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Macau returned to the People's Republic of China (PRC) from Portuguese administration on 20 December 1999. Portuguese seafarers first settled in Macau in the 16th century and Portugal administered the region until the handover to the mainland.
Macau's Basic Law or mini-constitution was promulgated by the PRC's National People's Congress in 1993. It specifies that Macau's social and economic system, lifestyle, rights, and freedoms are to remain unchanged for at least 50 years after the transfer of sovereignty to China.
Under the principle of "one country, two systems", Macau enjoys a high degree of autonomy in all areas except in defence and foreign affairs. The Basic Law provides for an independent executive, legislature and judiciary.
Under Macau's executive led system the Chief Executive (CE) is responsible for implementing the Basic Law and other laws of Macau. The CE makes policy decisions and has the power to initiate legislation. The CE also appoints an Executive Council of between seven and eleven members who are consulted on major policy decisions. The CE is appointed by Beijing after election by a 300-member Election Committee representing Macau's business, cultural and social interests.
CE's are elected for five years and limited to two terms in office. Edmund Ho Hau Wah was Macau's inaugural CE, serving two terms. Dr Fernando Chui Sai On became Macau's second CE on 20 December 2009.
Besides the CE and Executive Council, Macau has a Legislative Assembly which is responsible for general lawmaking, including taxation and passing Macau's budget. The Assembly has 29 members: twelve directly elected, ten indirectly elected members representing functional constituencies and seven members appointed by the CE. Members of the legislature serve four-year terms.
Macau's civil law tradition is inherited from Portugal, though judicial links with Portugal were severed in June 1999. The judiciary comprises a Court of First Instance, a Court of Second Instance, a Court of Final Appeal, a Lower Court and an Administrative Court. Members of the judiciary are selected by an independent committee and appointed by the CE.
While Beijing controls Macau's foreign affairs, as with Hong Kong, Macau has considerable autonomy in some external matters, mainly concerning economic and cultural relations and related agreements. Macau is a member of several international organisations including the World Trade Organization, as a separate customs territory.
Next Legislative Assembly elections are due to be held in 2013 and next CE elections in 2014.
In response his third annual policy address in November 2011 CE Chui announced the government would canvass public opinion on possible changes to the method of electing the Legislative Assembly.
Macau’s Basic Law contains provisions which allow for the electoral system to be changed after 2009. The Basic Law says that any changes to the method of selecting the CE or the Legislative Assembly must be reported to the National People’s Congress Standing Committee for approval. In his announcement CE Chui said the Macau government had sought an interpretation of the Basic Law from the NPC Standing Committee regarding possible electoral reforms.
In late December 2011, the Standing Committee delivered its interpretation, clarifying various issues, including the need for electoral reforms to be cleared by a two-thirds majority of the Legislative Assembly. The Committee highlighted the need for any reforms to be approved by the CE before being forwarded to the NPC Standing Committee for final approval. The Committee also stressed that any final decision on whether reforms were necessary was reserved for the Standing Committee.
After conducting eight consultations in January, the government submitted a report to the National People’s Congress Standing Committee summarising the opinions and submissions received. Media reporting following the consultations indicated that while the majority of residents want reform, opinions differ on the number of directly and indirectly-elected seats to be made available. The NPC is expected to discuss the report in early 2012 after which the Macau government will launch a second consultation period.
Macau has experienced very strong economic growth in recent years, underpinned by liberalisation of the gaming industry and high levels of investment in associated property and tourism infrastructure. Gaming has been licensed in Macau since 1850 and the region is the only part of China where casinos are permitted to operate. The Global Financial Crisis resulted in a severe but short-lived recession with the Macau economy contracting by more than 13 per cent in 2009 then rebounding strongly in 2010. Real GDP then grew by an astonishing 40.2 per cent in the first half of 2010, driven by casino revenue which grew an unprecedented 57.8 per cent over that full year. At that time, and in revenue terms, the Macau gaming market was four times the size of its Las Vegas strip equivalent.
Macau's growth eased in 2011, in part due to the high comparison base against 2010 figures as well as an indirect cooling effect of tightening central government monetary policy. Even so Macau’s real GDP expanded by 21.8 per cent year-on-year in the first three quarters of 2011, driven by gaming (revenue of US$34 billion in 2011, up 42 per cent on the year before) and an associated booming inflow of tourists from the mainland (55 per cent come from China). The Macau government predicts low double-digit growth for 2012. Inflation remains a concern (5.11 per cent in the third quarter of 2011) and is expected to hover between 4‑6 per cent in the first half of 2012.
