The development of Hengqin as a special economic zone has been giving nearby Macao the support needed to help diversify its economy beyond gaming. But those on the ground there believe more could still be done.

Hengqin, Zhuhai, has been deemed the ‘backyard of Macao’ ever since the central government kicked off a series of initiatives to develop the 106-squarekilometre island, adjacent to the city’s Cotai area, back in 2009. With the development of the Guangdong-Hong Kong-Macao Greater Bay Area in recent times, the two cities have become increasingly intertwined, from investments and cross-border commerce, to a growing community of Macao locals and institutions.

“Many years ago, we didn’t see much economic activity and business development taking place in Hengqin, but if you have stopped by there lately you will see all these high-rise buildings,” says Prof Jacky Yuk-chow So from the Macao University of Science and Technology (MUST). “The overall development progress in Hengqin has happened quite fast. There were difficulties when it first started, but now the momentum has really started to kick in.”

The vice president and dean of the School of Business of MUST added that the central government’s master plan for turning the barren land into a developed city – including a business district, industrial areas, tourism zone and more – were finally starting to be realised in the past few years.

Indeed, there has been tremendous growth in the past decade in the special economic zone, which enjoys more flexible free-market policies than elsewhere in mainland China. According to the latest figures from the administration of Hengqin New Area, the gross domestic product (GDP) of the island has averaged 64 per cent every year for the last decade (with the exception of last year, which only rose 4.1 per cent as a result of the Covid-19 pandemic) totaling an impressive RMB 40.7 billion (US$ 6.33 billion).

Hengqin has appealed in particular to institutions and business from Macao, as the country’s central government has floated the island as a means to help reduce the city’s reliance on gaming. For instance, Beijing designated about one square kilometre of land in Hengqin to be used for the University of Macau’s new campus, which was inaugurated in 2013 and is governed by the laws of Macao. Moreover, a further five square kilometres of territory on the island was earmarked for projects specifically backed by Macao capital and local authorities, which has come to be known as the Guangdong-Macao Co-operation Industrial Park.

A total of 1,395 new Macao firms were incorporated in Hengqin in 2020 alone, representing a growth of 67.5 per cent from the previous year. This brought the total number of Macao firms registered in Hengqin to 3,575 by the end of last year, placing the island as the region with the most number of Macao firms in mainland China, according to local authorities.

Concerning the Macao-backed projects in the co-operation industrial park, as of the end of 2020, 24 projects totaling an investment amount of RMB 79.27 billion, have been approved for construction. Among the 24 projects includes Legend Ponto Square, a shopping complex inspired by Portuguese classic architecture which counts Macao businessman David Chow Kam Fai as a stakeholder. Add to that, a second batch of 123 Macao-backed projects have applied for the co-operation industrial park, 17 of which have already been given the green light to launch planning and construction works.

New business opportunities

HN Group is one such firm eager to break ground in the co-operation industrial park. A multi-faceted local conglomerate from retail to trading to engineering, the company is developing a RMB 2.5 billion high-end project, featuring luxury accommodation, a hotel, villas, an extensive spa, swimming pool, gym, and restaurants. Serensia Woods, which sprawls over 40,000 square metres, is expected to have a soft opening by the end of this year, including wellness facilities that offer holistic treatments and physiotherapy.

The vision for Serensia Woods had existed in the mind of Amber Li, president of HN Group, since the 1990s, but was hampered by the lack of land resources in Macao. She eventually decided to pursue development in Beijing in the late 2000s. When the news broke that Beijing intended to developHengqin, however, it changed everything.

“As a Macao-based firm for over a century, we felt we had a responsibility to participate in the government’s development plan,” Li explains. “Obviously, Hengqin also provides a lot of opportunities to us given its unique location – because it’s next to Macao and Hong Kong – and special economic policies from the central government. This encouraged us to transfer the project from Beijing to Hengqin.”

“Infrastructure-wise, Hengqin is a different place now compared to 12 years ago; the local government has done a great job and designed the city in a nice way. But for further development, we need to see more industries moving in.”

A guideline for the industrial development of Hengqin published in 2013 indicates seven key areas for the island to explore, including tourism and leisure, logistics and commercial services, finance, culture and creative industry, healthcare and medicine, research and development, and high technology. Six years later in 2019, the ambitious ‘Hengqin International Leisure Tourism Island Construction Scheme’ was announced to accelerate the development of the tourism sector, aiming to turn the barren land into a mix of business towers, theme parks, resorts, hotels, performance venues and other entertainment facilities by 2035.

Influx of professionals 

In addition to reserving land resources for Macao projects and companies, the central government and Hengqin authorities have also rolled out an array of other incentives and measures over the years to attract a flow of human capital from Macao.

