Macau Business Law

Macau, a 27 square kilometers territory in south china, bordering Guangdong province and located in the Pearl River delta, west of Hong Kong, is a Chinese territory which administered by Portugal from the sixteenth century until 19 December 1999.

Basically in Macau, the current political and institutional framework, similar to that of Hong Kong, with different legal traditions, both are named as Special Administrative Regions. Based on the 1987 Sino-Portuguese Joint Declaration вЂ" an international treaty between Portugal and China, it applies until 2049. In other words, “remain unchanged for 50 years”, which with the principle “one country, two systems”, and high degree of autonomy are the basic thoughts of Basic Law.

In this report, I will mainly analyze the economy changes comparisons before and after the returning of Macau by using the economy concept of Basic Law. In the chapter 5 of the Basic Law, there are 18 articles which stated kinds of, which ensure the economy of Macau can stably developing. As we knows, Economy is the large set of inter-related economic production and consumption activities which aid in determining how scarce resources are allocated, while Economic system is the system of production and distribution and consumption.

Macau still is one of the most open economies in the world since its reversion to China in 1999. One of the most important reasons is the effects of Basic Law.

The Macau economy is based largely on tourism (including gambling) and textile and fireworks manufacturing. Efforts to diversify have spawned other small industries - toys, artificial flowers, and electronics. Negative growth for 4 years in succession before coming back, although the territory was hit hard by the 1997-98 Asian financial crisis and the global downturn in 2001, its economy grew 10.1% in 2002, 14.2% in 2003, and 28.6% in 2004. Leap-type increases year after year, the local total output value of Macao attracts people's attention, meanwhile, the rate of unemployment of Macao has dropped by a wide margin during 5 years, make the residents of Macau really enjoy the material benefit that the economic growth brings.

During the first three quarters of 2005, Macau registered year-on-year GDP increases of 6.2%. A rapid rise in the number of mainland visitors because of China's easing of travel restrictions, increased public works expenditures, and significant investment inflows associated with the liberalization of Macau's gaming industry drove the four-year recovery. The budget also returned to surplus since 2002 because of the surge in visitors from China and a hike in taxes on gambling profits, which generated about 70% of government revenue. The three companies awarded gambling licenses have pledged to invest $2.2 billion in the territory, which will boost GDP growth. Much of Macau's textile industry may move to the mainland as the Multi-Fiber Agreement is phased out. The territory may have to rely more on gambling and trade-related services to generate growth. Two new casinos were opened by new foreign gambling licensees in 2004; development of new infrastructure and facilities in preparation for Macau's hosting of the 2005 East Asian Games led the construction sector.

The Closer Economic Partnership Agreement (CEPA) between Macau and mainland China that came into effect on 1 January 2004 offers many Macau-made products tariff-free access to the mainland, and the range of products covered by CEPA was expanded on 1 January 2005.

Now let’s see how the Basic Law works:

Article 103 c

The ownership of enterprises and the investments from outside the Region shall be protected by law.

This article has especially stipulated the protection of foreign investment, the region of Macau is narrow and small, resources are scarce, and the dependence on foreign investment is very great. How to absorb foreign investment, how to protect foreign investment, they are the important problems which concern the prosperity and development of Macau. According to the above-mentioned regulations of Basic Law, Macau SAR should makes relevant laws, offer protective policy and measure foreign investment, in order to strengthen investor's confidence , encourage them to come to Macao to make the investment , inject new vigor into development of Macau.

Article 104