Debate on Integrated Resorts 19 April 2005
Lim Boon Heng, Member for Jurong GRC
My parents taught me that gambling is a vice. Each Chinese New Year we were allowed to keep part of the “ang pow” that we received. When I was about 6 or 7 years old I lost it all in a card game in the kampong. When my parents came to know, I was duly punished. ‘Gambling leads to broken families,’ they sternly told me.
I went to a Catholic school. There I was also taught that gambling is wrong. There was competition among the ice-cream vendors who came by the school. The enterprising ones made themselves more popular by running a ‘tikam-tikam’. Buy a cut of ice-cream wedged between two wafers for 5 cents, one got a chance to try one’s luck to win up to 30 cents. But the school chased such vendors away!
I grew up to know that many people gamble on 4-D and Toto. But many among those who do so think it is wrong to bet on horses, or on table games in a casino.
In the past few months I have discussed the subject with quite a few Singaporeans of all walks of life. Some of them are clearly against having a casino. They hold dear the fundamental values of honesty, integrity, diligence and thrift. That is why we have a wholesome living environment, where people can move about in the streets at all times, anytime of the day, feeling safe. I have met a young man in his early 30s, recently married, who spoke passionately that he identifies with this Singapore. That is what sets us apart from others. He wants Singapore the way it is. He did not want our home corrupted by what may come with a casino.
I met also a businessman who had to start from scratch because his father gambled away the earnings from several lines of business. He too was strongly against having a casino in Singapore. For him, we should continue to earn our living by honest hard work. That was how he built up his fortune.
If the debate is only on whether we should allow a casino in Singapore, like these Singaporeans, my answer would be “No.”
In the discussions of the past few months, there had been suggestions that we could become the Las Vegas of the East, but we could be left behind by Macau and others if we did not move quickly. I wondered what being Las Vegas would mean. I have never been to Las Vegas. I decided to visit Macau last month, immediately after the Budget debate.
There are 17 casinos already in Macau. I visited two of them, the Sands and the Lisboa.
I was told that the newly-built Sands Casino cost US$280 million. Huge queues formed on opening day, as punters heard rumours that there would be free chips for the first customers. In the end there were no free chips, but the crowds poured in. The ambience is grand. On the ground floor is a “No smoking” gambling hall, tried out as a first for a casino, and turned out to be a huge success. On second level is a huge gambling hall of 160,000 sq ft. The tables and jackpot machines were packed. At higher levels were more exclusive rooms for high-rollers. The Sands Casino had the world’s biggest chandelier and the world’s biggest video wall. Stage shows run throughout the day to entertain the gamblers. Top class restaurants offered the best steak, the best Japanese cuisine and the best Cantonese cuisine. 5,000 workers kept the casino operating day and night. On Chinese New Year’s Day the takings at this one casino was more than the takings of all the casinos in Las Vegas on their busiest day, New Year’s Eve. Little wonder than, that Sands Casino recouped its investment in 10 months.
I asked what percentage of the gamblers were Macau residents, and how long did non-residents stay in Macau on each trip. I was told that 55% of the patrons came by bus from mainland China direct to the casino, and took the bus back when they finished for the day. 45% of the patrons came from Hong Kong by ferry. They were essentially day-trippers. There was a sprinkling of patrons from Taiwan, Korea and Japan. But Sands is building another complex, much bigger on the Cotai strip, and there would be 11,000 rooms for patrons who will come from further afield, mostly from mainland China.
I next visited the Lisboa. Unlike the Sands, it was garish, like what one imagines a casino to be, like what one sees in the movies. It was congested. Every space was used for gambling. On that Saturday afternoon, hopeful gamblers packed the main gambling hall almost shoulder to shoulder. One could hardly move around without bumping into someone else. There were private rooms too, for the big-timers. The Lisboa too, appeared very successful.
