Quora Answer: Could an Independent Macau Surpass Singapore as a Major Technological & Financial Hub in Asia?

The following is my answer to a Quora question: “Could an independent Macau surpass Singapore as a major technological, and financial hub in Asia?”

Before we talk about surpassing, we have to first consider whether Macau has the infrastructure to be a technology or financial hub in the first place.  When we consider the economy, Macau’s gaming industry is, by far, the largest in the world.  It generated US$24 billion in revenue in 2018.  This is about seven times larger than that of Las Vegas.  Accordingly, almost 80% of tax revenue comes from gaming.  As a share of GDP, it is over 60%, and almost 50% of total economic output.  Manufacturing is less than 1% of GDP, from almost 40% in 1980.  This tells us where the focus of the current administration is.

Macau does not have a centralised school system.  It has a hodge podge of systems in Cantonese, Mandarin, and other languages.  There is a lack of technical education centres, trade schools, and accredited institutions of higher learning.  This means Macau does not have the means to churn out an educated workforce for either the finance or the technology sector.  All expertise would have to be imported, which would mean there is a need to build housing, accommodation, and amenities for them. When we consider that the population density is over 21,000 people per square kilometre, and available land area is just under 30 square kilometres, that would be prohibitively expensive.

Macau is also not in a particularly strategic location when it comes to trade, being off the major routes.  When there is trade, there is a need for banking facilities, and that is how financial hubs generally grow.  Macau also has a major rival in Hong Kong, just over 60 km across the Pearl River Delta.  It would make no sense to spend that amount of money developing another banking hub, when Hong Kong is so near.

When we consider the possibility of Macau being a technology hub, it would seem that being at the mouth of the Pearl River Delta, as a Special Administrative Region, should convey some advantages,  But the prohibitive cost of developing the educational and structural base, at the cost of losing gaming revenue, is not an incentive to the current administration.  This is a part of China that is the economic powerhouse of the nation, where the manufacturing and technology sectors are based.  If anything, cities like Shenzhen, where many of China’s technology giants already are, would be more likely, as a technology hub.  There is little incentive for companies such as Huawei and Alibaba to shift to Macau.

Macau, as things stand, is not going to be a financial or technology hub, let alone overtake Singapore.  There are cities in the region better placed for that.  Being independent is not going to change the underlying challenges.  It might make it even more daunting.