VZCZCXRO7729
PP RUEHCN RUEHGH
DE RUEHHK #0013 0030949
ZNR UUUUU ZZH
P 030949Z JAN 07
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 9989
RUCPDOC/USDOC WASHDC PRIORITY
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 0008
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHCN/AMCONSUL CHENGDU 1011
RUEHGZ/AMCONSUL GUANGZHOU 0304
RUEHGH/AMCONSUL SHANGHAI
RUEHSH/AMCONSUL SHENYANG 3478
RUEHIN/AIT TAIPEI 4321

UNCLAS HONG KONG 000013 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
STATE FOR EB/TPP 
STATE PASS USTR STRATFORD/WINTERS/CELICO 
USDOC ITA LAVIN/MACQUEEN 
TREASURY FOR LEVY/GLASER/SHARMA 
 
E.O. 12958: N/A 
TAGS: ECON ELAB ETRD MC
SUBJECT: U/S LAVIN DISCUSSES MACAU DEVELOPMENT WITH ACTING 
CHIEF EXECUTIVE CHAN 
 
 ¶1. (SBU) SUMMARY:  Department of Commerce Under Secretary 
for International Trade Franklin L. Lavin met with Macau's 
Acting Chief Executive Florinda Chan on December 9.  Chief 
Executive Edmund Ho was reportedly attending an economic 
conference in Guangzhou. Lavin and Chan discussed the 
liberalization of Macau's gaming sector, the growth in 
tourism and gambling, financial sector regulation, and the 
sanctioning of Banco Delta Asia.  END SUMMARY. 
 
¶2. (SBU) Lavin congratulated Chan on the liberalization of 
Macau's gaming sector, which allows U.S. firms to enter the 
market and has led to explosive growth in tourism, gaming, 
hospitality, and retail.  Chan welcomed increasing U.S. 
investment and tourism; she noted that Macau's 2006 GDP is 
expected to show double digit increases.  Many analysts 
forecast 15% growth over 2005 figures, totaling approximately 
100 billion patacas (US$13 billion).  The Macau Special 
Administrative Region government (MSARG) budget also will 
increase from 25 billion patacas (US$3.2 billion) in 2006 to 
30 billion patacas (US$3.8 billion) in 2007.  This rapid 
growth is forcing Macau to import approximately 50,000 day 
laborers from mainland China as Macau's indigenous labor 
force only totals 220,000.  Small entrepreneurs are learning 
to cope with both labor shortages and increasing property 
rents. (Septel will describe Macau's economic growth and 
development in greater detail). 
 
¶3. (SBU) Lavin asked Chan to describe MSARG's efforts to 
regulate the financial sector - specifically the casino 
industry - and how Macau benchmarks these efforts.  Chan 
replied that MSARG is finalizing legislation and training law 
enforcement authorities to upgrade regulatory capabilities. 
In March 2006, the MSARG passed both anti-money laundering 
and anti-terrorism finance legislation, which is being 
implemented.  The MSARG established a Financial Intelligence 
Unit in 2006, participates as a member of the Asia Pacific 
Group, and maintains a cooperative relationship with mainland 
China and Hong Kong monetary authorities.  Chan added that 
Lavin's visit coincided with a mutual review of Macau by the 
Asia Pacific Group. 
 
¶4. (SBU) Lavin queried Chan for Macau's reaction to the 
sanctions imposed by the U.S. on Banco Delta Asia (BDA). 
Chan replied that the MSARG continues its close cooperation 
with the United States, Hong Kong and mainland China.  She 
stated that Macau is under great pressure - "not just 
economic" - to resolve the BDA situation. 
 
¶5. (SBU) Lavin stated that increasing amounts of money will 
soon pass through Macau, some of which will be dirty money. 
He noted that money launderers will seek to exploit Macau, 
particularly if neighboring jurisdictions have tougher 
financial oversight regimes than does Macau.  He added that 
U.S. financial enterprises and casinos operate under national 
and international regulatory controls, which may be helpful 
to the MSARG.  Chan added that U.S. institutions in Macau 
have to follow Macau law. 
 
¶6. (U) This report was cleared by U/S Lavin's staff. 
Sakaue