Singapore is Counting Chips of Profit from IRs

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Aug 31 2010
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Singaporeans would be “prudent” to let foreigners do the gambling at the casinos in the two new integrated resorts (IRs) as such a move will be a “sure-win” situation, as taxes levied on gambling would boost government coffers, Prime Minister Lee Hsien Loong said yesterday at the National Day Rally. Yeah, maybe PM Lee should start a tourism campaign such as “Gambling is good for you because it’s better than smoking since it will get you cancer, it’s better than drinking because it will fail your liver and it’s definitely better than vice because you may end up getting AIDS.”

The two IRs namely Marina Bay Sands IR (developed by Las Vegas Sands) and Resorts World Sentosa IR (developed by Genting International) were given microscopic economic calculation to justify its benefits long before many Singaporeans were up in arms protesting the building of casino(s). In the end, the Singapore government was satisfied that the potential economic benefits outweighed the social risks of increased crime and addiction hence the green light for not only one but two casinos – much to the surprises of the people.

Marina Bay Sands IR 

The Singapore government estimated the two IRs would contribute between 0.5% and 1% (versus private sector estimates of 0.3% – 1.8%) of the country’s GDP (gross domestic product) when fully operational. It was important to have all the right facts and figures in place simply because the two IRs would be an iconic project that will not only measures PM Lee’s economic skill but also serves as a guideline as to how much more resources should the country pour in expanding other affected areas such as the tourism and services sector.

Marina Bay Sands and Resorts World Sentosa IRs were projected to double visitor arrivals to 17 million by 2015. Singapore, a country so small that its neighbour Malaysia (government) once joked was not even a country but a tiny island, depends very much in the services sector which is employing two-thirds of the working population and contributing the same proportion to GDP each year.

Resorts World Sentosa IR 

Since the IRs opened, tourist arrivals went up to 1 million visitors in the month of July 2010 alone. The government on the other hand has collected S$70 million in casino levies. Resorts World Sentosa made S$861 million in revenue in the second-quarter while Marina Bay Sands pocketed S$128 million of pre-tax profit in its first 65-days of operation. But IRs is not about casino alone but rather about hotels, shopping malls, convention centres, theatres, theme parks and whatnot. So the other segment’s tangible benefits are still unknown at this moment.

What about the social problems as a result of the iconic projects? This is an area which the Singapore government has done quite well. The guidelines that requires a Singaporean to pay S$100 for a day pass or S$2,000 annual membership fee show that while the government wants the revenue from tourists, it also wish to discourage its citizens from the “evils” of gambling although I’m sure it doesn’t really care if tourists it is attracting to its casino tables would eventually jump from the top of the IRs’s hotels.

Resort World Sentosa Casino 

No matter how you debate on these most expensive casinos in the region, the Singapore government is already the clear winner. Besides contributing to the country’s economy via creation of thousands of jobs, the spill-over effect on hotels and tourism are simply compelling enough for the project to be given the thumbs-up. And the best thing is the government does not have to worry about recouping the investment totalling a whopping US$10 billion for both the IRs.

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