MACAU: LITTLE GOVERNMENT ACTIVITY UNTIL 2010

Status quo from Beijing or Macau governments until 2010 at the earliest but visa and tax changes are looking likely in 2010. 

Our sources are telling us that Beijing wants to be perceived as impartial when it comes to Macau politics.  The visa situation is unlikely to change until well into 2010.  The new Macau government is also likely to remain idle but the good news is that they are becoming increasingly open to reducing the gaming tax rate to remain competitive with Singapore.  We are hearing that LVS will not open in Singapore until April and the Macau government would wait on the tax reduction until then.

We’ve got some pretty good color on government intentions:

  • Investors expecting an immediate visa relaxation by Beijing may be disappointed. We are hearing that the Chinese government wants to sit tight for 4 to 6 months after the new CE takes over later this year so not to show favoritism.  We remain convinced that Beijing wants to control growth in the 5% range and will only tweak the visas to reach that goal.
  • We are now more optimistic about the Macau government lowering the gaming tax rate.  Our government sources indicate that officials are very worried about the Singapore impact.  Macau wouldn’t move until the spring, just a bit ahead of the LVS opening in Singapore.  This would be good news, just maybe not as soon as some were hoping.
  • The new Macau government will be deliberate on implementing any changes.
  • The bad news on the status quo is that Macau hotel casinos are still being forced to reduce the number of foreign employees.  The entertainment divisions are taking the biggest hit which is affecting service issues and potentially could weigh on visitation.  We’ll be following this closely.