MACAU: An Introduction to General Business Law
Overview and Legal System
The Macau Special Administrative Region of the People’s Republic of China (“Macau SAR”) is located in the South China Sea Region, neighbouring the Hong Kong SAR and the city of Zhuhai (Guangdong Province).
The Macau SAR’s population is of about 683,000 inhabitants, in a territory of 33 km2 (12.7 square miles).
Macau SAR’s economy has been heavily reliant on the gaming industry. However, plans to diversify the local economy are being implemented, such as the development of the local financial market, tourism and entertainment (although leveraged on the gaming industry) and international trade and commerce – please see below.
The legal system of the Macau SAR is of civil law based on the rule of law and the prevalence of statute over custom, equity and precedent. It is essentially codified, and its creation was largely an adaptation of the Portuguese legal system (although throughout its 23 years of existence, several important and specific new statutes have been approved). The Basic Law entitles Macau SAR with a high degree of autonomy and self-governance until 2049 under the principle ”one country, two systems”.
Recent Legal and Other Developments
Many relevant changes have been set in motion in the five-year period leading to 2022, in the areas of gaming, financial markets and arbitration, as well as in matters regarding regional integration, which are expected to have an impact on the development of the Macau SAR in the immediate future.
Gaming Industry
In 2022 the Macau SAR’s Legislative Assembly approved an overhaul of the Macau Gaming Law, introducing impactful changes, and revised the entire gaming legal framework, mainly through the approval of the new Gaming Operations Law and its regulation (and also a series of governmental decisions on other gaming-related matters).
These changes are generally oriented towards the sustained development of the local gaming industry, regulating the gaming promoters’ operations in further detail, while enhancing the supervision powers of the regulator and increasing the information and cooperation obligations of all industry operators.
New Gaming Concessions
During 2022 the Macau SAR Government initiated and concluded the tender process for the award of six gaming concessions for a period of ten years. The contracts for the award of the new concessions were signed on 16 December 2022 and entered into force on 1 January 2023.
Under the new concession contracts, the six gaming operators undertook to invest mainly in non-gaming elements of their integrated resorts (such as international tourism; entertainment and performances; conventions and exhibitions; theme parks; sports events; culture and arts; gastronomy; health and wellness; and community and maritime tourism).
Out of a global investment amount of about USD14.8 billion originating from the six gaming concessionaires, 91% is set to be dedicated to these non-gaming elements.
Financial Market
In recent years, the Macau SAR Government has stated that the development of a strong local financial market is one of the avenues for economic diversification. As such, the creation of the Macau SAR’s financial market infrastructure is underway.
In mid-2018, the Macau SAR saw the licensing of the first financial institution for the provision of bond services, through the creation of a trading platform. In late 2021, the Macau SAR Government created the Macau Central Securities Depository and Clearing Limited to provide securities registration, clearing, settlement, depository and related services, in a move that will likely result in international investors, issuers and participants widely recognising the local financial market, especially the established bond market.
Further to this, the Macau Government is conducting the preparatory works for several pieces of legislation that will be the Macau SAR financial market infrastructure, all in line with the highest international standards (influenced by modern European and Asian legislation).
Trust Law
The Macau Trust Law entered into force in December 2022, integrated in the broader strategy of developing the local financial market. While the concept of trust is not absolutely foreign to the local legal system, the purpose of the new law is to grant trusts more practical relevance and allow them to generate and drive immediate growth in the financial services sector. The legislator drew inspiration mostly from trust regulations enacted in China and Japan, but also from the United States of America’s Uniform Trust Code.
Arbitration
The new Macau Arbitration Law entered into force in mid-2020, closely following the UNCITRAL Model Law, in a step towards setting up the Macau SAR as an international commerce and trading platform, with a special focus on the relationship between China and Portuguese-speaking countries. While the Region’s development has been slowed down by pandemic-related restrictions, local institutions and practitioners have been actively seeking and providing training to make sure the local legal market is ready for arbitration (and mediation) work requests, which are expected to increase in the coming post-pandemic years.
The Greater Bay Area
The Guangdong-Hong Kong-Macau Greater Bay Area (“Greater Bay Area” or “GBA”) is a city cluster in the Pan-Pearl River Delta Region, comprising the cities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing and the Hong Kong and Macau Special Administrative Regions.
As a part of the GBA project, the Macau SAR is expected to leverage its unique characteristics to assist in its continued and diversified development: from a global tourism and leisure centre into a training base for tourism education; from a trade platform between China and Portuguese-speaking countries into a conventions and exhibitions hub, commercial services centre, food products distribution centre and financial services platform.
The integration of the GBA cities is expected to continue to advance in the coming years, considering the end of pandemic-related restrictions and all governmental measures towards said purpose.
In parallel, the development of the Guangdong-Macau Intensive Cooperation Zone in Hengqin is also underway.
COVID-19
After being one of the first jurisdictions to implement strict anti-pandemic measures, which were in force between 2020 and 2022, the local government initiated a move to lift restrictions in late 2022, and it is expected that by the end of the first quarter of 2023 such measures will be non-existent or have a very limited practical effect.
Outlook for 2023 and Beyond
Considering the upcoming lift of travel restrictions and the gaming concessionaires’ strong commitment to immediately invest in non-gaming elements, 2023 should mark the beginning of a new development era for the Macau SAR, focused on economic diversification leveraged in the gaming industry: a strategy expected to be implemented during the next ten years.
Gaming operators are expected to promote entertainment and cultural events (such as concerts and theatres) of the highest international standards, to place the Macau SAR in the international arts and culture scene, which will likely develop the Macau SAR into a centre for tourism education, in a process lead by local demand.
The same operators are also expected to further promote the conventions and exhibitions sector, which will likely strengthen the Macau SAR’s role in the international trade and commerce scene.
The necessary infrastructure or hardware is already in place (there are only marginal construction works outstanding, as well as minor renovations to be carried out) and the operators and local government will likely coordinate efforts to ensure all factors align.
On the other hand, the local government is expected to continue implementing legal reforms to enable the Macau SAR to take a more prominent role in the international trade, commerce and finance scene.
According to the five-year plan for economic and social development of the Macau SAR (2021-2025), the next years will see further legislation including the securities law, amendments to financial system act, talent attraction regime, union law and law on use of maritime territory.