HONG KONG, Aug 11 (Reuters) - Macau’s gambling-reliant economy will come under further strain from the financial crisis, Chinese Premier Wen Jiabao said on Tuesday during a meeting in Beijing to formally appoint Macau’s next leader.
“The financial crisis is continuing to deepen and spread. The difficulties you face are still great,” Wen told Macau’s incoming chief executive, Fernando Chui, who will take up his five-year term on Dec. 20.
Citing a Chinese proverb, Wen said it was important for Chui to start well so that future difficulties could be overcome, with the world’s largest gaming hub hard hit by the downturn and Beijing-imposed visa curbs on Chinese visitors.
“This way, during your term you can overcome all sorts of difficulties,” Wen said, while calling on Chui to unite all sectors in Macau to achieve new results.
Chui, who has pledged to lessen Macau’s overwhelming reliance on gambling sector revenues through “appropriate diversification” of the city’s economy and to clean up Macau’s corruption-tainted image, said he would do his best with the worst not yet over.
“Macau’s economy has been relatively stable, but it has also been impacted to a certain extent. We expect that in the coming period we haven’t yet seen the bottom, so we have to make sure that our work to fight the financial crisis is well done.”
Chui’s comments on Macau’s economic and gaming prospects contrast with the recent bullishness of gaming analysts who expect Macau to recover more swiftly than Las Vegas given its proximity to China and its vast pool of gambling-mad punters.
Macau’s gross gaming revenues, which exceeded those of Las Vegas in late 2006, are expected to rise 11 percent year-on-year in the fourth quarter, according to BNP Paribas.
The former Portuguese colony is unlikely, however, to see a return to the explosive growth rates seen since 2002 when it liberalised its gaming sector and opened up to gaming goliaths like the Las Vegas Sands (LVS.N) and Wynn Resorts (WYNN.O).
Three new casinos are expected to open in the next two years while Macau will also face regional competition from upcoming mega casinos in Singapore.
The low-key Chui, a former culture official from a wealthy Macau family was elected unopposed by a pro-Beijing 300-person electoral college last month.
This will be the first leadership change for Macau since it reverted to Chinese rule in 1999, with incumbent chief executive Edmund Ho having served since then.
Reporting by James Pomfret; Editing by Sugita Katyal