Singapore likely to go ahead with casino to boost tourism

Asian Economic News, April 18, 2005

SINGAPORE, April 16 Kyodo

Singapore is expected to scrap its long-standing ban on casinos next week, overriding debate on an issue which has roused raging controversy in recent months, analysts say.

Last Saturday, members of the Cabinet reached a decision on the issue, which Prime Minister Lee Hsien Loong will announce Monday in parliament.

Analysts say the government will likely go ahead with the idea.

''Basically at the end of the day the government is driven by economic consideration,'' said Seah Hiang Hong, head of research at Kim Eng Research, part of a local stockbroking house.

''The main idea is to pull in tourists because tourism affects Singapore's airline industry and its status as an aviation hub, which in turn also affects the rest of the economy,'' he said, adding Singapore sees Hong Kong and Dubai with their multimillion dollar tourism projects as threats to Singapore's tourism industry over the longer term.

The government softened its decades-old resistance to casinos in the squeaky clean city-state by announcing in December last year it was considering the possibility of allowing a casino to be set up and invited casino operators from around the world to submit concept plans to build a glitzy integrated resort, which could include a casino, convention centers, hotels and theme parks.

The proposal is seen as part of the country's strategy to stay ahead of stiff economic competition by wooing more tourists as manufacturing and other jobs are lured to lower wage countries such as China and India and other Southeast Asian countries are intensifying their bid to rival Singapore in services by building new airports and port facilities.

The integrated resort, which is expected to be located either at Marina Bay on the country's southern waterfront near the bustling commercial and financial district or at the more tranquil setting of Sentosa Island, a resort off the southern coast, has sparked heated debate, with both citizens and Cabinet members split on the issue.

Proponents say the economic benefits of having a casino far outweighs costs by providing an added booster for the country's tourism industry, create more jobs when thousands have been shed in recent years amid an economic slump, and help raise tax revenues for the government.

But those who oppose the idea, including several Muslim and Roman Catholic religious groups, have expressed concerns about the negative social effects caused by gambling.

The government has rejected calls by a ruling party politician for a referendum to let the citizens decide on the issue or for a free vote in parliament to allow legislators to decide.

Former Prime Minister Goh Chok Tong, who is now senior minister in the Cabinet, said earlier, ''The world has changed, Singaporeans have changed...That there'll be incremental social costs, I concede. But will the whole society collapse because of a casino? I don't believe so.''

Lee Kuan Yew, who governed the country as prime minister from 1965 to 1990, has long resisted the idea of having a casino in the city-state, but he too conceded Singapore might have to adapt to a changed environment.

''It is a different Singapore from the one I governed,'' Lee said. ''I am dead set against gambling. I don't believe you can get rich by gambling.''

The government had toyed with the idea for a casino as far back as 1985 when the country was hit by a severe recession and it resurfaced again last year when a government committee, which was established to review the country's economic directions, proposed a casino.

But it was shot down on both occasions.

Now, however, the government wants to capture some of the estimated US$1 billion that Singaporeans spend at overseas casinos, be it on cruise ships, in Indonesia's Batam Island about 45 minutes ferry-ride from Singapore, where there are 13 casinos, or at Malaysia's hilltop resort casino at Genting, which is just several hours drive from Singapore.

The country is also keen to tap into the growing wealth of Asian tourists and their penchant for gambling, particularly the new rich from India and China and wealthy oil sheiks from the Middle East.

Analysts say the project would help Singapore achieve its declared goal of attracting 17 million tourists and S$30 billion (US$18.1billion) worth of tourist receipts by 2015.

Investment banker Morgan Stanley estimated in a recent report the integrated resort project as a whole would have spillover effects on the broader tourism sector and generate growth of about 1.5 percent of gross domestic product.

However, as for the casino per se, the report said, ''It is doubtful whether the proposed casino in Singapore would be able to attract the necessary critical mass of foreign clientele'' due mainly to strong competition from existing casinos such as those in Macau.

Singapore's move comes at a time when other Asian countries and regions including Macau, South Korea and Thailand are also racing to expand or build new casinos.