4
improvement in arrival numbers, figures in the latest part of the year remained well below
what is traditionally seen in Macao and were insufficient to guarantee a solid recovery.
Despite the downturn, the labour market held up well and the unemployment rate rose only
moderately to 2.9% in the September to November period (from 1.7% as at the end of 2019)2.
Inflation for the first eleven months was 0.1%.
On the fiscal front, Macao’s government had to draw from its reserves to allow revenue to
meet expenses in the 2020 fiscal year, due to the combination of a weak economy, a decrease
in revenue (including gaming tax revenue) and an increase in public spending. Nonetheless,
the SAR’s fiscal position remains comfortable, with large fiscal reserves still available (MOP
607 billion – EUR 63 billion – as of the end of October).
For businesses in Macao, travel restrictions in and out of the SAR led to additional
operational challenges. This is especially true for foreign companies and residents, as non-
mainland Chinese foreigners have been largely denied entry or re-entry into Macao for most
of the year.
Economic policy Due to the exceptional circumstances, much of the focus in 2020 was on containing the
pandemic and supporting the economy, leading to a series of urgent measures. The
government disbursed a consumption subsidy scheme of MOP 8 000 (EUR 826) per resident,
healthcare vouchers of MOP 600 (EUR 62), and a MOP 15 000 (EUR 1 550) allowance to
eligible local employees and self-employed professionals. It also provided paid training and a
deduction in the salary tax for employees. For businesses, the government temporarily eased
the eligibility criteria for a SME aid scheme and launched a SME bank loan interest subsidy
scheme3. It also exempted businesses from paying the tourism tax, cut the profit tax and
waived various fees. A subsidy scheme was rolled out under the condition that companies
would not lay off employees for a determined period. Altogether, the measures amounted to
an estimated 12% of the SAR’s 2019 GDP4.
The Chief Executive’s
Policy Address for the year 2021 was delivered on 16 November.
Priorities included combating the epidemic – targeting both imported cases and any internal
resurgence – and supporting the economic recovery. Given the structure of the economy, the
recovery depends to a large degree on developments regarding the pandemic. In terms of
economic development, the focus remains on consolidating the tourist and gaming industries
while diversifying the economy and strengthening regional cooperation with the Mainland.
Other priorities include urban development and public administration reform.
In terms of
economic diversification, while progress has been made since the release of the
Five-Year Development Plan (2016-2020), the gaming sector still accounts for about half of
Macao’s GDP (compared to 63% in 2012)5. The SAR’s economy also continues to rely
largely on visitors from the Mainland. The Policy Address therefore reiterated the goal of
2 However, it is worth noting that Macao has a large number of ‘non-resident’ workers who do not have permanent residency in Macao
(around 87 20
0 before COVID), and many of whom commute on a daily basis.
3 Interest subsidy of up to 4 percentage points per year and loan of up to MOP 2 million.
4 Source: IMF
(https://www.imf.org/en/Topics/imf-and-covid19/%20Policy-Responses-to-COVID-19#M). 5 Source: WTO (WTO’s trade policy review of Macao, Report by the Secretariat, November 2020).
5
further encouraging ‘non-gaming’ tourism and developing the industrial sector, the
convention and exhibition industry6, traditional Chinese medicine, the trading sector and the
financial service industry. Providing support to Small and Medium Enterprises and
encouraging innovation are also seen as key to achieving diversification.
With regard to
financial services, a bond market is to be established in the SAR and financial
institutions and insurers from the Mainland are encouraged to set up regional headquarters in
Macao and expand their business in Portuguese-speaking countries.
The circular economy and climate policy remain substantial challenges. During the year,
the government launched a new recycling programme for electronic and electrical devices and
made the pledge to ban the import of Styrofoam utensils in 2021.
Regional cooperation
Integration with the Mainland under the
Guangdong-Hong Kong-Macao Greater Bay Area
(GBA) remains a key priority for Macao’s government.
Within the GBA, Macao aims to
consolidate its position as a world-class tourism and leisure centre and as a commerce, trade
cooperation service and financial services platform, including between China and Portuguese-
speaking countries.
An Amendment to the Agreement on Trade in Services under the Closer Economic
Partnership Arrangement with the Mainland came into effect in June 2020 (having been
signed in November 2019). It further liberalises access to the Mainland for Macao companies
in sectors such as financial, legal, accounting, construction and engineering, cultural, tourism
and distribution services.
Together with Zhuhai, Macao is co-developing the island of
Hengqin, located west of Macao
in Guangdong province. The island provides Macao with additional land that can be used to
promote economic diversification and further integrate Macao within the GBA. It hosts the
campus of the University of Macao and various facilities to develop youth entrepreneurship,
traditional Chinese medicine and other industries. During the year, a proposal for a
Guangdong-Macao Intensive Cooperation Zone in Hengqin was put forward and a task force
was established. A new border checkpoint also became operational during the summer,
allowing for more convenient crossing of the border between Hengqin and Macao. Macao and
Zhuhai signed a contract granting Macao land to develop a residential project for Macao
residents in Hengqin (the ‘Macao New Neighbourhood’ project), further integrating Macao
with the Mainland.
