21 August 2019
Macau cannot rely on Hengqin to diversify its economy, according to some sources. Photo: Bloomberg
Macau cannot rely on Hengqin to diversify its economy, according to some sources. Photo: Bloomberg

Macau and Hengqin: So close, so far apart

So near each other, Macau and Hengqin might as well have been born joined at the hips.

Separated by a narrow causeway and linked by a 1.78 kilometer bridge, they’re as close as any two land masses could get geographically.

Economically, the two neighbors – a gaming behemoth and an emerging powerhouse off the coast of Zhuhai in Guangdong province – could be more intertwined.

In reality, however, they’re as far apart as it gets, and the problem could be a simple matter of miscommunication.

“There’s a communication problem between the Macau and Zhuhai governments,” said Simon Ho, president of Hang Seng Management College and former vice rector of academic affairs of the University of Macau.

Macau missed many opportunities by not raising its concerns with Zhuhai during the early stage of Hengqing’s development as a special economic zone, Ho said.

Imperfect plan

In 2009, the State Council mandated Hengqin to reserve five square kilometers for the Guangdong-Macau Cooperation Industrial Park intended to help the former Portuguese enclave diversify its economy from gaming.

In theory, the plan should have gone off without a hitch. Instead, there are accusations Hengqin is keeping prime sites for itself, leaving inferior plots for Macau companies to build on.

Also, Hengqin’s administrators are being accused of setting the investment bar too high. Macau companies are simply unable to surmount it.

Niu Jing {牛敬}, director of the administrative committee of Hengqin New Area, rejects those claims.

“The State Council mapped out the [development] plan in 2009. It’s not as though it’s only now that we are planning our property development sites,” Niu said.

“There is no such thing as a good plot or a bad plot. Every inch of land in Hengqin is good.”

Hengqin has marked an area near the border with Macau for corporates to develop cross-border services and certain sites for gaming companies to build cultural and technology industries, Niu said.

Companies from Hong Kong, Macau and the mainland are welcome in Hengqin’s innovation and cultural areas, and Macau businesses can have up to five square kilometers as mandated by the central government, he said.

Niu said Hengqin’s 100 million yuan (US$16.06 million) investment threshold is reasonable. In fact, more than 80 Macau companies have already registered.

“They need to meet the investment threshold only if they want land [for development]. If they lease space, there is no threshold and they can come any time.”

Also, he dismissed claims Hengqin is keeping prime areas to make money from land auctions, saying land allocation in the special zone goes through that process, not by reservation.

Scattered pieces

Under a 2011 framework agreement between Guangdong and Macau, the latter can develop Chinese medicine, cultural innovation and tourism service training industries in the Guangdong-Macau Cooperation Industrial Park.

However, the sites are scattered across the 106 sq. km. island, instead of being clustered in a block, undercutting the very idea of integration.

Hengqin appears to be acting in its own economic interests rather than striving to comply with the central government’s plans for Macau’s future, a source familiar with the situation told the Hong Kong Economic Journal’s EJ Insight.

That means Macau cannot rely on Hengqin to diversify its economy, forcing it to seek cooperation with Guangzhou’s Nansha New Area which could offer it more room within its 800 sq. km. borders, the source said.

On Friday, Li Gang, director of the central government’s liaison office in Macau, said the Macau government is in discussion with Nansha and Cuiheng village in Zhongshan for potential acquisition or lease of sites for Macau’s small and medium-sized enterprises.

Fading attraction

Rising land and property prices could make Hengqin less attractive to professionals.

Property prices have been climbing since large business groups such as Shun Tak Holdings Ltd. (00242.HK) and Lai Sun Development Co. Ltd. (00488.HK) acquired land on the island last year.

The floor price is more than 30,000 yuan per square meter in Hengqin, more than double those in other areas in Zhuhai.

Nearly half of Zhuhai’s land auctions come from Hengqin, accounting for more than 80 percent of the city’s land sales revenue, news website reported.

Niu said Hengqin will be hard pressed to control property prices but it will continue to offer incentives in order to attract talent.

These include tax subsidies and affordable apartments for professionals and free apartments for young people in the innovation and advertising industries.

– Contact the reporter at [email protected]


EJ Insight reporter

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