Inside Asian Gaming

INSIDE ASIAN GAMING | October 2011 28 Feature T he failure last month of the ferry operator Macao Dragon was merely the outward manifestation of deeper structural problems in the Macau economy. Despite a decade of gaming market liberalisation,theconceptofrealcompetition in other areas of the local economy often tends to be honoured more in the breach than the observance. Even before Macao Dragon breathed its last, there was a highly significant development in the market. On 11th August, an announcement that barely got a mention in the Macau media revealed that New World First Holdings Ltd—a Hong Kong- based operator of ferry services to Hong Kong’s outer islands and to Macau—had been sold to Shun Tak. Shun Tak is a shipping and property conglomerate founded by Dr Stanley Ho and run by his daughter Pansy. It also operates TurboJet—the dominant (and at one time monopoly) ferry service provider between Hong Kong and Macau. As part of the HK$350 million deal, Shun Tak got NewWorld’s fleet of catamarans and the ferry concession agreement granted by the Macao SAR government. On 1st September, less than two weeks after the Shun Tak takeover, New World First Ferry Services (Macau) announced it was reducing the price of a single trip between Macau and its operating base at Kowloon in Hong Kong, by HK$19 (US$2.4) or its equivalent in patacas. The company said this was to reflect a decision by the Macau government to drop a departure tax previously levied on tickets from Macau. TurboJet didn’t make an equivalent offer to reduce the price of its tickets from Macau to downtown Hong Kong. That led some to wonder whether New World First Ferry’s largesse was an astute move designed to deflect any suggestion that the Shun Tak takeover was against consumer interests. Even when competition is introduced into the Hong Kong-Macau tourism market, it can be a relative concept compared to some other parts of the globe, given the spider’s web of family and business ties that bind Macau’s and Hong Kong’s ruling elite. Macao Dragon wasn’t entirely the people’s champion of choice it has been presented as in some quarters. Its major shareholder is local businessman Ng Fok, who also has business ties with Stanley Ho. And New World First Holdings had been—up to the point of its sale to Shun Tak—50% owned by NWS Holdings. NWS Holdings in turn was founded by Cheng Yu, a shareholder in Sociedade de Turismo e Diversões de Macau—the tourism investment company started by Dr Ho that originally ran his former Macau casino monopoly. On 14th September came market attrition, with news that Macao Dragon had ceased trading. The ferry operator— launched only 15 months earlier—had been offering cut-price services between TurboJet’s home base at Hong Kong-Macau Ferry Terminal at Sheung Wan and the Taipa Temporary Ferry Terminal in Taipa, Macau. The debts of Macao Dragon could reach over HK$10 million (US$1.28 million) and are expected to exceed the company’s total assets, according to the company’s provisional liquidators Deloitte Touche Tohmatsu. Macao Dragon did not own the four catamarans it operated, but leased them from sister companies, Deloitte stated. Exit the Dragon Market consolidation as well as a company failure could spell bad news for Macau’s shuffling army of ferry passengers Racing for the exit—NewWorld First Ferry is now part of Shun Tak