III. EU-Macao Bilateral Relations
In 2020,
the EU remained Macao’s second largest trading partner in goods after
mainland China. The EU was Macao's largest source of imports, accounting for 31% of
Macao’s total imports7. On the other hand, only 1.6% of the SAR’s exports of goods went to
6 The number of events increased by 50% between 2012 and 2019 according to the WTO, before being strongly affected by the pandemic.
7 EU-27 figures.
6
Europe, and the EU continues to maintain long-standing trade surpluses with Macao. An
explanation for this is that Macao’s import demand has grown steadily over the years, in
tandem with the growth of its gaming and tourism sectors, while its manufacturing sector has
shrunk to roughly 1% of GDP.
Bilateral
trade in goods (for the first 11 months) reduced by 37.3% to EUR 702 million in
2020. EU exports to Macao in that period reached EUR 650million, a 37.0% decrease y-o-y,
resulting in a trade surplus of EUR 599 million. Macao remains a growing market for
European luxury goods, and major EU exports included high-end leather goods, clothing,
watches and jewellery, food and beverages, and automobiles.
The EU is Macao’s third-largest foreign investor after Hong Kong and mainland China
(excluding offshore centres). According to Macao statistics, the EU accounted for 5.2% of
total FDI stock in 2019. Portugal alone accounts for 54% of EU investment in Macao.
According to Eurostat, FDI stocks from the EU-27 in Macao reached EUR 342 million in
2019 and EUR 1.93 billion for Macao FDI in the EU.
Due to the pandemic, the
24th EU-Macao Joint Committee meeting, which was due to take
place in 2020, was not held. The meeting is expected to be held in the first half of 2021.
In December 2020, Macao underwent its
Trade Policy Review (TPR) at the WTO. Macao
was recognised as an open economy practising free trade, with all applicable tariffs kept at a
rate of 0% and external trade (goods and services) equivalent to 117.1% of GDP in 2019. The
EU, as a main trading partner of Macao, followed the TPR with attention and contributed a set
of questions. The EU encourages Macao to join the WTO Government Procurement
Agreement (GPA).
Despite the challenging year, the Macao European Chamber of Commerce (MECC) and the
European Chamber of Commerce in Hong Kong (EuroCham HK) jointly coordinated
European participation in the Macao International Trade and Investment Fair (MIF) in
October.
The EU and Macao continued their longstanding cooperation in the field of interpreter
training, despite the COVID-19 pandemic in 2020. Pedagogical assistance, delivered by
trainers from the Directorate General for Interpretation of the European Commission to the
Macao Polytechnic Institute, took the form of virtual classes and remote training as well as
online seminars for course leaders.
The Government of Macao provided a final report in March 2020 on the
3rd Macao-EU
Cooperation Programme in the Legal Field, covering the period 2015-2019. The
programme has contributed to the modernisation and development of Macao’s legal system,
and the EU and Macao are discussing the possibility of further collaboration in this field.
7
Document Outline
- The Macao SAR government took swift and decisive steps to control the spread of COVID-19, including ordering casinos to suspend operations for two weeks in February and introducing protective measures when operations resumed. Over 20 million facemasks...
- The mainland Chinese authorities resumed issuing visas to allow residents to visit Macao for leisure travel purposes from August. Overall, the COVID-19 outbreak resulted in 46 confirmed cases and no deaths.
- In October, in a speech delivered at the opening ceremony of the Legal Year 2020/2021, the President of the Court of Final Appeal of Macao referred to challenges faced by the SAR’s legal system. He highlighted the continuing influence of the Portugues...
- Rights, freedoms and equal opportunities
- Rights, fundamental freedoms and the rule of law were generally respected to the extent guaranteed in the Basic Law of Macao and in conformity with the ‘one country, two systems’ principle.
- There continue to be no moves to establish an independent human rights body in response to the recommendation issued by the UN Committee against Torture in December 2015.
- Press freedom was generally respected, though self-censorship is a feature of the media landscape. The Macau Portuguese and English Press Association (AIPIM) released a statement on 18 March voicing concern at the inclusion of Macao and Hong Kong in t...
- Macao continues to make efforts to address trafficking in human beings. However, Macao was placed on the US Tier 2 watch list, with the State Department’s annual report noting that Macao did not fully meet the minimum standards to eliminate traffickin...
- Macao has not yet adopted comprehensive anti-discrimination legislation. Discrimination on the grounds of sexual orientation and gender identity continues to cause concern, notably in employment, education and healthcare.