A so-called single plate policy was debuted in 2016, in which Macao vehicles bearing a single licence plate permit could enter and travel within Hengqin without the need for a mainland Chinese license, provided the owners work, live or invest on the island. An annual quota of 400 permits was initially made available, but after huge demand from local motorists, this number expanded to 10,000 in 2021.

New legislations have also been put in place in the past few years ensuring that professional certifications issued and recognised by Macao and Hong Kong authorities which include tourist guides, construction companies, architectural firms, and medical doctors may work in Hengqin without having to pass mainland Chinese certification tests and requirements. Policies like this echo the blueprint laid down by Beijing in the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area in 2019, which called for turning the island into “a demonstration zone for in-depth co-operation among Guangdong, Hong Kong and Macao”.

As of the end of 2020, a total of 589 tourist guides, 34 construction and architectural firms, and 152 professionals in the construction field from Macao and Hong Kong were approved to work in Hengqin, according to local government data. The Hengqin Branch of Zhuhai People's Hospital, a public hospital, also employed 53 Macao doctors earlier this year to provide medical services and treatment, a first for the hospital and the island, according to mainland Chinese media.

Community service

With housing prices that are roughly half the price of Macao, a streamlined customs procedures, and other incentives and measures, an increasing number of Macao residents have been investing in Hengqin residential properties, with some opting to reside permanently on the island. Government figures show that 8,224 Hengqin real estate propertieswere bought by Macao purchasers at the end of 2020, while about 5,132 Macao residents held permits to live on the island.

One of the largest non-profit social services organisations in the city, the General Union of Macau Residents’ Associations (UGAMM), or Kai Fong in Cantonese, was invited by Hengqin officials to provide a wide range of community services on the island. The group inaugurated a 2,200-square-metre integrated service centre in collaboration with the Hengqin authorities in November 2019 – the first centre of its kind run by a Macao association in mainland China catering to the needs of children, teenagers, the elderly and families, as well as providing consultations with social workers and others.

In light of the success of the integrated service centre, the association has also launched two other service points on a smaller scale in different districts of Hengqin with a third becoming fully operational by this June, says Tian Yi, head of the Guangdong branch of UGAMM.

“As the administration of Hengqin New Area foresees more Macao residents working and staying there, officials invited us two years ago to bring Macao-standard social and community services to the island,” he explains. “We have decades of experience in providing community service in Macao and we pay attention to the evolving needs of our clients.”

“Our integrated service centre and three service points in Hengqin are basically able to cover all the biggest and most active districts on the island now,” Tian adds. “After setting foot in Hengqin about a year and a half ago, we havenow served nearly 30,000 clients – including both Macao and non-Macao residents – and held over 700 activities for the community.”

Though public services available in Hengqin might not be as convenient as those in Macao, he believes the continuous improvements and a stronger push for integration between the two locations will see more residents keen to explore opportunities and inhabit the island.

One of these latest developments, for example, is the Macao New Neighborhood, an ambitious housing complex in Hengqin boasting 3,800 flats that cater specifically to Macao residents. A major project for the Guangdong-Macao co-operation that is slated to open in 2023, it will include a kindergarten, school, elderly centre, medical clinics and other recreational facilities run by Macao-approved institutions.

More action

Administrations from both sides have also planned to develop the Guangdong-Macao Intensive Co-operation Zone on the island, which is believed to be a game changer for future Macao-Hengqin co-operation. Asked about the progress in the Legislative Assembly in April, Macao Chief Executive Ho Iat Seng revealed there would be a new joint development and management mechanism between Guangdong and Macao for the intensive co-operation zone, but more details would only be available once the plan received approval from the central government.

In an interview with the state-run Newsgd.com in the same month, Ho said one of his priorities after taking office in late 2019 was to strengthen the city’s exchanges with the nearby province, in particular advancing the implementation of the intensive co-operation zone. As Macao faces a shortage of land resources, the Chief Executive noted the intensive co-operation zone could provide more room for development and new opportunities for Macao, and help usher in a new era of economic prosperity.

This is perhaps what Li of HN Group hoped for, when she made the decision to move her development project from Beijing to Hengqin. “Economic diversification does not only mean building the infrastructure, but how Macao could take the opportunities provided by Hengqin to incubate and nurture new industries,” she says. “It’s important for the government to encourage people and industries moving to Hengqin via policies.”

“The governments do have a vision of what Hengqin ought to be," she adds. "But a vision will not get anyone anywhere. Only action can.” she adds.

Free movement

According to a 2021 report looking ahead for Hengqin, one of the island’s top tasks is to create even more incentives in trading, finance, taxation and immigration. The authorities also pledged to enhance the GDP of Hengqin and the nearby districts to RMB150-180 billion by 2025, about four times its current value, and bolster the population of Macao residents on the island to 30,000-50,000 over the same time period.

