Pedro Cortés and Marta Mourão of Rato Ling Lei & Cortés - Advogados in Macau provide an introduction to the jurisdiction

1. What attributes does your country have that makes it a unique investment destination?

Macau is still a well kept secret as an investment destination. It is one of the freest economies of the World, with a tax rate of as low as 12% (individuals and companies), being very attractive to set up investment companies, as it has not the costs of the sister Special Administrative Region of Hong Kong. Despite the downturn in the gaming revenues, the fact is that it still an investment destination as there are plenty of new resorts to be opened in the next couple of years. The new bridge to be inaugurated in the Pearl River Delta, linking Hong Kong, Macau and Mainland, as well as the development that will occur in the neighbour Hengqin Island makes Macau as a place to invest in the next five to ten years.

2. What are the main drivers of investors moving to Macau over the last year? / What have been the key growth sectors and market opportunities of the last 12 months?

It goes without saying that the main driver and the key sector is still the gaming industry and all that comes with it. With the construction of the new resorts in Cotai ongoing (the so-called Cotai 2.0 and 3.0), the investment continued to be in that industry. The banking sector has also seen growth, mainly due to international acquisitions that affected Macau institutions. Since the liberalisation of the gaming sector, diversification as an aim of the Macau Government, is still to be achieved. However, the fact that Macau is now experiencing a downturn may be seen as the catalyst for a true diversification of the economy. Macau is still the biggest gaming market in the world and a regional centre for MICE and the tourism industry.

3. Can you identify the key economic risks that international investors have faced when doing business in Macau in the last year?

The risks are still the real estate prices (acquisition and rent), the difficulties in importing qualified and skilled workers, as well as the inflation that Macau has seen in recent years.

4. What are the main political risks/developments affecting inward investment that you have observed recently?

Unsatisfied social needs may pose problems to the Macau government and may be considered as a risk that may affect inward investment. The protection of residents may deprive foreign investors of the chance to develop their business. It is also known that the crackdown on corruption by Chinese leaders, which stopped or at least eased the flow of mainland Chinese gamblers into Macau, had consequences in terms of consumption of high end luxury goods.

5. What are the key regulations that govern in-bound FDI?

There are no special rules governing in-bound FDI. Both overseas and domestic corporations register under the same set and are subject to the same regulations on business, such as the Macau Commercial Code (Decree-Law 40/99/M). Last year, in December 2015, a new law was approved by the Legislative Assembly to comply with the United Nations Convention against Corruption. This has been in force since January 2015, and states who offer bribes to foreign public officials (including officials of the Chinese mainland, Hong Kong and Taiwan) and officials of public international organisations in exchange for trade deals could receive a jail term of up to three years or fines.

The law 7/2003 governs the import and export activities from and to the Macau Special Administrative Region.

There are limited foreign control limits in few areas (education, legal services or newspapers).

6. Which free trade agreements does your country currently enforce? Are there any prospective additions for the next 12 months?

The Mainland and Macau Closer Economic Partnership Arrangement (CEPA) signed in 2003 between the People’s Republic of China and the Macau Special Administrative Region is the main free trade agreement (FTA) in place in Macau. It has, since its implementation, had ten supplements covering three major economic and trade areas: Trade in Goods, Trade in Services and Trade and Investment Facilitation.

A Zero Tariff in Trade in Goods, Rules of Origin, Certificate of Origin, Definition and Related Regulations in Mainland and Macau, among others, are parts of the referred FTA.

According to recent reports and press releases, Macau and Hong Kong should have, by now, started negotiations on a FTA. This new arrangement is deemed to cover, inter alia, “commitment to bind tariffs at zero, minimising non-tariff barriers, avoiding imposing trade remedies, customs facilitation procedures, liberalisation and facilitation of trade in services, and legal and institutional arrangements.”

7. Are there any exchange controls that affect the flow of capital in your territory?

Macau is a free port without any exchange controls affecting the flow of capital.

