Singapore said on Monday it would build two casino resorts, worth a combined S$5bn (US$3bn), in a controversial move to increase tourism and create jobs.
The two casinos, which will be located on the recreation island of Sentosa and a new central property development Marina Bay, will be completed by 2009 and are expected to add S$1.5bn a year to the economy, the government said.
The casinos would form the centrepiece of what are expected to be Singapore’s biggest entertainment, hotel and retail complexes and spearhead efforts to double the number of visitors to 17m in 10 years, reversing Singapore’s declining share of Asia’s tourism market.
The casino would help create new jobs for unskilled workers as assembly-line manufacturing moves from Singapore to China, said Dominique Dwor-Frecaut, regional economist at Barclays Capital in Singapore. The “integrated resorts” are also expected to boost the ailing construction sector.
The prospect of large profits has already attracted 19 of the world’s leading gaming operators to submit initial proposals to build the new resorts. The government said it would award licences for resort development by the end of this year.
MGM-Mirage, Las Vegas Sands, Harrah’s Entertainment and Wynn Resorts are seen as the favourites to gain the casino licences since all four are seeking partnerships with state-owned CapitaLand and Keppel Land or other local property developers.
But some analysts are sceptical that the casinos will deliver promised economic gains because of doubts they will attract many foreign gamblers.
The risk is that Singapore could remain a secondary gambling destination in Asia behind Macao, which has become the centre of Asia’s gaming industry since opening to foreign operators in 2002.
“Singapore’s proposed casino would by itself struggle to attract a critical mass of foreign clientele, thus undermining the economic logic of this project,” said a recent report by Morgan Stanley in Singapore.
Another worry is a government proposal to charge Singaporeans a S$100 a day entry fee to the casinos to curb the growth of gambling among the local population.
But this threatens to reduce significantly casino revenues since Asia’s gaming industry is “highly fragmented and casinos have to rely to a large extent on local clientele”, said Morgan Stanley.
In contrast, Merrill Lynch predicted that Singapore’s casinos will attract gamblers from neighbouring countries and capture 60 per cent of the US$735m that Singaporeans spend on gambling abroad.
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