What were the social problems? Our tour guide told us that loan sharks lurk in the casinos. They identify the gamblers who had become desperate, and offer them loans. How do they collect the debts, when the gamblers lose all again and left? We were told that the loan sharks beat the borrowers up until they reveal the names and addresses of relatives. Were there suicides too? Yes, our tour guide told us: since the Sands Casino opened, there had been 3 suicides. Was there vice? Certainly, but the residents in Macau are used to it.
So I came away from Macau troubled and deeply concerned about the social problems a casino would bring to Singapore. At the same time I realised that Singapore is not competing to be the Las Vegas of the East, if we are talking of one or two casinos, when there are already 17 in Macau, and more are being built there.
But it is not only about whether we should allow a casino. It is about what kind of economy we will have in the future. It is about an economy that will generate enough jobs for Singaporeans.
As other countries open up to foreign investments, we lost competitiveness because our costs have risen. As the old lines of work relocated overseas, we moved up the ladder. We chased higher value added activities. So now a company that used to employ 12,000 production workers now employ 5,000, but they are 5,000 engineers and not production workers. They still hve 600 production workers in order to set up the prototype production line before moving it overseas for mass production.
We moved into other sectors – chemical, pharmaceutical, life sciences, education, medical tourism. These sectors offer jobs for those with higher education and higher skills. For some years already, the EDB has said the new investments will need more skilled workers and less less-skilled ones, in the ratio of 2 to 1. So, two skilled workers against one less-skilled worker. The Ministry of Manpower recently told the NTUC Central Committee that it projects a shortage of skilled manpower with tertiary education over the next five years, but a surplus of low-skilled workers. We are trying to recreate 10,000 jobs in the next 12 to 18 months. It is difficult. Even if we succeed, it is not going to be enough. To create enough jobs for low-skilled Singaporeans we would need a lot more investments and a lot more skilled manpower to generate enough low-skilled jobs.
There is a need for us to develop our services sector.
Whilst trade in manufactured goods is fairly liberal and open, the same cannot be said of services. Many others want to take away from us what we have been good at, being an air hub and a sea hub. Many others also aspire to be one of the top two or three financial centres in our time zone. We will defend our share, and aim for more in these areas. But we also have to diversify.
The tourism and hospitality sector had contributed a significant share of our economy in the past. We used to be the shopping paradise with pockets of the third world for tourists to see. Today we are not a shopping paradise, and the pockets of the third world have gone. We have lost out for lack of re-investment. Investments in tourism projects have to be big to be attractive. We failed to agree to terms with Disney – they went to Hong Kong. The Hong Kong government gave them a huge subsidy.
Small theme parks are not viable. They are not good enough to attract the large numbers of customers needed to sustain operations. Yet to remain attractive they have to refresh themselves. From the NTUC Club’s experience, a facility has to be refreshed every two or three years. The small theme parks do not earn enough to do so. That is why Haw Par Villa, Tang Dynasty Village, Fantasy Island and the Asian Village failed. They were not world class attractions good enough to attract tourists. They were not good enough to attract repeat visitors from among Singaporeans.
Mega projects have the critical mass, but they also require a bigger mass market. Therefore business risks of mega projects are high. Even Disney Europe outside Paris struggled for years, even though it drew its customers from a base of 250 million who could reach it by car, and it also had special incentives to locate outside Paris.
Miyazaki is a city in the south of Japan. Its mild climate made it the favorite honeymoon location for young Japanese couples in the past. But with air travel, young Japanese couples prefer Hawaii and other overseas locations. So Miyazaki lost out. They tried to reinvent itself. A mega resort, called Segaia, was built with in indoor wave surfing lagoon complete with a sandy beach, and it also had top class golf courses, including the one that hosts the annual Phoenix Open. It did not attract enough visitors. The developer went bankrupt. It has been bought over by an American businessman.
The approach that our Government has taken is to put the development of integrated resorts to the market test. The test is whether potential developers will do so without subsidy. Many are very keen to invest big money - $4 billion to $5 billion - if they are given a casino licence. These projects are for MICE facilities, family entertainment, mega shows and the like. I estimated that 10,000 jobs will be created directly by the integrated resorts. MTI believes that with the spin-offs there will be 35,000 jobs. The inflow of tourists will benefit other hotels, shops and taxi-drivers.
