Reported by Tian Jing, a journalist from Southern Finance Media, and Wang Zitong, an intern. Sent from Macau.
Recently, the Statistics and Census Service of Macau released the "2021 Direct Investment Statistics" report. The statistics show that in 2021, foreign direct investment inflows into Macau totaled MOP 38.2 billion, and the total investment return of foreign direct investors for the year, including post-tax profits and interest income, was MOP 15.94 billion. As of the end of 2021, the cumulative total of foreign direct investment in Macau was MOP 333.76 billion, an annual increase of 12.4%.
Regarding overseas investment, Macau companies invested MOP 25.78 billion overseas in 2021, with an investment return of MOP 880 million. As of the end of 2021, the cumulative total of overseas direct investment increased by 36.1% YoY to MOP 99.94 billion. Among them, the cumulative total of direct investment in the Mainland of China was MOP 75.62 billion, an annual increase of 16.7%, mainly concentrated in Guangdong Province.
Some interviewees pointed out that in 2021, Macau's attraction of foreign direct investment has recovered to 70% of pre-pandemic levels, and that Macau's unique advantage in attracting Mainland investment is apparent. On the other hand, as the development of the Hengqin-Macau integration progresses, Macau companies' total direct investment in Hengqin has grown nearly 43 times from 2014. Interviewees expressed their belief that with the advancement of the construction of the Guangdong-Hong Kong-Macau Greater Bay Area, the mutual foreign direct investment between Macau and the urban agglomeration of the Greater Bay Area will surely double in the future.
Mainland China's investment in Macau reaches its highest in a decade
The "2021 Direct Investment Statistics" report also pointed out that the amount of Chinese mainland investment in Macau reached the highest level in ten years. In 2021, the total foreign direct investment inflows into Macau amounted to MOP 38.2 billion, and as of the end of that year, the cumulative total of foreign direct investment in Macau was MOP 333.76 billion, with an annual increase of 12.4%.
Ng Wai Ian, the president of the Macau International Investment Association, told Southern Finance reporters that in 2021, Macau's foreign direct investment has recovered to 70% of pre-pandemic levels, showing a trend of fluctuating recovery.
Southern Finance reporters found that from 2017 to 2021, the five-year period, 2020 was the only year in which foreign direct investment inflows into Macau recorded negative growth.
On December 6th, Tang Kegong, the President of the Macau Management Institute and Chairman of the Macau Political and Economic Research Association, told a reporter from Southern Finance that according to a report from the United Nations Conference on Trade and Development, due to the impact of the epidemic, the global inflow of foreign direct investment sharply decreased in 2020, from USD 1.5 trillion in 2019 to USD 859 billion, a decrease of 42%. The inflow of foreign direct investment in 2020 fell below the bottom after the global financial crisis in 2009, with a decline of over 30%. As an outward-looking micro-economy, the Macau Special Administrative Region was also inevitably affected by the epidemic in 2020. The inflow of foreign direct investment recorded negative due to losses caused by the epidemic's impact on the gaming market.
The Statistics and Census Service of Macau has stated that the inflow of foreign direct investment in Macau has changed from a negative value (-HKD 55.77 billion) in 2020 to a positive value (HKD 38.20 billion) in 2021, mainly due to the increase in loans borrowed by gaming companies from foreign direct investors and overseas counterpart companies.
Tang Kegong said that foreign direct investment has always been regarded as one of the important driving forces for the development of an economy, especially for a micro-economy. Foreign direct investment can make up for the lack of capital accumulation, increase employment, introduce new products and technologies, and generate technology spillover effects.
He believes that there are two major favorable factors for the inflow of foreign direct investment into Macau to turn positive and develop incrementally in 2021. First, the easing of the epidemic and more precise epidemic prevention and control policies have supported the reversal of foreign direct investment in industries including the gaming industry, wholesale and retail industry, and other industries from negative to positive. Second, the "Overall Plan for Hengqin's Deepening Cooperation with Guangdong and Macau" proposed in 2021 has put forward the development of four new industries and introduced a series of policies and measures to attract investment and talent, creating more favorable conditions for the Macau Special Administrative Region to attract inflows of foreign direct investment in industries such as banking and construction.
According to the direct source of investment statistics, funds mainly come from the British Virgin Islands (HKD 18.39 billion), Hong Kong (HKD 11.95 billion), and mainland China (HKD 9.53 billion). It was discovered by Southern Finance reporters that the mainland's investment in Macau in 2021 reached its highest value in ten years. The inflow of foreign direct investment from mainland China changed from a negative value (-HKD 1.07 billion) in 2020 to a positive value (HKD 9.53 billion) in 2021, mainly due to the increase in the inflow of foreign direct investment in wholesale and retail industries and the banking industry.
(Investment inflows from the mainland to Macau from 2012 to 2021. Wang Zitong/graphics)
It is worth noting that the direct investment flow from mainland cities in the Greater Bay Area for the full year of 2021 has turned from negative value of -1.52 billion yuan in 2020 to a positive value of 680 million yuan. Specifically, in 2020, the direct investment flow from mainland cities in the Greater Bay Area recorded a negative value for the first time since relevant statistics have been kept in 2015, which is attributed to industries including wholesale and retail and insurance that have also suffered losses.
