OPINION – ZAPE deserves a new opportunity!

By José Luís de Sales Marques

Economist

The Circle Game

We’re captive on the carousel of time

We can’t return, we can only look

Behind from where we came… — Joni Mitchell

Recently, the Macau Economic Association (MEA) predicted in their monthly report released on 14 June the region’s economy to remain stable in the coming months, recognising, however, that domestic demand will remain sluggish due to the high cost of living coupled with slow increases in salaries and the negative impact from the expected closing of satellite casinos. As a result, the “prosperity index”, a prospective indicator of economic performance, for a three-month period will be kept at 5.9 in June, July and August, down from 6.2 in May. This indicator had for the last twelve months its highest value of 6.5 in the last quarter of 2024 and January 2025, when expectations on economic recovery were heightened by the election of a new Chief Executive and the introduction of new consumer-friendly policy measures.

The lowest index value of 5.8 of last March is tied to GGR’s performing under par and unable to reach the average of MOP 20 billion per month projected in the original 2025 Government budget, leading to an unprecedented downward revision in April of gaming-related fiscal revenues of (-5%), based on an estimate of 2025 GGR of MOP 228 billion.

Therefore, the lowering of the “prosperity index” announced by MEA for the summer months, after a great Golden Week pulled up May GGR to MOP 21.19 billion, the highest in the post-Covid era, is mirroring two main perceptions of several sectors of society: 1) That the local economy will not significantly improve in the coming months on the domestic front and, overall, might even become more challenging as the external environment has significantly deteriorated, particularly since the USA joined Israel in the war against Iran, which they started; and 2) that the announced closing of the eleven satellite casinos by year end raises concerns of negative impacts in several dimensions of the economy, including direct unemployment of their workers, default of several SMEs whose client base are patrons of those casinos, increase in bad loans to local banks and devaluation of real estate in the vicinity. As MEA stated in the said report, some communities’ economies might face serious feasibility issues, since the aforementioned negative impacts also have a territorial dimension.

It is indeed a complex issue, a puzzle with several pieces that needs to be carefully managed, piece by piece, but without losing sight of a larger vision, which will have to be a revamp and repositioning of, particularly, one urban area, which has become the “Satellite HUB”, the area known in Macau as ZAPE, its original Portuguese acronym loosely translated to English as the Outer Harbour Reclaimed Area. It is, indeed, a matter of urban reshuffle at a scale and pace that has not been seen before, not so much for its area of 0.8 km², but because of the underlying sense of urgency it carries!

It is essential to introduce street art and environmental design to improve the quality of those places.

Firstly, let us address the “urban dilemma” at hand. Why an urban issue that goes beyond economics? ZAPE is an urban area resulting from a first reclamation that intended to build a new port for Macau in the early 20th century, transforming the struggling economy of the city into an import–export hub for the west bank of the Pearl River as well as a regional tourist haven. The port project never took off, was a failure, and for decades the area was filled in with micro backyards of wooden constructions, mostly built by migrants, where some kind of subsistence agriculture was practised. Notwithstanding, it became a world-famous spot because the Macau Grand Prix, founded in 1954, has its race track around the area. Implementation of the urban development plan for ZAPE, covering the area between Avenida da Amizade and Avenida Rodrigo Rodrigues, kicked off in the last two decades of the 20th century, but businesses in the area only turned to their golden age after the gaming liberalisation. The 2021 Census accounts the area’s population as 16,454 with a density of 21,715/km². It is indeed a very high-density urban area, both by existing high-rise construction as well as for people living and working in it. In its golden periods, a highly visible floating population dedicated to parallel economic activities were seen 24/7 circulating in the area, raising its real density to double those official figures. Of the eleven satellite casinos, only three are located outside of the ZAPE area. Most of those casinos are located at hotels which, together, offer a total of around 2,000 rooms. The number of shops, restaurants, pawnshops, pharmacies, and other SMEs operating in the ecosystem of satellite casinos amounts to 300 in the ZAPE area, according to media reports.

