Macau Still Needs IVS To Resume, But When That Happens Is Unclear

Posted on: July 20, 2020, 12:51h. 

Last updated on: July 20, 2020, 03:12h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Macau’s gaming industry received a much needed boost last week when Guangdong province eliminated a 14-day quarantine policy previously applied to travelers arriving from the gaming center. But there’s still work to be done on that front, including the resumption of issuing a vital travel permit used by Chinese nationals to visit the casino hub.

Macau Needs IVS To Resume
Visits to Macau are perking up, but help is still needed in the form of the IVS policy being renewed. (Image: MarketWatch)

Data from the Macau Government Tourism Office (MGTO) confirms that visits to the casino hub surged immediately following the relaxation of the Guangdong quarantine protocol. But analysts believe Macau needs the individual visit scheme (IVS) to be renewed in order for visits to come anywhere close to rebounding to pre-coronavirus levels.

We are skeptical whether IVS will resume in July at this late stage, or in August even,” said Bernstein in a recent research note.

IVS is the largest source of individual visas for travelers from mainland China looking to enter Macau. Beijing is giving no indication as to when it will relax its freeze on the issuance of those permits.

IVS Essential for Travelers

Macau is currently averaging about 2,000 visitors per day, confirming that the end of the Guangdong quarantine policy is impactful. Last month, daily arrivals to the special administrative region (SAR) averaged just 752 people, and the daily rate immediately following the February COVID-19 shutdown was 700 to 900.

Still, the bulk of travelers arriving to Macau are doing so via business or family visas, not IVS permits. Analysts view the resumption of IVS issuance as essential to the SAR’s recovery hopes, with some likening it to a floodgate opening scenario. To that end, Macau policymakers are pressing Beijing to resume issuing the visas, but to no avail, as of yet.

The IVS policy went into effect in 2003. The policy — along with Macau opening its gaming industry to foreign competition in 2002 — is viewed by experts as “miracles” that charted a course for the SAR to become the world’s largest casino center.

In any given year, a third or more of all visitors to Macau arrive via IVS permits. In 2019, nearly 47 percent of visitors to the gaming mecca from mainland China arrived via IVS visas.

Confusing Outlook

The current halt on IVS issuance actually isn’t a direct result of the coronavirus pandemic. But an extension of that policy does stem from the outbreak. It went into effect late last year in advance of China President Xi Jinping’s visit to Macau to celebrate the 20th anniversary of the handover of the territory from Portugal.

Entering 2020, expectations were in place that Beijing would swiftly undo the IVS halt. But then COVID-19 hit, providing a reason to extend the freeze.

What’s confounding analysts, concessionaires, and Macau lawmakers alike is that authorities on the mainland are giving no insight as to when IVS visas will be issued or what needs to take place to make that happen.

Some analysts go so far as to say it’s “impossible” to predict when Beijing will relax the IVS halt, with the only certainty being Chinese politicians know it’s probably the next step that needs to be taken to bolster Macau’s economy.