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The government hopes to boost tourism with two new casinos but will try to keep local gambling in check by charging Singaporeans a steep admission
Singapore has long enjoyed a reputation as the cleanest and least corrupt city in Southeast Asia, which may be why multinationals such as GE Energy (GE), Citibank (C), and Pfizer (PFE) have made it their home base for the region. But while ?Singapore offers the kind of security that corporate strategic planners like, it's also, well, a bit stiff?? place where chewing gum can only be sold by pharmacies and defacing public property with graffiti is punishable by a half-dozen swift strokes of the cane.
Now, Singapore is letting its hair down. For the past two years, the city has closed the streets downtown during the last weekend of September to create a Formula One Grand Prix circuit, with drivers thundering through 23 turns among the skyscrapers and colonial buildings along the waterfront. Last month's event also included outdoor concerts by Beyonc??, the Black Eyed Peas, and Gwen Stefani in a downtown park.
The next attraction is a pair of casinos. The $5.4 billion Marina Bay Sands, built by Las Vegas Sands (LVS) on reclaimed land across from the Formula One circuit, will open in the first half of next year. The complex will have a 161,000-square-foot casino, two theaters offering Broadway- and Bollywood-style shows, a science museum, a luxury mall with tenants including Louis Vuitton (LVMH.PA) and Chanel, a convention center, and 2,500 hotel rooms and suites.
Universal Theme Park
In February on Sentosa Island, 10 miles from downtown, Genting Singapore, the gaming and property arm 54% owned by Malaysia's Genting Group, plans to open the $4.2 billion Resorts World Sentosa, with six hotels and a Universal Studios theme park featuring a Shrek castle, 24 attractions including the world's tallest dueling roller coasters that snake in and out of each other's tracks, and a marine park. On Oct. 2, Genting Singapore launched a rights issue raising $1.2 billion, tapping shareholder enthusiasm that has driven the stock up 160% this year.
The hope is these sprawling resorts will help goose Singapore's tourism industry, which accounts for about 5.8% of gross domestic product, about the same as neighboring Thailand. Casinos in Asia have proven to be hugely successful in attracting visitors, as Macao's experience shows. The former Portuguese colony boasts more gaming revenues than the Las Vegas Strip and has become an important profit driver for U.S. casino bosses such as Steve Wynn. His Wynn Macau raised $1.84 billion in a Hong Kong listing that started trading on Oct. 9.
Las Vegas Sands is looking to raise as much as $2 billion in a similar listing of its Macao casinos before the end of the year.
Stylistically, however, the Marina Bay represents a major departure from the over-the-top betting palaces of Las Vegas Sands Chairman Sheldon Adelson. There are no replica Venetian bridges or gondoliers belting out arias in artificial canals that his casinos in Las Vegas or Macao feature.
There's no neon either, in fact??othing from the outside of the sprawling complex that suggests a casino at all. "This is a fully integrated resort and entertainment property that just happens to have a casino," says Thomas Arasi, CEO of Marina Bay Sands. Aw Kah Peng, chief executive of the Singapore Tourism Board agrees. "I don't think you will see that kind of in-your-face casino that you see in Vegas," she says.
Singapore is hoping fast cars, roulette tables, and green ogres will help woo more visitors. The government aims to boost tourist arrivals to 17 million people annually, from 10.1 million last year, and to double tourism receipts to $21 billion. "Tourism is really part of the transformation into a global city," says Aw.
But it's not just vacationers and conventioneers the city wants to woo. Singapore realizes that to remain competitive, it needs to attract top professionals to the city-state. "You need talent to create and lead and drive businesses, entrepreneurs, lead scientists, and engineers" says Beh Swan Gin, CEO of the Economic Development Board of Singapore. "Singapore was always livable, but it's in our own interest to be a more vibrant and interesting city."
With fewer than 5 million citizens and no natural resources, Singapore has been in a state of constant transformation since it was carved out of neighboring Malaysia in 1965. In the 1970s, Singapore focused on exports of textiles and wood products. Then in the 1980s its companies made a big push into semiconductors. In the 1990s the government wanted to make Singapore into a biotech hub, wooing companies such as Novartis (NVS) and Eli Lilly (LLY) to open research labs. The city has also been successful at building itself into Asia's wealth management hub and is now promoting itself as a leading center for green-tech firms. Still, the city got whacked early in the year when exports plummeted, and Singapore is anxious to diversify its economy further, hence its desire to become Southeast Asia's leisure capital.
Blacklisting Problem Gamblers
But once the casinos open their doors, the government will watch the proceedings carefully. In an attempt to keep local gambling in check, Singaporeans will have to pay $72 to get into the casinos for a day or buy an annual pass for $1,440, while foreigners can enter for free. And relatives of problem gamblers can keep them away from tables by putting their names on a government blacklist. The level of interest among locals is "the billion-dollar question," says Tan Hee Teck, CEO of Resorts World Sentosa. "These are probably the first casinos in the world where they charge admission."
Some analysts say the entry fee is just a drop in the bucket compared with the vast sums most Asian players wager in a single sitting. Aaron Fischer, gambling analyst at brokerage CLSA, figures locals will flock to the tables. Singapore's casinos will earn about $3.2 billion in their first year, he predicts. Some 40% of that will come from Singaporeans, he reckons, with most others coming from Indonesia, China, India, and other nearby countries. "The locals will be gambling a lot more than people think," he says, "and the question is how is Singapore going to control this."
Another question is whether the Universal theme park will fare better than Hong Kong Disneyland, where attendance has underperformed expectations. Visitors complained the Hong Kong park's 296-acre lot felt too small, but the Sentosa park spans just 49 acres. (By contrast, the Universal theme park in Orlando sprawls across 840 acres.) Universal Singapore therefore feels somewhat cramped, with its Battlestar Galactica-inspired roller coaster sitting just meters away from statues of pharaohs and the Egyptian-themed attraction next door.