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Raising the stakes

The Edge Singapore
The Edge Singapore4/8/2019 08:00 AM GMT+08  • 4 min read
Raising the stakes
SINGAPORE (Apr 8): Nine years ago this month, Sheldon Adelson, the ageing chairman and CEO of Las Vegas Sands, cut a yellow ribbon at precisely 3.18pm to symbolise the opening of the Marina Bay Sands (MBS) integrated resort (IR). The iconic three towers
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SINGAPORE (Apr 8): Nine years ago this month, Sheldon Adelson, the ageing chairman and CEO of Las Vegas Sands, cut a yellow ribbon at precisely 3.18pm to symbolise the opening of the Marina Bay Sands (MBS) integrated resort (IR). The iconic three towers and boatlike cantilevered deck would soon come to define Singapore’s skyline.

Three months earlier, in time for the Lunar New Year, Resorts World Sentosa (RWS) had opened for business. Genting Singapore’s sprawling complex, with six slick hotels and a Universal Studios theme park, quickly overshadowed the casino and leisure park that its Malaysian parent had built in the highlands in Pahang in 1965.

Together, the two developments represented $15 billion worth of investment, as well as a paradigm shift in the national mindset of what was good for Singapore.

With the experiment deemed a success, the government has now extended the gaming companies’ licences to operate exclusively until end-2030. The hope is that the expanded facilities will give Singapore’s economic fortunes a much-needed boost at a time when growth has begun to stagnate and competing offerings are emerging in neighbouring countries.

The IRs each hold roughly 15,000 sq m of casino gaming floor space in their bellies. Much care was taken to ensure that Singapore was not flat out licensing casinos but instead developing broader business and lifestyle offerings. The two developments presented different propositions — MBS would be the city-centre business meeting space while RWS offered families extensive entertainment options.

The idea for the IRs came up in 2004, and was formally proposed in Parliament in 2005. For over a year, there was a lot of public discussion over whether casinos should be allowed in Singapore and what the implications were. Members of Parliament debated the issue over four days, with many raising concerns that it could give rise to crime and erode values.

In fact, a casino had been suggested twice before — first in 1985 during the depths of a severe recession, and again in 2002 as the country’s leaders were “Remaking Singapore”. Both times, the suggestion was rejected. As Prime Minister Lee Hsien Loong said at the time in a letter to Wee Ee Chao, who was leading the tourism committee, “There may be economic merits to setting up a casino in Singapore. But the social impact is not negligible.” Lee quoted the letter in an April 2005 speech announcing the cabinet’s decision to go ahead with the casinos, as a way of explaining how it had been carefully weighed, and how the government was ready to adapt to changing circumstances.

At the time, coming off the back of the dotcom bust, the 9/11 terrorist attacks and the SARS epidemic that just about decimated business activity, there was concern that Singapore’s economy was too susceptible to external shocks, and on the verge of losing out to regional competition and fading into obscurity.

There was an almost single-minded obsession with growing the economy and the prospect of extensive economic value that the IRs promised won out. ”By acting now, we seize a window of opportunity to get ahead of our competitors,” Lee said. “If we say no, the best proposals for the IR, together with the investments and the jobs, will most likely go somewhere else in the region. Then we will be forced to play catch-up, and be in a much weaker position.”

To mitigate the “undesirable effects” of casino gambling and “deter vulnerable persons” from the casino, as then deputy prime minister and home affairs minister Wong Kan Seng put it, the government imposed a levy on locals and a mechanism to prohibit certain people from entering the casino. Now, with the expansion, the government is also increasing those “safeguards”: Levies will increase by 50%.

The IRs’ bigger space, and resulting growth, is expected to rejuvenate the economy. For one, the building activity would immediately benefit the construction sector. New tourists might be drawn here, while others enticed to return to experience the expanded offerings. It would also mean greater capacity for the meetings and conventions that Singapore has come to be known for.

Still, analysts caution against expecting the boost experienced in the IRs’ initial years of operation. Indeed, the expansion of existing concepts does seem like an old trick for the new set of circumstances that Singapore faces. Perhaps we would do well to refer again to what Lee said in 2005: “The IRs are an important step forward, but it is only one of many things we must do to remake our city, and build a new Singapore.”

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