Some people have asked me what kind of jobs there will be.
Let me use NTUC Club to illustrate. It is not a casino, but it does operate jackpot machines. It operates Downtown East in Pasir Ris (which includes the Escape Theme Park and Wild Wild Wet), 6 social club lounges (two in the city and 4 in the HDB heartlands), chalets at Pasir Ris, East Coast Park and Sentosa, a retirees club with 5,000 members, a children’s club, and a sports and wellness club. NTUC Club and its subsidiaries employ about 800 staff, both full time and part time. (About 630 full time staff and 170 part time staff.) NTUC Club employs Singapore citizens and permanent residents. Its subcontractors (for ground and land scaping and technical servicing) employ another 75 persons. The lessees (restaurants and shops) employ probably another 200. Of these more than 1,000 jobs, only 78 are employed for the jackpot operations. So, if you look at integrated resorts, the employment that they generate, be it the 10,000 directly or the 35,000 jobs if you count the spin-offs, only a small number would be in the jackpot and casino operations.
As the Prime Minister mentioned yesterday, without the jackpot operations, NTUC Club would have to close shop.
NTUC Club is almost the only provider of chalets for Singaporeans who want a short holiday with their families. The annual subsidy is $400,000.
Seven years ago, the annual subsidy for the 6 social club lounges was almost $13 million. With concerted efforts to raise productivity, this annual subsidy came down to $6 million last year – so still almost $1 million a year for each social club lounge. NTUC Club will open at the former Embassy at the Esplanade in two weeks. The annual subsidy will be about $1 million. Why can we continue to operate? It is because of the subsidy from the jackpot operations. And that is why Embassy failed – it did not have a jackpot room.
To keep Downtown East and the other facilities fresh, NTUC Club invested $100 million in the past 7 years. The investments include the Escape Theme Park and Wild Wild Wet for which it derives no surplus. NTUC Club will invest another $110 million in the next 3 years to keep itself fresh and appealing.
Is it worth it? When the NTUC Club started in 1987, it entertained 100,000 visitors in one year. When the Pasir Resort opened in 1989, the number shot up to over one million a year. Last year the NTUC Club received 6 million visitors. The patrons are a cross-section of Singapore society, both young and old. NTUC Club is particularly happy that it is able to serve lower income families who can mix with the higher income at its facilities.
But investors in an integrated resort will not think like us. They want a return on their investments. They will need many multiples of the 6 million visitors that NTUC Club attracts annually, if they are to keep their pricing attractive enough, even with a casino licence. If they succeed, yes, the retail and restaurant sectors will come back to life, and many more taxis will be required. They are putting their money on it. And I know they will need multiples of six million visitors to their facilities. So it is 12 to 24 million visitors we are talking about. Many of them would have to come from overseas. If they are putting their money on it, and they can attract this volume of visitors, then there would be buzz in Singapore and there would be benefits to the economy.
But if we don’t revitalize the tourism industry, and concentrate only on higher end electronics, chemicals, pharmaceuticals, life sciences, nanotechnology, finance, education and healthcare, we won’t have enough jobs for lower-skilled Singaporeans, many of whom are in the older age group. As it is their wages are stagnating. In fact, for many of them, they suffer a loss in real income, while the cost of living goes up. They need good jobs, and better paying jobs.
I wish we can have integrated resorts without casinos. Casinos come with social costs; there will be some broken families. But there are social costs also, of high unemployment. There are 35,000 jobs to be had. Cabinet decided not to let it pass. But the social costs are real, and we have to pay enough attention to this. Only last night, I was reminded that the social costs of gambling are already with us. One young woman came to ask me for help. She and her mother wanted to buy a new HDB flat. Why? They have been harassed by loan sharks. Her mother wanted to divorce the father. And she looked me squarely in the face and said, “All because of gambling”. So this is not an easy decision, but when there are 35,000 jobs, I cannot say no.
