Scarce land resources and escalating rental costs in Macau are prompting several firms from the gambling enclave to look at Hengqin Island in Zhuhai across the border in the mainland as a good place to launch new start-up ventures and expansion projects.
Providing encouragement to these firms is none other than Macau authorities, as they realize the limitations of their own territory and also recognize the need to nurture new businesses to diversify the Macau economy, which has been relying far too much on the gaming sector.
In keeping with the goal, the Macau Trade and Investment Promotion Institute said on Monday that it will recommend 33 out of 87 applicants to set up businesses on Hengqin Island, taking advantage of the concessions and incentives offered by the special development zone.
After the recommendation from Macau authorities, the administrative committee of the Hengqin New Area will decide on the size and location of the land plots to be granted to the applicants – if they are given any — in the Guangdong-Macau Cooperation Industrial Park.
The Park is coming up on five square kilometers of land located at different areas of Hengqin Island, in an initiative aimed at helping Macau diversify its economy.
Among the 33 successful applications in Macau, 10 are from the culture and creativity, leisure and tourism industries; eight from the logistics and commercial industry; and three from the scientific research sector. Among the others, one falls under the medicine and high technology category.
Future Bright Holdings (00703.HK), a restaurant operator and property investor in Macau and mainland China, has got the top score of 628 among all the applicants. The company’s proposal involves building a food plaza in the Henqin special zone.
“The capital expenditure is expected to be 1.2 billion yuan (US$192.80 million). But it’s subject to change, depending on the size of the land plot that we’ll be granted,’ Future Bright’s managing director Chan Chak-mo told the Hong Kong Economic Journal’s EJ Insight.
“Hengqin is very important to Macau’s future development,” Chan said, citing the limited room for growth in Macau. “Whenever there is a holiday, the San Ma Lo (the main thoroughfare in Macau) is so crowded that you can barely walk in it,” he pointed out.
“A zone in Hengqin will be reserved for hotels and tourism. Theoretically, mainlanders can stay in Hengqin and they can go to Macau to have fun during daytime,” Chan said in an exclusive interview.
Chan, who is also a lawmaker representing the culture and sport functional constituency of Macau, believes tourist arrivals in Macau and Hengqin will get a significant boost when the Hong Kong-Macau-Zhuhai Bridge is finished in 2016 and a city rail linking Guangzhou to Hengqin is completed in 2018.
During its 2013 results announcement last month, Future Bright said it aims to have total gross floor area of some 140,000 square meters on Hengqin for a building complex to house up to 100 restaurants, exhibition hall, offices, warehouses and others.
Approved investors will get land use rights for 40 to 70 years; the land cost under the category of leisure and tourism sector ranges from 1,685 yuan to 3,057 yuan per square meter, the filing says.
Future Bright is also preparing to seize the opportunities arising from new casino-resort projects in Macau’s Cotai district.
“We have started negotiations with large casino operators… We hope we will be able to open about four to five restaurants in the casinos every year until 2018,” Chan said. He dismissed concerns about the business prospects, saying the rewards outweigh the risks.
Future Bright’s profit rose 7.8 percent last year to HK$260.96 million, on revenue of HK$746.54 million.
Treasure Island Entertainment Complex Ltd, a subsidiary of cruise operator Genting Hong Kong (00678.HK), has secured the second highest score of 602 among the Macau project applicants, with its proposal to build a theme park on Hengqin Island. Genting Hong Kong is owned by Malaysian casino mogul Tan Sri Lim Kok Thay.
Treasure Island’s chairman Kwan Yany Yan Chi told the Macau Business Daily earlier this year that his firm plans to invest 30 to 40 billion yuan to develop a theme park in Hengqin.
The investment will be made on more than 20 recreational facilities, which will be built in three phrases and will require at least half a square kilometer of land, according to the report.
If the plan gets the green light from the authorities, it will end up being the largest foreign-funded project in Hengqin.
Treasure Island had also outlined plans to build a boutique hotel on a reclaimed land plot of 8,100 square meters in the Macau peninsula, opposite the famed Casino Lisboa.
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