There is often a lively debate in Macao about expenditure on the construction of public infrastructure. The sums may be huge but the potential returns are also immense. Today the discussion takes place at a time when Macao faces not only an immediate need to counter the economic effects of the Covid-19 pandemic but also to lay solid long-term foundations for the city as historic new economic opportunities open up on its doorstep.
At the height of the pandemic, between May 2019 and May 2021, the Macao government invested more than MOP 13.4 billion (US$1.7 billion) in large infrastructure projects. These are designed not only to improve citizens’ lives but also to take full advantage of the historic prospects offered by Macao’s involvement in the Greater Bay Area (GBA) development programme.
Overhauling Macao’s transport systems may be the most visible sector to locals and visitors alike but there are also ambitious programmes in public housing, healthcare, environmental protection and the sporting sector, all measures designed to improve the quality of life for the city’s 684,000 inhabitants.
Diversifying the city’s economy has been a long-term goal of the government as well as integrating Macao with other parts of southern China’s Greater Bay Area, a region that will become one of the centres of global innovation and growth in the decades to come. Of increasing importance to Macao is the cooperation with neighbouring Guangdong province, particularly over the joint management of Hengqin Island, which sits just across from Macao.
For a city that occupies just 32.9 square kilometres of land, the transformation of Hengqin provides ample room for expanding business, academic and residential facilities. However, none of these goals can be achieved without modern urban infrastructure.
In the recent past, there were some controversies over the high level of government investment but, as Macao’s economy boomed, existing infrastructure became strained.
“By the end of the first decade of this century, some scholars and politicians were arguing that the government was spending too much money on public works and it was creating inflation. However, everyone in Macao soon realised that public infrastructure was in great need of upgrading, particularly those related to flood-control and transportation both within Macao and between Macao and its neighbours,” said local economist and president of the Institute of European Studies in Macau (IEEM), José Luís de Sales Marques.
For the IEEM president, “public investment in infrastructure is again at a high, this time to boost economic recovery and allow urban growth in the Guangdong- Macao Intensive Cooperation Zone in Hengqin. Public housing, new land reclamations, roads and bridges, and other public infrastructure will provide more and better public benefits for the Macao population as well as for the residents of the Hengqin Cooperation Zone.”
Sales Marques also believes that the construction programme will “contribute to Macao’s economic recovery after the severe crisis due to Covid-19.” Among other benefits, such as employment, the infrastructure itself will add new fixed assets to the city’s economy, a process described by economists as Gross Capital Formation.
Even those who live in Macao do not always realise the huge amount of infrastructure works the government has planned and launched since 2019.
Data from the Land, Public Works and Transport Bureau (DSSOPT) show that over the two-year period, the opening of the new express border-crossing point between Macao and Zhuhai at Qingmao, the creation of a public transport hub at Barra – currently under construction – in the southwestern part of the Macao Peninsula, the building of a training centre for athletes in Cotai and the second building phase of the new Coloane prison have been four of the most expensive projects built.
The infrastructure works planned until 2024 have largely kept to schedule, despite the impact of the pandemic and the strict anti-virus measures imposed by the government to protect public health.
According to the DSSOPT, by 2024 the government will complete major projects related to Macao’s transport network, social housing and environmental protection. The 48 large projects currently under construction represent a total investment of MOP 38.13 billion (US$4.75 billion).
Fourth Bridge and New Metro Lines by 2024
Two transport projects stand out. The first is the construction of a fourth bridge connecting the Macao Peninsula to Taipa island, which will span 3.1 kilometres. The basic construction costs are MOP 5.27 billion (US$660 million) with a further MOP 2 billion (US$250 million) to be spent on the remaining access works.
The new bridge will be ready in 2024, improving traffic flows near Macau International Airport and Taipa Ferry Terminal.
The second major transport project is the expansion of Macao’s Light Rapid Transit (LRT) railway, adding two new LRT lines. The first is the cross-border Hengqin Line that will connect the Lotus Checkpoint Station on Macao’s Cotai side to Hengqin Port Station on Hengqin Island itself. The second is the Seac Pai Van Line on Coloane island which has two stations. One of the stations will be at the public housing estate in Seac Pai Van and the other at the new Islands District Medical Complex. Both new lines will have transfer points for the existing Taipa Line. These new lines will cost MOP 4.4 billion (US$550 million).
The LRT’s current Taipa Line has 11 stations and runs 9.3 kilometres from Ocean Station at the Taipa side of Sai Van Bridge to the Taipa Ferry Terminal. The Taipa Line will be connected via the Sai Van Bridge to the new Barra transport hub. There are also plans for a future line that would use an underwater tunnel to connect to the Macao New Urban Zone A, right next to the Hong Kong-Zhuhai-Macao Bridge.
Barra station is scheduled for completion in 2023, costing an estimated MOP 1.18 million (US$147 million). The station will connect to the LRT Taipa Line and will also serve as a public transport interchange hub for the Barra area of the Macao Peninsula, including plans to link it to LRT lines serving the peninsula itself.
Alfred Seng Fat Wong, professor at the Faculty of Science and Technology at the University of Macau and a government transport adviser, says connecting the LRT Taipa Line to the Macao Peninsula in the future will be a great step.
For Wong, the fourth bridge and LRT lines will lead to fewer private vehicles on the roads and improve travel for people using public transport within Macao. He also welcomes greater opportunities for cross-border travel.