Government officials have downplayed the overall economic impact of the demise of the satellite casinos, highlighting, on the one hand, the commercial decisions taken by the three concessionaires involved — SJM with nine, Galaxy and Melco with one each — and, on the other, their small impact on GDP. Chief Executive Sam Hou Fai recently commented that the direct impact to total gaming revenues will not be significant since, he argued, all those small casinos jointly generate a GGR of around MOP 10 billion per year, which is below 5% of the expected total gaming revenue for 2025. Moreover, their gaming tables will be absorbed by the “mother” concessionaires and they could, in the future, generate the same or even more income and higher profits, in view of economies of scale. Likewise, the 4,800 gaming employees at those units are supposed to be relocated to those concessionaires’ portfolio of properties. However, what will happen to the remaining workforce of around 800 residents and number of non-residents who are directly employed by the satellite casino companies? And the hotel units where those casinos are located? Likewise, all those small and medium-sized shops, restaurants, pharmacies and other businesses previously mentioned and their staff in case of closing down? Government officials are actively conducting meetings with several parties in an effort to minimise negative impact and risk.

For instance, the Director of the Macao Government Tourism Office (MGTO) Helena de Senna Fernandes announced a set of measures to revitalise “normal” tourism in the area, namely by including it in the IP-themed marketing campaign currently under way in other districts as well as distribution of tourist consumption vouchers to be used in the area. All sides are seemingly well aware that, notwithstanding occasional restructuring support by government, the scope and direction of businesses in the area will definitely change, and survival will depend on resilience for now and new market opportunities for the near future.

A new era for ZAPE

ZAPE’s economic success over decades is firmly based on its prime location in regard to two main economic axes: the New Outer Harbour Reclamation Zone (NAPE) and the long commercial and tourist strip between Wynn Resort at the Outer Harbour and Ponte 16 at the Inner Harbour, with the Grand Lisboa in between. Moreover, the area is also close to Guia Hill and surroundings, the Macau Art Museum (MAM) and the Science Museum, the Grand Prix Museum and the Polytechnic University. And there are two public parks, the Ho Yin at ZAPE and Carlos Assumpção at NAPE, and the riverside promenade along Sun Yat-sen Avenue that will be extended towards the Barra area.

Public transportation to and from ZAPE is also abundant, although it could further improve, and it is located within a few minutes of the Ferreira de Amaral bus terminal. In a nutshell, ZAPE has the potential to be repositioned as the ideal location for business and family tourism with provision of reasonably priced four- and three-star accommodation, a variety of gastronomy and cultural offers, as well as indoor and outdoor educational and entertainment activities, within walking distance. As much as there is great potential, challenges are also mountain high. It will require active coordination and cooperation between merchants and operators, business owners and government. Most hotels in the area were built decades ago, have seen better days, with rooms and facilities requiring some urgent refurbishment. The same could be said in regard to shops and other infrastructure of tourist services, redirecting their customer base to a wider spectrum. Investment is needed and some facilitation by government would be crucial as an incentive for doing so. However, urgent urban intervention is needed to revitalise the whole of the ZAPE area and make it more attractive for the general public.

It will require active coordination and cooperation between merchants and operators, business owners and government

According to the 2020–2040 Master Plan for the Macau Special Administrative Region (MSAR), Art. 34, that area with mixed and diversified land usage will remain unchanged, since it is considered almost fully developed. However, the built environment is ugly and heavy at street level, there is too much cement and no greenery whatsoever, particularly in the inner and back streets such as Rua de Pequim. They were built just for passage, not as leisurely promenades.

Macau’s city management has improved a lot over the years and there are short-term and long-term solutions that could be easily employed. It is essential to introduce street art and environmental design to improve the quality of those places. Some government facilities, such as the old Macau Forum, adjacent to the Grand Prix Museum, could perhaps have better usage for cultural entertainment, since events taking place there have apparently stopped happening. The Forum could also be the hub for shuttle buses that could move tourists to and from the A-Ma Temple area and the LRT Macau Station. Hotel guests in the ZAPE area could be given the privilege of free access to that service, which would be much useful for families with small kids. The Macau Science Centre is a very popular destination, great for families.

The current programming is already rich and diversified, dedicated to science education. It is mostly targeted at the local population, which are the main users of the centre, and very rightly so. However, the centre could consider further promoting its programmes to tourists and even expanding facilities to include a dedicated facility to the Greater Bay Area (GBA), featuring, in a nutshell, the history, economic development, science, cultural exchanges and the dynamic 21st-century achievements and uniqueness of the GBA in the world context. It would be an educational and fun approach, using the latest technologies available, which could be appreciated by locals and visitors alike in a whole-family experience!

The sum of many small and big improvements in the pieces of the puzzle will definitely give ZAPE a new breath of life based on a new urban identity and economic diversification.

Macau is changing rapidly and it must adapt also rapidly. As Joni Mitchell sang in her hymn to changing times, we can only look behind from where we came… and move forward.