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Macau becoming the Las Vegas of
Asia
HONG KONG - Close to
an estimated US$7.4 billion worth of new
development, centered around entertainment and
casinos, has transformed the sleepy backwater of
Macau into a hive of activity.
China's
strategy is to turn Macau into the Las Vegas of
Asia, according to a report by Hong Kong-based UBS
Investment Research, "Macau Gaming - Let the Games
Begin". It says the political incentive is driven
by the upcoming 10th anniversary of Macau's
handover to China in 2009. UBS says a common
language, proximity (with a billion people within
three hours' flight time), and the limited variety
of entertainment venues in China, give Macau a
competitive advantage. The report adds that
China's economic growth provides a sustainable
base for gaming enterprises in Macau. Last year,
Macau earned US$5.4 billion from gaming - narrowly
beating the Las Vegas Strip (US$5.3 billion) as
the world's largest gaming center.
A
pivotal decision by the Macau government - to end
a 40-year monopoly on casino operations in 2002 by
granting three new licenses - triggered the
current development boom in Macau. Two of the new
licenses went to new players - Wynn's Resorts from
Las Vegas, and Galaxy Consortium, controlled by
Hong Kong group K-Wah. Several sub-concessions
were also issued, including one to Las Vegas
Sands, whose chairman, Sheldon Adelson, last month
unveiled plans to build a $15-billion replica of
the Las Vegas Strip on the Cotai Strip in Macau
(Cotai is the reclaimed land between two islands -
Taipa and Coloane). Sheldon told Hong Kong
reporters the strip could have as many as 60,000
rooms.
The strip has been carved into
seven parcels of land. At this stage, six hotels,
each supported by a casino, are planned, with
leading hotel groups, including Starwood,
Marriott, InterContinental, Regal and Four Seasons
committed to plans collectively worth $2. 5
billion.
Several Australian companies have
already tapped into opportunities in Macau. These
include WT Partnership, a quantity surveying firm;
Meinhart, an engineering firm; the Sanderson
Group, a theme park designer and contractor; and
Leighton Asia (Northern), part of the Leighton
Group. The Australian Gaming Manufacturers
Association plans to hold its trade exhibition in
Macau in June. Ross Ferrar, the association's
chief executive, says members including
Aristocrat, Ainsworth Machines and Stargames are
already exporting slot machines to casinos in
Macau. Such are the prospects for Australian
companies that the Australian Chamber of Commerce
in Hong Kong has set up a chapter in Macau to
service the growing number of Australians working
there.
Macau's economy grew 25% last year,
says Mark Wood, Austrade's trade commissioner
responsible for Macau. Growth is being driven by
the arrival of mainland Chinese tourists. Macau
and Hong Kong have benefited greatly since Beijing
decided to lift restrictions on travel to the two
special administrative regions (SARs) last year.
Individuals can travel to both Hong Kong and Macau
without joining an official tour group.
Wood says some 15-20 million tourists
visited Macau last year. If a similar level of
tourism per capita occurred in Australia, it would
mean a staggering 600 million tourists a year.
Wood says the average stay of Chinese visitors is
only 1.25 days. The strategy of the Macau
government is to double that stay by providing
more attractions, but currently there are not
enough hotel rooms. He says it will probably take
five years before Macau has enough rooms to meet
the anticipated increase in tourist arrivals. As
the new hotels get up and running, Wood says a
major concern will be the supply of fresh produce
- including seafood, vegetables and fruit. "We are
working to develop a supply chain to hotels in
Macau," he says. Australia is currently a leading
supplier of fresh food produce and wines to hotels
in Hong Kong.
As well as casinos and
hotels, a wide range of entertainment facilities
will be built in Macau in the coming years to
liven up tourist attractions in the former
Portuguese enclave. Aside from construction of the
casinos, hotels and entertainment complexes, Wood
says Macau will need additional housing,
hospitals, schools and other facilities to house
its growing population. Macau has a population of
500,000 and will have to rely on migrant workers
to fill newly created jobs. There will be a need
for both education offshore and new joint ventures
with vocational schools in Macau to train new
workers. Macau has already started to import
workers from the Philippines and India, according
to sources.
The second area is the civil
service, Wood says. The government has had to
adjust its civil service infrastructure to deal
with the huge volume of work coming from the waves
of investment activity. It will have to issue work
permits for the thousands of workers who will
arrive to work in Macau's casinos and construction
sector, deal with new licenses, and monitor the
industry.
Wood says Australia can play a
role in helping train more Macau people to cope in
areas such as licensing and monitoring. A team
from the Macau public service arrived in Australia
recently to see how Australia's Centrelink system
works. Macau needs to move to electronic
governance to keep pace with development. The
government hopes to deliver more services online
and to streamline its call centers.
Other players in the gaming
boom
Gaming in Asia is not only booming in
Macau. Last month, Singapore gave the nod to two
integrated resorts with casinos, to be built on
Sentosa Island and a newly reclaimed area known as
Marina Bayfront. Not to be outdone, the
Philippines Amusement and Gaming Corporation
(PAGCOR) plans a $15-billion project on reclaimed
land on Manila Bay to rival Macau. Rafael
Francisco, president of PAGCOR, said last year
that he would like to speed up the project to
catch up with Singapore and Thailand, which is
planning an integrated resort at Khao Lak, near
Phuket.
Austrade's Senior Trade
Commissioner in Manila, Alan Morrell, says the
idea is to make Manila a tourist attraction along
the lines of Las Vegas, with a variety of
entertainment, such as shows and rides.
Apparently, potential investors have begun
discussions with PACGOR. But as Austrade sees it,
a major hindrance is the expiration of PAGCOR's
charter in 2008. Investors would like to be
assured that the government will extend PAGCOR's
charter beyond 2008.
Negotiations are on
hold until the Congress of the Philippines passes
a bill extending PAGCOR's charter, probably for
another couple of years. PAGCOR hopes the
government will pass its bill this year, and is
mindful that neighboring countries like Singapore
have already announced their plans for casinos.
Sources say that if the bill is not acted on
quickly by Congress, the government's master plan
for developing gaming may not proceed as envisaged
- especially if potential investors start looking
at neighboring countries as an option.
(Asia Pulse) |
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