“The new LRT line to Hengqin will be very important for the development of Macao and expansion in the Greater Bay Area and Hengqin Island because a Guangdong fast-train can be taken from Hengqin to Guangzhou and from there to the rest of China,” he says.
“The infrastructure projects in the next year will bring some inconvenience to the public but when they are completed daily life and moving around will be smoother, contributing to the economic development of Macao.”
Christine Choi, president of Board of Directors of the Architects Association of Macau, also emphasises the importance of government investments to solve traffic problems.
“The infrastructure projects in the next year will bring some inconvenience to the public but when they are completed daily life and moving around will be smoother, contributing to the economic development of Macao.”
Alfred Seng Fat Wong
“With the rapid growth of private developments in Macao, the infrastructure and other supporting facilities were under pressure to meet the rising demands of greater traffic, housing requirements for foreign workers and meeting the daily needs of locals. Today, we can see significant growth of new private construction developments, providing accommodation and activities to attract an enormous amount of tourists,” Choi explains.
For Choi, the priority for Macao must be more Transit Oriented Development, integrating different transport and pedestriant structures into one system in order to provide alternative routes and direct access between points. I hope to see more travel on foot compared with vehicles as more pedestrian tunnels and flyovers will be built.”
Other current construction projects include a tunnel which will connect Cotai and Ka-Ho village in Coloane, and a pedestrian tunnel under Guia Hill connecting the Outer Harbour area to Flora Garden, a major public park.
There is a strong social component to many of the projects. There are, for example, 16 public social housing projects, most of them under construction or in preparation in the land reclamation New Urban Zone Area A, where the border crossing post of the Hong Kong-Zhuhai-Macao bridge is located. The public housing estates will provide approximately 9,000 apartments for lower-income families.
A second waterfront reclamation area of 33 hectares, this time on Taipa island, will also build affordable housing and public amenities. Located between Sai Van and Nobre de Carvalho bridges, the project will cost MOP 816 million (US$106 million).
Macao’s public healthcare facilities will also receive a major boost from the construction of the Islands District Medical Complex on Cotai, the area of reclaimed land that connects Coloane and Taipa islands.
After discussions with China’s National Health Commission, the Macao government chose to partner with Peking Union Medical College Hospital, which was founded in 1921 by the Rockefeller Foundation and is affiliated with Peking Union Medical College and the Chinese Academy of Medical Sciences.
The public hospital will be operated by the prestigious Peking Union Medical College Hospital and is being built at an estimated cost of MOP 8.9 billion (US$1.1 billion). It is scheduled to open in 2023 and will become the city’s second public hospital.
According to Macao’s Health Bureau, the new hospital will have around 1,100 beds as well as departments specialising in nuclear medicine, radiotherapy and organ transplants. Other facilities will include a nursing institute, laboratory and residential quarters.
The complex will include the main hospital, a logistics building, administration, multi-use areas and access roads. The three main buildings have a construction area of 276,000 square metres and are located in grounds of 23,000 square metres. The MOP 7.3 billion (US$908.8 million) construction and engineering contracts for the hospital were awarded to a Chinese consortium in 2019.
Some of the social concerns about environmental protection have also been addressed by the government’s MOP 2.567 billion (US$321 million) investment in the expansion of the Taipa incineration plant, which is due to be completed by 2024. The Macao administration has been promoting environmental policies to reduce pollution and waste in the territory.
New Investments Stimulate Recovery
Sales Marques recalls that: “In the past few years, government investments have reached around MOP 12.9 billion (US$1.5 billion) per year. Those figures refer to public procurement in 2019. Representing only 3.17 per cent of GDP, this did not have a major impact on economic growth that year.”
However, the economist points out that with Macao’s dramatic contraction of GDP in 2020-21 as a result of the pandemic, increased government investment in infrastructure at this point acts as a vital stimulus to the economy overall, a result of the so-called multiplier effect promoted by the late British economist John Maynard Keynes. This investment can play a crucial role in economic recovery
“With the implementation of new public works and introduction of new projects already announced in excess of MOP 40 billion (US$4.9 billion) until 2024, averaging MOP 13.3 billion (US$1.7 billion) per year, the government is playing the public investment card in a pro-Keynesian way,” Sales Marques believes.
The IEEM president continues: “The investment announced for 2022 by Chief Executive Ho Iat Seng during his Policy Address for 2022 is MOP 18.32 billion (US$2.3 billion). As the Macao economy has suffered badly from the external shock of Covid-19, leading to a sharp drop in GDP by 56.3 per cent in 2020 and with an economic rebound taking time, 2021 GDP results will be far below expectations, particularly due to severe restrictions on visitors entering the region and the unpredictability of new Covid cases in neighbouring regions and in Macao itself.”
These recent developments have highlighted the structural sensitivity of the Macao economy through its dependence on gaming and tourism. Given these constraints, Macao’s internal growth factors are private and public consumption as well as private and public investment from within the city.
Sales Marques stresses that “it is crucial that besides supporting private consumption with consumer cards and other instruments to improve family incomes, the government must continue to invest strongly in providing public infrastructure. By doing so, it is not only stimulating the economy in the short term but also providing Macao with greater capacity to face the future with more confidence and greater efficiency.”
Despite being faced with the greatest financial and social challenges of its modern history, in the past couple of years Macao has kept its focus firmly on building infrastructure for both recovery and long-term progress.