“The aim of the Macao-Hengqin co-operation and the integration of the two special administrative regions into the Greater Bay Area is to create synergies. How can we do that? We do what we specialise in,” Prof So from MUST says. “Macao could help the other [mainland] cities in the Greater Bay Area to attract capital and provide management know-how; on the other hand, Macao doesn’t have enough talents or land resources, which the other [mainland] cities could help.”

“The right way to go is definitely the service industry,” says Prof So, explaining how the gaming enclave could utilise Hengqin to further reduce its reliance on the gaming sector, and expand instead into tourism and finance.

While Macao is now undertaking a feasibility study about the possibilities of setting up a yuan-denominated equities market, the Chinese National Development and Reform Commission, the nation’s top planner, said last year the market could be located physically in Hengqin and still achieve the same purpose of diversifying the Macao economy.

 

Regardless of what types of Macao-Hengqin co-operation are in the pipeline, ensuring the smooth movement of people, goods and capital is key. A new border crossing checkpoint between the two destinations was established last year, which is open around the clock and includes customs officers from both Macao and Hengqin, helping to accelerate the immigration process.

“What I mean is not totally getting rid of customs [from the two sides] and other regulations but [the authorities] should try to make the experience more user-friendly. There is always room for improvement,” Prof So says. Local authorities could learn from the example of land borders among the US, Canada and Mexico, he adds, namely the policies and technologies employed to facilitate free movement between them.

“When I taught in Texas, I sometimes went to Mexico for lunch with my colleagues, and when we drove through the borders, all we needed to do was to pay a quarter. No questions were asked [by customs] and passports were not needed. We only needed to show our passports after returning [to the US] from lunch.” 

Better informed

Apart from a new border checkpoint, the Macao administration has also committed to improving the public transportation infrastructure linking the two regions. The MOP 3.5-billion (US$437.5-million) works for a new Light Rail Transit (LRT) line started in March, connecting the Cotai section of the railway to the border checkpoint in Hengqin. The project, slated for completion in 2025, will ultimately link up with the mainland’s high-speed rail network. 

Better infrastructure and more incentives might help attract Macao residents to stay, work and develop businesses on the nearby island, says Tian of UGAMM, but getting the word out about Hengqin’s advantageous policies and initiatives is the next step in the process. In his daily interactions with Macao residents in Hengqin, he says many do not yet have a full understanding of the policies in the mainland. “With a living or work permit in Hengqin, Macao residents are actually entitled to similar benefits and treatment as their mainland counterparts in terms of social security, pensions, and others. But many of them are only now aware of this.”

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Hengqin holds the future for Macao

A cross-border video conference sets out an array of new ideas and proposals which will bind Macao’s fortunes closer to the Greater Bay Area.

Hengqin – Macao’s ‘new big brother’ – is set to become the cornerstone of its future relations with Guangdong, acting as a pivot for greater cooperation and shoring up the city’s economic diversification.

At the Guangdong-Macao Cooperation Joint Conference last June, Chief Executive Ho Iat Seng and Guangdong Governor Ma Xingrui took four major decisions.

The first is to concentrate on the future Guangdong-Macao Intensive Cooperation Zone in Hengqin, speeding up legislation and policy co-ordination while accelerating the launch of specific projects.

Secondly, cooperation in science and research, high-end manufacturing, traditional Chinese medicine (TCM), financial services, high- and newtechnology sectors, culture and tourism, and the meetings, incentives, conferences and exhibitions industry will be enhanced to boost Macao’s economic diversification.

Thirdly, cross-border connections will be improved to help Macao citizens living and working in Guangdong.

Finally, steps will be taken to speed up economic development and optimise people’s livelihoods.In particular, the two sides vowed to devote further efforts to epidemic control and prevention, support Macao’s young people to work or start a business in Guangdong, and enhance exchanges and collaboration in education, food safety and ecological protection.

Ho said that 2021 marks the first year of the country’s 14th Five-Year Plan, as well as a significant period for Macao to integrate further into national development.

Ma said that Guangdong and Macao will work closely in order to take advantage of opportunities presented by the Greater Bay Area (GBA) development. In particular, Guangdong and Macao will work together on the TCM Science and Technology Industrial Park, the Hengqin Macao Youth Business Valley, and the Macao New Neighbourhood project.

During the conference, Guangdong and Macao signed six agreements concerning exchanges and cooperation on food safety issues; standards of quality and recognition regarding inspection work; accounting standards for Macao enterprises set up in Guangdong; cooperation in tourism; cooperation in holding job fairs; and internships for university students in the GBA and TCM cooperation.

Text Christian Ritter

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TEXT Tony Lai 
PHOTOS Weiming Xie