Macao is cashing in on its Closer Economic Partnership Arrangement (CEPA) with the mainland to boost its economic, trade and cultural development.

Firms sending goods from Macao to the mainland do not have to pay tariffs because of the free trade pact. According to statistics from customs, the volume of such goods stood at over US$1 million in the first 10 months of this year. The pact meant Macao companies did not have to pay 926,000 yuan (US$115,750) in tariffs.

So far, 509 categories of products from Macao are covered by the non-tariff treatment of the CEPA. Among Macao's exports to the mainland are cement and clothes.

In 2006 the mainland will lift tariffs on all products imported from Hong Kong and Macao in line with CEPA agreements with the two regions.

Ng Pak Meng, director with the Macao delegation to Beijing, said a steady communication network had been established between Macao and mainland provinces and municipalities. "It helps us to make progress in exchanges and cooperation with the mainland in the economic, trade, tourism, culture and training sectors," Ng said.

The mainland's trade volume with Macao was US$1.48 billion in the first 10 months of this year.

Exports to Macao decreased by 5 percent year-on-year to US$1.27 billion in the same period and imports from Macao rose 15.5 percent year-on year to US$0.21 billion.

Experts suggested mainland enterprises could take advantage of the free trade market under the framework of the CEPA.

For example, Guangdong Province should spare no efforts to develop its service industry further, said Zhang Youhuai, a researcher with the Guangdong Academy of Private Economy.

"The province can maintain its important role in the manufacturing industry and sharpen its competitive edge in the service sector," he said.

He added that firms in Guangdong could use Hong Kong and Macao to gain a foothold in the global economy.

By the end of this year, the volume of zero-tariff goods from Hong Kong and Macao to the Chinese mainland is expected to surpass 3 billion yuan (US$371.4 million), said the Ministry of Commerce.

The central government signed the free trade pact with the Macao Special Administration Region in October 2003. Zero tariffs were implemented on goods from Hong Kong and Macao from January 1, 2004.

(China Daily December 21, 2005)