The gaming industry dominates the local economy to the extent that it accounts for around 20 per cent of local jobs and 85 per cent of government revenue. Traditional industries such as clothing and manufacturing, by contrast, continue to decline. The Macau government aims to diversify the economy and the labour market away from its high level of dependence on gaming and gaming-related employment by stimulating the growth of sectors such as conferences and exhibitions, sport and leisure, and entertainment.
A Closer Economic Partnership Arrangement between Macau and China came into effect in 2004, initially covering select trade in services and investment facilitation. The CEPA now comprises several supplements. Supplement VIII, signed in December 2011, expands the range of services and non-services measures and now includes manufacturing, research and development and culture. There are now a total of 46 liberalised service sectors and 281 liberalisation measures. By the end of the mainland’s 12th five year plan (2011-15) trade in services is expected to be fully liberalised.
China is Macau's principal source of imports and Macau depends on China for most of its food, fresh water, energy and, increasingly for labour. Projects such as the Hong Kong-Macau-Zhuhai bridge, due for completion in 2016, will further connect Macau with the greater Pearl River Delta, reducing travel times and assisting with the flow of goods and labour. The combination of the CEPA, tourism, gaming and the mainland’s decision to ease restrictions on yuan transactions for Macau residents will increases the territory's economic integration with the PRC.
Australia and Macau enjoy good relations at the government and officials levels. The following high-level visits from Australia have taken place since the territory was returned to the mainland:
-- An Australian Parliamentary delegation, led by then Speaker of the House of Representatives Mr Harry Jenkins MP, visited Macau during Easter 2010.
-- Ms Florinda Chan, Secretary for Administration and Justice and deputy to the Chief Executive, visited Australia from 20 to 26 September 2003 to learn of Australia's experience in governance and administrative reform
-- Ms Teresa Gambaro, then Parliamentary Secretary for Foreign Affairs, visited Macau on 27 October 2006 and met Florinda Chan and leading Macau-based Australian executives.
-- Then Trade Minister the Hon Mark Vaile MP visited Macau in May 2000 for an Australian trade promotion.
-- Then Foreign Minister the Hon Alexander Downer MP led a high level Australian delegation to the 1999 handover ceremonies to convey Australia's interest in seeing Macau's "high degree of autonomy" continue in accordance with the Sino-Portuguese Joint Declaration and the Macau Basic Law.
There have also been frequent visits by Australian State Government representatives, including the Lt. Governor of South Australia (December 2009), the South Australian Minister for Infrastructure, Transport and Energy (July 2010) and the Western Australian Minister for Sport, Recreation, Racing and Gaming (October 2010).
Australia has strong business interests in Macau including in the design, construction, project management and fit-out of casinos, marinas and entertainment projects in Macau. Melbourne-based Crown Limited has an interest in the $549 million Altira, which opened in 2007, and the $2.3 billion City of Dreams, which opened in June 2009. Both projects are operated by Melco Crown Entertainment, a joint venture between Crown Limited and Hong Kong-listed Melco Entertainment Limited. The City of Dreams casino currently contributes approximately 18 per cent to Macau’s gaming revenue.
The booming gaming industry is creating opportunities for Australian businesses providing gaming products and services. Aristrocrat has already established itself as the largest provider of gaming machines in Macau. Transcity Asia, a subsidiary of Transcity Group based in Melbourne, opened in Macau in 2010 offering repair and service capability for gaming machines.
Bilateral merchandise trade is modest: in 2010-11 the total volume of merchandise trade was $44 million, down from $54 million in 2009-10. Australian exports account for more than 80 per cent of total two-way merchandise trade. Major items are prams, toys, games and sporting goods; live animals excluding seafood; and curtains and other furnishing articles. Australia's main imports from Macau are medicaments including veterinary and pharmaceutical products.
Trade statistics may understate the true level of exports from Australia to Macau because there are few direct shipping services and many products, especially food and beverages, which are repacked and trans-shipped via Hong Kong, are not recorded as being of Australian origin.
Australia and Macau signed a Tax Information Exchange Agreement on 12 July 2011.
Approximately 2,000 people of Macanese descent live in Australia and around 1,000 Australians live in Macau. Austrade established an office in Macau in July 2005. Consular services are provided by the Australian Consulate-General in Hong Kong.
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