8. What incentives are in place to attract foreign investors?

There are investment incentives to investors, which are stated in several pieces of legislation, provided that companies prove that they are involved in the following: promotion of economic diversification and added value within the value chain of their activities, contribution to promotion of exports to new unrestricted markets or contribution to technical modernisation. The incentives have different categories:

(a) Fiscal incentives – full or partial exemption from taxes (profit/corporate, property tax, stamp duty for transfer of properties and other taxes); industrial tax is currently exempted for all companies;

(b) Financial – incentives by government-funded interest subsidies;

(c) Export diversification – subsidies given to companies and trade associations attending trade promotion activities organised by the Macau Trade and Investment Promotion Institute (IPIM).

There are other subsidies in place such as those for installation and anti-pollution equipment.

9. What pitfalls should international investors be conscious of?

Costs of labour and real estate, downturn in Macau’s main industry (gaming), very protective and restrictive policies on importation of labour (skilled and non-skilled) are some pitfalls that international investors should be conscious of.

10. What can investors expect when negotiating in Macau?

Investors can expect a fully regulated and sophisticated jurisdiction, where foreign investment is welcome but shall abide by the local laws and customary rules. Investors should also be aware that the two official languages are Chinese and Portuguese and, therefore, a translator may be needed. Local relationships and contacts are paramount to a successful negotiation.

11. What is the main advice that you would give to a prospective investor interested in Macau?

Find a local lawyer that may introduce you to the general business environment and the rules to set up a business. Know exactly in advance what is the business intention and prepare a plan B. Understand that Macau is a unique jurisdiction, with specific rules that must be respected.

12. Are there any restrictions which govern the involvement of international counsel?

Only lawyers authorised and registered with the Macau Lawyers’ Association may advise on local law. Aside from this general principle and practice, no specific rules exist in relation to the involvement of international counsels in international transactions.

13. Which areas of corporate law do you feel are currently the most under-developed?

Macau is a very sophisticated jurisdiction, and corporate law is in line with international standards and practice.

14. What trends have you observed in the role of laws governing contracts?

Since the liberalisation of the gaming industry it is very common that foreign laws govern the contracts. This has posed challenges to local lawyers involved on these transactions.

15. What are the key compliance issues that in-house counsel should be aware of when doing business in Macau?

Depending on the areas of business, there are specific rules for Macau companies such as bookkeeping, accountancy, tax, report of transactions for AML purposes and submissions to the public departments.

16. How mature/stable is the banking industry in Macau?

Currently there are 29 financial institutions, consisting of 10 local banks and 19 banks incorporated overseas, 11 moneychangers, two cash remittance companies, two financial intermediaries, six exchange counters and one representative office of an overseas financial institution.

According to public data, total deposits amounted to $60.3 billion in January 2015. In December 2014, banks in Macau maintained a capital adequacy ratio of 14.23%, well above the minimum 8% recommended by the Bank for International Settlements. Accounting systems in Macau are consistent with international norms.

17. Which key long term developments should investors be aware of in Macau?

Macau is likely to experience an uptick in its economy when the new casino and resort developments are opened to public. However in our view, investors should have a long-term approach and should not expect the same growth as in the last decade.

18. How does the culture affect the way that business is conducted?

As a unique Chinese Special Administrative Region, which was administered by Portugal for 450 years, the culture is quite important and affects the way business is conducted. The business etiquette is quite similar to what is practised in Hong Kong.

19. How is competition governed in this territory?

The Macau Commercial Code is the main source for the regulation of competition between entrepreneurs in Macau and the main principle established is article 153, which states that competition between entrepreneurs shall take place in a manner that does not harm the interests of the economy of the Region, and within the limits established by the law, states also that all agreements or practices that have the object or effect of preventing, falsifying or restricting competition are forbidden, without prejudice to special provisions.


Pedro Cortés

Senior partner

Rato Ling Lei & Cortés - Advogados


Marta Mourão

Senior associate

Rato Ling Lei & Cortés - Advogados