The City of Macao

Economy

(gov.mo)
Updated: 2009-12-17 11:36

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Manufacturing

The manufacturing industry in Macao is dominated by the textile and garment sector. It is labour-intensive and export-oriented. Most of its products are exported to the United States of America and Europe.

The development of Macao's manufacturing industry dates back to many decades ago, starting with firecrackers and incense. The textile and garment sector began to develop in the 1960s and entered its golden age in the 1970s and the 1980s. Meanwhile, companies manufacturing toys, electronics and artificial flowers also flourished. Entering the 1990s, the manufacturing industry slowed appreciably as Macao felt the impact of economic slowdown in its two major export markets – the United States of America and Europe, as well as rising domestic wages and competitive pricing from newly developing industrial countries.

On 17 October 2003, CEPA was signed in Macao and entered into force on 1 January 2004. Subsequently, six supplementary protocols to CEPA were signed respectively in 2004, 2005, 2006, 2007, 2008 and 2009. The framework of CEPA offers facilitation in three areas of trade: goods, services and investments. Under CEPA, all Macao-originated goods that have established rules of origin are able to enjoy zero-tariff in the Chinese mainland since 1 January 2006, except for goods that are banned from entering the mainland or other restricted goods. At present, Macao and the mainland have established rules of origin for 1,156 kinds of goods, fully covering Macao's major export products. This provides an excellent incentive for local enterprises to enter the mainland market. As for the trade in services and investments, the Chinese mainland has opened up 41 categories of services and nine categories of investments for Macao.

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As the abolishing of export quota in international garment trade in 2005 posed a significant challenge to Macao's manufacturing industry, the MSAR Government had proposed to the central government a plan to build a cross-border industrial zone between Macao and Zhuhai in order to combine the advantages of the two regions. The idea was approved by the State Council on 5 December 2003. The industrial zone sits on reclaimed land between the northwest coast of Macao and Zhuhai's Gongbei district. Phase one of the project has a total area of 400,000 square metres. Some 290,000 square metres of this are in Zhuhai, and 110,000 square metres are in Macao. The Zhuhai-Macao Crossborder Industrial Zone and its round-the-clock customs checkpoint were inaugurated on 8 December 2006. Construction in the Macao part of the zone is proceeding as planned and 34 projects have been launched there. Among these, nine projects have built their own factories while 25 projects have rented factories. These projects range from health food, Chinese and western medicines, garment manufacturing, logistics and warehousing, foodstuffs and beverages, electronic products, gaming equipment, environmental industry, to printing and publishing. Their investors come from Macao, the Chinese mainland, Hong Kong, Taiwan, Portugal, and the USA.

The traditional manufacturing sectors are trying to adapt to the changing economic environment. Their contribution to Macao's GDP is gradually decreasing, down from 10 percent in 1999 to less than 3 percent in 2007. Macao's export value stood at 16.03 billion patacas in 2008, down by 21.6 percent from the previous year due to the global economic slowdown. Macao's export trade in the first nine months of 2009 remained weak, posting a total value of 5.78 billion patacas – down by 55.1 percent from the same period of last year. The United States used to be Macao's biggest export market, but it was surpassed by Hong Kong in the first nine months of 2009: exports to Hong Kong accounted for 37.3 percent of Macao's total export value in the period.

Labour and Employment

Since Macao's return to China, the SAR Government has strived to enhance job opportunities for the workforce, rolling out a series of measures aimed at job training and providing incentives for work. Unemployment rates began to drop since 2000, down from 6.3 percent in 1999 to 4.1 percent in 2005. Thanks to the recent economic boom, Macao's jobless rate has remained at around 3 percent since 2006. Meanwhile the monthly median wage has surged from 4,920 patacas in 1999 to 8,000 patacas in 2008.

In the third quarter of 2009, the total labour force was estimated at 328,000, 3.7 percent of whom were unemployed and 2 percent underemployed. The labour participation rate in the period stood at 72 percent (77.9 percent for male and 66.5 percent for female), while the monthly median wage was 8,500 patacas.