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C O N F I D E N T I A L SECTION 01 OF 02 HONG KONG 001281 
 
SIPDIS 
 
E.O. 12958: DECL: 07/14/2014 
TAGS: PGOV PREL ECON EINV CH HK MC
SUBJECT: CONSUL GENERAL'S FAREWELL CALL ON MACAU SECRETARY 
FOR ECONOMY AND FINANCE FRANCIS TAM 
 
REF: HONG KONG 1246 
 
Classified By: CONSUL GENERAL JOE DONOVAN FOR REASONS 1.4(B) AND (D) 
 
1.(C) Summary.  In the Consul General's farewell call on 
Macau Secretary for Economy and Finance Francis Tam July 13, 
Tam expressed appreciation for the role of U.S. foreign 
investment in Macau's economy and said that despite the drop 
in gaming revenues, Macau expects to have a balanced budget 
this year.  Macau has maintained a low (3.5 percent) 
unemployment rate largely by sending roughly 20,000 foreign 
workers home as construction projects have been suspended or 
canceled. Beijing's decision to permit the University of 
Macau to construct a new campus on Guangdong Province's 
Hengqin island was a "breakthrough."  Acknowledging earlier 
widespread speculation that he would run for Chief Executive 
to replace outgoing CE Edmund Ho, Tam wryly noted that his 
choice not to run (against Fernando Chui) "was more than a 
personal decision."  One major challenge Chui will face is 
inevitable comparisons Macau residents will make with 
outgoing CE Edmund Ho.  Looking to the future, Tam said Macau 
must further develop its convention, exhibition and cultural 
tourism while avoiding pressure to diversify into areas where 
it has no expertise. End summary. 
 
Despite Downturn, Macau Finances in Good Shape 
--------------------------------------------- - 
 
2.(C) In the Consul General's farewell call on Macau 
Secretary for Economy and Finance Francis Tam Pak Yuen on 
July 13, the CG complimented Tam and the Macau Special 
Administrative Region Government (MSARG) for policies that 
have led to dramatic economic growth and progress over the 
past several years and expressed appreciation for Tam's work 
in strengthening U.S.-Macau economic ties.  Tam thanked the 
CG for his support.  Turning to the important role of foreign 
investment in Macau's economy, he said that with the support 
of U.S. companies, "Macau has been doing very well." Despite 
the global economic downturn, Macau is "still doing ok," with 
an unemployment rate of around 3.5 percent.  Tam admitted 
that one of the reasons unemployment has remained low is the 
MSARG's policy of protecting local workers by sending foreign 
workers home.  On the fiscal side, although gaming revenues 
have dropped by 12 percent in the first six months of 2009 
over the same period last year, Tam expects Macau will have a 
balanced budget for the year, and for the next several years 
"will still be ok."  (Note:  Thanks to a flood of 
gaming-related income and limited spending capacity, Macau's 
tax revenues have been double its expenditures for the past 
two years.  Plans to spend more on infrastructure and social 
services in 2009 are only slowly being implemented.  End 
note.) 
 
3.(C) In response to the CG's observation that some U.S. 
casino operators in Macau are struggling, Tam said he hoped 
that as the global economy improves, "people like (Las Vegas 
Sands Chairman) Sheldon Adelson will be able to raise 
additional funds in the capital markets."  (Note: 
International press is reporting that Las Vegas Sands is 
planning to restart two stalled projects in Macau and is 
exploring options to raise several billion U.S. dollars, 
possibly through an initial public offering in Hong Kong or 
sale of some of the company's Macau assets.  End note.)  He 
noted that Macau companies had "only" cut about 20,000 of the 
roughly 100,000 foreign workers employed in the territory. 
About 15,000 of that number were involved in construction 
projects which were shelved or postponed. 
 
University of Macau's Hengqin Expansion a Breakthrough 
--------------------------------------------- -------- 
 
¶4. (C) Tam described as a "breakthrough" China's recent 
decision to allow Macau to lease 1.1 square kilometers of 
land on adjacent Hengqin Island in Zhuhai to build a new 
campus for the University of Macau (reftel).  Tam opined that 
it would have been much more difficult if Macau had attempted 
to get permission from the central government to develop a 
for-profit project on Hengqin.  He stressed that Macau needs 
more land, and "a university is something everyone can 
support." 
 
Mum on Future Plans; CE Ho A Tough Act To Follow 
--------------------------------------------- --- 
 
¶5. (C) Tam, 60, said he did not know what his future plans 
would be following the conclusion of Chief Executive Edmund 
Ho's second and final five-year term of office in December. 
Any future government position would depend on the next CE, 
almost certainly former Secretary for Social Affairs and 
Culture Fernando Chui.  Acknowledging the CG's observation 
 
HONG KONG 00001281  002 OF 002 
 
 
that many people in Macau had earlier speculated he might run 
for Chief Executive to replace Ho, Tam shrugged, wryly noting 
that the choice not to run "was more than a personal 
decision."  Asked what Tam felt would be the toughest 
challenges facing Chui, Tam acknowledged that CE Ho would be 
a tough act to follow.  He expressed the hope that Macau 
residents guard against any quick comparisons between Chui 
and outgoing CE Edmund Ho, whom he described as having a very 
strong character.  Much will depend, Tam noted, on who Chui 
selects to head Macau's cabinet agencies. He doubted the 
presumptive CE would name his cabinet before elections for 
Macau's Legislative Assembly on September 20.  Assuming the 
Chief Executive transition process proceeds as expected, Chui 
will be "elected" by a 300-member selection committee on July 
26, approved by Beijing thereafter, and will take office 
December 20. 
 
Macau Should Focus on Improving Tourism Sectors 
--------------------------------------------- -- 
 
¶6. (C) Asked what Macau can do to diversify its economy, Tam 
said that as a small economy heavily dependent on gaming and 
tourism Macau has little flexibility.  It must be realistic 
and work to do well what it can do.  This, Tam said, means 
further developing convention, exhibition and cultural 
tourism.  It does not mean trying to return to textiles, 
which long ago left Macau for lower cost locations in the 
mainland and elsewhere, or trying to develop high technology, 
Tam continued.  While various members of the community are 
always pressing for Macau to diversify, Tam recognized this 
is not a simple thing to do. 
DONOVAN