Chief Executive of Macao Special Administration Region (SAR) Ho Hau Wah yesterday delivered his policy address for the fiscal year 2009, which highlighted the SAR government's bid to secure the stable development of local economy amid global finance crisis.

Ho said in the address that due to the impact of the financial crisis, the SAR will unavoidably be affected, since Macao's service-oriented economy is highly depended on the external economic environment, and the gaming industry, the pillar of its economy, is undergoing changes that affect the casino revenues.

To boost the sustainable development of local economy, Ho said the SAR government will increase public investment, including the construction of light rail transit system, building more public residential houses, launching the landscape works of the city's World Heritage sites.

He also said that a total of 10.2 billion patacas (US$1.28 billion) will be invested in these infrastructure projects.

Figures released from the SAR's Statistics and Census Service (DSEC) indicated that Macao's GDP for the first half of this year grew by 26.1 percent year-on-year, and the city's inflation rate stood at 9.07 percent, an increase of 3.13 percentage points over the same period of last year.

Although various sectors of the SAR will be influenced by the downturn, the economy will remain relatively stable and as further implementation of CEPA (Closer Economic Partnership Arrangement), an agreement signed between Macao and the mainland authorities on opening the market for the SAR products and services, still provides new opportunities to Macao's enterprises, Ho said.

Ho also stressed the importance of local SMEs (small and medium enterprises) in maintaining the economic stability, and the SAR government has planned to allocate some 1.5 billion patacas (US$188 million) to the city's commercial and industrial development fund, allowing it to help, with sufficient resources, local SMEs overcome the difficulties caused by the slowing down economic development.

Meanwhile, the government will proposed to the SAR's Legislative Assembly that the government's guarantee of bank loans to the SMEs be increased to 3.5 billion patacas (US$438 million), in a bid to help the SMEs maintain their regular operations.

As for the welfares of the local residents, the SAR government will introduce a package of measures with the aim to ease the locals' pressures from the financial crisis. These measures include, tax breaks in various fields, transitional housing subsidies, income subsidies and textbook allowances, and medical subsidies.

In addition, Ho also announced that the government will continue its cash handout program targeting local permanent and non-permanent residents next year, so that the people can "share the benefits of the SAR's economic development". The SAR government has granted 5,000 patacas (US$625)and 3,000 (US$375)patacas respectively to each of the city's permanent residents and non-permanent residents this year.

The cash handout and other subsidizing measures is not just "giving out money", but also a move by the government to stimulate local consumption, which will prevent the further shrinkage of the small scale market Macao has, as a result, soothing the pressures on the operations of local SMEs, Ho explained at a press conference ensuing his policy address at the Assembly.

With a total population of over 530,000, the SAR logged a relatively low unemployment rate of 3.1 percent in September 2008,according to the figures from the DSEC. However, worries of mass lay-off triggered by the economic downturn still exist.

The chief executive promised that the government will further slash the number of imported workers next year, which will mostly concern the large gaming companies that operate casinos in Macao.

As for the SAR's gaming industry which is at the core of its economy, Ho said that he expect the average monthly casino revenue for next year will stand at 7 billion patacas (US$875 million). The figure is lower than the 8 billion patacas (US$1 billion) recorded in this year.

He noted that the gaming operators are set to face operational difficulties, due to the market shrinkage and the government demand of guaranteeing local employment that renders their running costs high. He said the government will discuss the issue with the operators and figure out a reasonable solution to the issues, but "we believe the revision of gaming taxes are the only thing that is not being considered at present, which is a matter of principle."

Under the SAR's relevant laws, the six licensed gaming operators in Macao is obliged to pay 35 percent of its income as direct gaming taxes to the SAR government. Earlier this year, some of the operators have called for the reduction of these taxes.

Ho said that the downturn will not sweepingly affect the SAR's gaming industry. "People will come to play (in the casinos), be it in a good or bad economic environment, which is a trend, and...the same situation exists in the world's other gaming hubs."