Inside Asian Gaming

inside asian gaming February 2015 34 Cover Story The Singaporean Job Besides boosting tourism and creating a buzz, Singapore’s IRs were supposed to deliver jobs and economic development. Independent scholar Derek da Cunha needs convincing. Marina Bay Sands is estimated to contribute 1.25% to Singapore’s GDP, including S$457 million in procurement contracts to local firms, 48% of that to small and medium enterprises. The Singapore Tourism Board says the IRs support more than 40,000 jobs, including 22,000 direct hires, most of them locals. MBS says it emphasizes hiring young Singaporeans and putting them on career tracks. Prove it, Mr da Cunha says. “Since the two IRs are in effect a national project and one of the selling points in 2004 was job creation for Singaporeans, the government should have made it a requirement for IR operators to report on [employee] head count disaggregation in terms of foreign nationals, permanent residents and Singapore citizens.” The author of “Singapore Places Its Bets,” a 2009 “predictive analysis” of the IRs, says consideration of the IRs was less open than the similarly consequential decision to construct the MRT transit system that employed international consultants to evaluate rail and bus alternatives, culminating in a televised debate. The IRs haven’t spurred hoped-for growth in complimentary fields. The new expertise they have fostered, such as theme park management, are “niche” skills, Mr da Cunha says. The city-state’s official unemployment rate, 1.9% overall, 2.8% for permanent residents and 2.9% for citizens, may understate the real situation, due to some jobless workers abandoning fruitless employment searches or moving overseas, he believes. The IRs came after the Singapore government “opened the floodgates” to foreign workers in a variety of labor-intensive industries, according to restaurant and catering specialist Menu Group founder Devin Kimble. “They thought they’re not good jobs and Singaporeans wouldn’t want them.” “It’s an absolute fallacy that Singaporeans didn’t want these jobs,” Mr da Cunha says. But they may not want them at current salaries. “Because Singapore is allergic to minimum wages, foreign workers knocked down [monthly] wages to S$600,” Mr Kimble, now director of Hong “When we were writing the application, I just assumed that they would expeditiously license junket operators,” Mr Gore says. After all, junket promoters would bring the wealthy foreigners that authorities preferred as casino patrons. “Nobody anticipated there would be no junkets.” But CRA requires voluminous financial and personal disclosures, leading Macau junkets to be rejected or not bother applying. Some tried to use nominees, which CRA disallowed. At the MBS opening, Mr Adelson declared, “We are fully prepared to operate without junkets,” and MBS has. “Las Vegas Sands did a good job proving a large percentage of your VIP business can come without junkets,” an executive with extensive Asia experience says. “There’s ways to recruit very good customers as individuals, give them the proper amount of credit, if that’s required, and to look after them well.” Total revenue collected from the casino entry levy, as reported by the Singapore Totalisator Board, was S$224 million in the financial year ended 31st March, 2011, covering the initial year of IR operations, and has declined annually since then to reach S$151 million in FY 2014, a drop of 32.5%. Only three IMAs have been approved, two from Malaysia and one based in Singapore, all licensed for RWS. The strict licensing requirements “compel a situation where people have to avoid the regulation to be able to operate,” states Mr Gore. Shadow junkets, with promoters signed up as individual VIPs and distributing chips and commissions to players, are believed to be present at both IRs, helping enable VIPs to account for 50% of gaming revenue. The absence of Macau junket operators significantly constrains gaming revenue potential. It also saddles operators with player debt, a risk junkets largely assume in Macau. Gambling debts can’t be collected through mainland China’s legal system, and those players account for about half of Singapore’s VIP roll. RWS and MBS carry a combined $1.8 billion in receivables and made impairment provisions of $234 million during the first nine months of 2014, when estimated VIP revenue was $1.95 billion.