Ng Wai Ian stated that compared to other cities in the Greater Bay Area, Macau's attraction for mainland investments mainly lies in three aspects, namely its unique historical background, rich social and cultural heritage, and convenience in exploring the ASEAN market. As a bridge between the East and West, Macau can more accurately connect the mainland with Portuguese-speaking and EU countries, promoting bilateral and multilateral trade and investment through the Portuguese language platform to facilitate Chinese enterprises’ “going out” and international investors' “coming in,” especially for Portuguese-speaking and EU countries in investing and trading with China. In addition, Macau has a huge network of returned overseas Chinese and their families, which facilitates the exploration of the ASEAN market. The network of returned overseas Chinese and their families among Macau residents also gives Macau a unique advantage in participating in investment and development in ASEAN countries.
By industry, the foreign direct investment inflows into the gaming industry, financial industry, and wholesale and retail industry in 2021 were 16.96 billion yuan, 14.93 billion yuan, and 4.74 billion yuan, respectively. According to calculations by Nandu Finance reporters, the foreign direct investment inflows into the gaming industry, financial industry, and wholesale and retail industry in 2021 accounted for 44.40%, 39.08%, and 12.41% of the total foreign direct investment flow that year, respectively.
Of note is that foreign direct investment flows into the financial industry in Macau have shown an upward trend year by year, increasing threefold from 53.7 billion yuan in 2017 to 149.3 billion yuan in 2021.
Ng Wai Ian stated that the significant growth in the data of the financial industry and wholesale and retail industry is mainly due to policy guidance and the demand for the transformation and upgrading of Macau's social and industrial diversification. He expressed that the future will continue to look promising for the steady development of Macau's financial industry and wholesale and retail industry.
Zenta Group was previously known as Doumen Enterprise Group.
The journalist from SCJ found that there have been significant fluctuations in the foreign investment inflows into Macau's gaming industry over the past 5 years. For the period between 2017 and 2021, the foreign investment inflows into Macau's gaming industry were -4.007 billion yuan, 18.972 billion yuan, 43.307 billion yuan, -60.094 billion yuan, and 16.961 billion yuan, respectively.
Ng Wai Ian analyzed that the data on foreign investment in the gaming industry is affected by various factors. From the demand side, the proportion of tourist gambling has decreased, the source markets have shrunk, and there is increased competition from overseas gaming industries, which further limits the growth of the gaming and tourism markets. From the supply side, although the gaming industry and related industries such as exhibitions and leisure are still the mainstays of the economy, society, and fiscal tax revenue, the future development path for Macau's economy is diversified development. The integration of Macau and Hengqin will guide the Macau economy from a single industry to a diversified one and gradually reduce its dependence on the gaming industry in fiscal and livelihood aspects. "I believe that the proportion of foreign investment in Macau's gaming industry may shrink in the future."
According to statistics, the investment return of foreign investors in 2021 (including post-tax profits and interest income, etc.) was 15.94 billion yuan, wherein the profitability of foreign capital in the financial industry, wholesale and retail industries, and real estate development and leasing industries increased by 98.3%, 285.9%, and 70.6% annually. By region, investment returns from direct investment from the mainland increased by 27.8% annually to 14.59 billion yuan, mainly due to increased profits in the banking industry. In 2021, the banking industry's direct foreign investment mainly came from the mainland, totaling 529.4 billion yuan, an increase of 6.5% annually, accounting for 67.0% of the cumulative total of the banking industry.
The data shows that in terms of overseas investment, Macau companies invested a total of 25.78 billion yuan in overseas direct investment in 2021, increasing by 183.8% annually. The return on direct overseas investment was 880 million yuan, whereas it generated a loss of 410 million yuan in the same period last year.
As of the end of 2021, Macau companies' cumulative direct overseas investment increased by 36.1% annually to 999.4 billion yuan, and the cumulative total of direct overseas investment in the mainland was 756.2 billion yuan, mainly concentrated in Guangdong Province, accounting for 79.7%.
（2021年澳門企業在大灣區內地城市直接投資累計總額占比。王梓同/製圖）
Among them, Macau companies' cumulative direct investment in mainland cities in the Greater Bay Area increased annually by 18.5% to 596.4 billion yuan, accounting for 78.9% of the total. Among them, investment in Zhuhai increased by 21.2% to 438.7 billion yuan, with Hengqin increasing by 26.6% to 366.6 billion yuan, Guangzhou increasing by 11.5% to 6.10 billion yuan, and Zhongshan increasing by 6.4% to 3.29 billion yuan.
Ng Wai Ian believes that compared with other destinations, the mainland market not only has a complete industrial chain and supply chain system, a continuously optimized business and investment environment, and an improving innovation capability but also has broad market space in areas such as new energy and new infrastructure. It is the most potential and valuable investment market globally.
Since the statistics on Macau companies' cumulative direct investment in Hengqin were made in 2014, their cumulative direct investment increased nearly 43 times over an eight-year period from 840 million yuan to 36.66 billion yuan.
（2014年-2021年澳門企業在橫琴直接投資累計總額。王梓同/製圖）
"For Macau's capital, integrating into the country's development is not only the direction encouraged by policies but also an important direction for the moderate and diversified development of Macau's economy. Hengqin-Macao deep cooperation zone has launched multiple financial industry development support policies, continuously innovated cross-border financial services, encouraged the deep linkage of the financial industries between Hengqin and Macau, and continuously attracted financial 'vitality.' The financial industry has become one of the important engines driving Macau's economic growth, and it is an overall trend for Macau companies to continue to increase investment in the mainland," said Ng Wai Ian.
Tang Jizong believes that with the construction process of the Greater Bay Area, the two-way direct foreign investment between Macau and the urban clusters of mainland cities in the Greater Bay Area will double.
(Author: Tian Jing; Editor: He Jia)
