TUESDAY, APRIL 19, 2005
Singapore bets big, plans $3bn casinos
REUTERS
SINGAPORE: Singapore approved a controversial proposal to legalise casino gambling, clearing the way for two casino resorts worth $3bn to bring in tourist dollars and overhaul the island's strait-laced image.
In his first major policy decision since taking power in August, Prime Minister Lee Hsien Loong unveiled plans on Monday to build one casino on Marina Bay near the city centre and one on the resort island of Sentosa.
"We cannot stand still. The whole region is on the move," Mr Lee said, citing statistics showing Singapore receiving 6% of Asia-Pacific tourists in '02, down from 8% in 1998. "If we don't change, where will we be in 20 years?"
The casinos are central to Singapore's ambitious target of doubling tourist numbers to 17m a year, tripling annual tourist spending to $18bn, creating about 100,000 jobs and overturning the stereotype of a staid, sleepy island.
It opens a new avenue for tapping the growing affluence of Asian travellers, especially as China's middle class swells. China's southern city of Macau, boasting 17 casinos, saw its economy expand 28% in real terms in '04.
But the plan provoked a rare open policy debate over whether the economic benefits would outweigh potential risks of gambling addiction and crime. "Casi-NO" bumper stickers adorned some cars. Internet chat rooms buzzed with debate on the topic.
The decision comes as big casino operators are turning to Asia for expansion, and could spur Thailand, India, Taiwan and Japan into legalising casinos after explosive growth in casinos in the Chinese city of Macau, analysts say.
Singapore has received 19 proposals from nearly every big name in the global casino business - including Las Vegas giants Harrah's, MGM Mirage, Kerzner International, Wynn Resorts, and Australia's TabCorp Holdings.
"Several bidders said this would be their flagship project in Asia," Mr Lee said. Potential developers include Singapore's CapitaLand and Keppel Land.
The casinos, expected to open in '09, will form the epicentre of two resorts boasting theme parks, shopping plazas, convention halls, 1,500 to 2,000 room hotels and museums. The resorts alone would generate 35,000 jobs, Mr Lee said.
US investment bank Merrill Lynch estimates one casino resort alone would cost about $2bn to build, have an enterprise value of about $4.8bn with a third of its estimated $2.1bn a year in revenues coming from tourists.
Some bidders have been selected to submit a second proposal, the next phase in a selection process that ends in December with the awarding of licences to build the projects.
The casino is part of a plan to remould Singapore's economy as China's rapid economic growth erodes its manufacturing base and cities such as Bangkok compete for tourist dollars. Nomura Singapore economist Tomo Kinoshita reckons just one casino resort could boost the economy by 0.6 percentage point. The decision came after spirited debate.
One group, Families Against the Casino Threat in Singapore, gathered 29,516 signatures in an online petition to stop it, while two opposition parties formally opposed the plan. Founding Prime Minister Lee Kuan Yew, the premier's father, expressed concern before later saying it made economic sense.
"There is definitely a lot of concern in the community," said Fong Hoe Fang, the 50-year-old founder of the online petition. "It is so sad that after years of keeping the casino at bay, Singapore finally has to blink."
Singaporeans already bet heavily in lotteries, on cruise ships and via illegal bookmakers. Merrill Lynch estimates that a casino could capture up to 60% of the $735m Singaporeans spend each year gambling abroad.
To reduce the risks of gambling addiction, crime and other social ills, the government said it would restrict access for locals through membership fees of S$100 ($62) per day or S$2,000 a year. The casinos also cannot extend credit to local residents.
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