A plan to set up a non-mandatory central provident fund was unveiled by Macau Chief Executive Edmund Ho Hau-wah yesterday as part of his package to tackle "snowballing social problems" in the former Portuguese enclave.
Mr Ho also admitted "inade- quacy" in estimating and coping with social problems that surfaced in the city's economic development. "There is lots of room for improvement when it comes to our judgment on new social developments and our ability to act early," he said.
Delivering his policy address in the Legislative Assembly, Mr Ho said the government would earmark part of its surplus as seed money for a central provident fund aimed at enhancing the quality of life for retirees.
"The government will decide whether to inject extra funding into the scheme, depending on the fiscal situation at the time," he said.
Eligible residents can choose to open personal accounts under the scheme, with funds provided by the government. They can access cash in their accounts when they retire. The so-called "non-mandatory central provident fund" would cover all permanent Macau residents, although employers might not be obliged to contribute to the fund.
The policy address did not explain what would happen to the fund in a year of deficit.
Hong Kong unionists have, since the 1960s, been calling for a central provident fund to be set up with contributions from the government, employers and employees. But the idea was not adopted because of lack of consensus in the community. The Hong Kong government introduced the Mandatory Provident Fund scheme in 2000.
Mr Ho said various problems in Macau quickly produced a snowballing effect that harmed the government and society.
The chief executive, who will step down in 2009, said 19,000 public housing flats were being planned for completion by 2012. "The lasting optimism of investors has put a different complexion on Macau's property market, causing pressure and worries to many citizens," he said. The government would also develop homes for young couples who had problems buying apartments.
Tax cuts worth a total of 1.1 billion patacas were announced, with employees continuing to enjoy a 25 per cent income tax concession.
The personal allowance will be raised from 95,000 to 120,000 patacas, and Macau residents who are first-time homebuyers will be exempted from stamp duty on the first 3 million patacas spent on property purchase.
Other sweeteners handed out by Mr Ho, to be implemented next year as short-term relief, include exemption of rates for all residential properties which are not rented, and a rise in the old-age allowance. Civil servants will be given an 8 per cent across-the-board pay rise next year.
The Macau government's surplus increased by 95.5 per cent to 19.13 billion patacas in the first nine months of this year. While revenue rose by 47.39 per cent during the period due to soaring contributions from gaming taxes, which accounted for 75.5 per cent of all government revenue, spending fell by 0.34 per cent.
Macau's swelling coffers represented 9.37 per cent of gross domestic product and 115 per cent of all government spending during the first half of the year.
While the casino-driven economic expansion has created unprecedented wealth in the city, it is concentrated in the hands of a few.
Annual GDP per capita soared by 101 per cent to 227,500 patacas between 1999 and last year, but median annual earnings increased by only 37 per cent to 80,400 patacas.
Workers outside the gaming industry have largely missed out on the boom, and resentment towards imported labour continues to grow.
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