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International Herald Tribune
4 March 2005
Las Vegas casinos can’t wait to come to Singapore. And although groups like Families Against the Casino Threat in Singapore and the National Council of Churches of Singapore are putting up a strong protest, they will probably lose.
MGM Mirage, which will soon control half of all hotel rooms on the Las Vegas Strip, wants government permission to develop a resort that may include Singapore’s first casino. So do Wynn Resorts and Harrah’s Entertainment.
Harrah’s, the No. 2 U.S. casino operator, says its Singapore proposal, if accepted, would be its most important project since its pending acquisition of Caesars Entertainment, the world’s largest casino company.
Prime Minister Lee Hsien Loong said Wednesday in Parliament that the government had received 19 proposals for the casino project, and that it would decide within six weeks whether the city-state, which only last year lifted a ban on the U.S. television sitcom “Sex and the City,” is now ready for slot machines.
The decision appears to be a foregone conclusion, especially since the government has already planned safeguards for the local population.
Every time any of Singapore’s 3.5 million citizens or permanent residents want to visit the casino to try their luck at roulette, they’ll have to pay a fee of 100 Singapore dollars, or $61. Tourists will enter for free.
One can debate whether that’s enough, too little, or too much of a deterrent.
What’s important is that legalized gambling is one of the few businesses left where Singapore has an edge over other Asian nations, because casino operators are forced to choose their locations not based on the size of the market, wage costs or availability of raw materials, but purely based on which place is open enough to receive them, warts and all.
China bans gambling, except in the semi-autonomous former Portuguese colony of Macao.
If tomorrow a Bellagio were allowed to open in Shanghai, would MGM still be interested in Singapore?
Pragmatic policy has, historically, been Singapore’s biggest draw for investors. In the 1960’s, when the rest of Asia was barricading itself against foreign investors, Singapore began courting them with tax breaks. Now that every country in Asia has gotten into the game, Singapore’s attraction has somewhat dimmed.
A casino is thus an opportunity for Singapore to once again capitalize on its openness, knowing that its small population, which is 94 percent literate and earns an average of $26,000 a year, allows it the greatest leeway of any nation in Asia to manage the social risks associated with gambling.
Will the casino add jobs, or merely poach workers from other parts of the hospitality industry? Will it bring in more tourists or turn locals into problem gamblers? Will greater freedom of choice help nurture an entrepreneurial spirit among Singaporeans, or will productivity suffer after a late night playing blackjack?
None of these questions can be answered by citing examples of other countries where the social milieu may be totally different.
Even the reason Singapore is considering a casino, after having rejected the idea in the past, is unusual. The government, which has run up budget surpluses in most years since 1968, does not need to rely on gambling to bolster revenue. Singapore’s motivation is different.
It was fine for Singapore to be efficient, safe and boring when the key to economic success lay in capturing factory investments for exporting electronics and other goods to the United States and Europe. Asian tourist numbers were small and the regional traveler, except for the Japanese, lacked purchasing power. Western tourists didn’t have to come to Asia to gamble.
The situation is different now. The battle for investment has gotten fierce ever since China became the world’s preferred manufacturing location. Meanwhile, many more Asians are traveling in the region, thanks partly to the proliferation of budget airlines. Of the 8.3 million visitors to Singapore last year, 73 percent were from Asia. Back home, these travelers have almost everything Singapore has to offer. Except baccarat tables.
While the rest of Asia takes time to warm up to casinos – a government advisory agency in Thailand has recommended legalizing gambling in 2007 – Singapore has a window of opportunity to entice the big gaming companies. And it must hurry.
Although South Korea isn’t a big draw with tourists, it already has 14 casinos, of which 13 are reserved for foreign gamblers. Seoul, as UBS noted in a recent report, is only an hour away from Beijing and Shanghai.
Singapore’s fastest-growing tourism markets are China and India, both of which have eased rules on the amount of money citizens can spend on overseas visits.
According to a report by the Xinhua press agency, the Chinese central bank this month added Singapore, South Korea and Thailand to Hong Kong and Macao as destinations where Chinese tourists can access their bank deposits back home via ATM machines.
Macao got twice as many visitors as Singapore last year.
If Singapore wants to bet on casinos, the time is now.