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Source: www.asiaecon.org |

SINGAPORE'S GAMBLING VENTURE


The notoriously conservative Singaporean government is venturing into the gambling industry by allowing the construction of its first ever casino. Prime Minister Lee Hsien Loong first announced plans for a casino resort in 2004 and the project is now nearing completion. Singapore hopes to cash in on the rampant growth of the gambling industry around Asia, especially in Macau. The plan represents a cultural change as gambling and casinos were once widely frowned upon. Today, the industry is fast-growing both in terms of social acceptance and revenues.



The notoriously conservative Singaporean government is venturing into the gambling industry by allowing the construction of its first ever casino. Prime Minister Lee Hsien Loong first announced plans for a casino resort in 2004 and the project is now nearing completion. Singapore hopes to cash in on the rampant growth of the gambling industry around Asia, especially in Macau. The plan represents a cultural change as gambling and casinos were once widely frowned upon. Today, the industry is fast-growing both in terms of social acceptance and revenues.

In 2007, global gambling revenue topped $114 billion and is expected to pass $155 billion by 2012. In Singapore alone, it is estimate that $180 million a year is spent by Singaporeans in Malaysian casinos. If Singapore is able to recap its own losses and attract outside gamblers, it will be able to significantly increase its tourism and government revenue figures. 

Singapore is in prime position to capitalize from the gambling market thanks to its geographic location. The gambling industry is growing the fastest in the far-east and neighborly China is perhaps the most serious gambling nation in the world. However, gambling is illegal in China, forcing million of citizens every year to leave the country on specific gambling trips, mostly to Macau.  But if Singapore can take even a fraction of the gambling tourists away from Macau, the venture will prove to be a success.

The success of Macau has forced other countries to look at gambling as a way to increase revenue. Tourism accounts for 50 percent of GDP of Macau. The gambling industry alone provides 40 percent of the GDP and gambling taxes provide 70 percent of Macau’s government income. Furthermore, legalized gambling in Macau attracts massive amounts of tourists, mainly from China, who arrive solely for the purpose of gambling. In 2006, 22 million people visited the small territory of only 500,000 people, making it the 21st most visited tourist destination in the world.

Singapore, on the other hand, receives just 5 percent of its GDP from tourism. Singapore believes that with the addition of a gambling industry, it can double annual arrivals to 17 million and triple the amount tourists spend to $19 billion by 2015. The timing of the casino is also important as visitors in Singapore have been dropping dramatically amid the global financial crisis. Visitors in January fell almost 13 percent to 771,000, down from 885,000 a year ago, while economic output is officially forecast to contract by 2 to 5 percent in 2009.

In 2006, US based company Las Vegas Sands won the bid to develop the first casino. The Marina Bay Sands is expected to be completed in December 2008 with an approximate cost of $5 billion, making it the most expensive casino in the world. In addition to the casino, the resort will include three hotel towers with a combined 2,500 rooms, a 200,000 square foot museum and a 1.2 million square foot convention center with the ability to accommodate 52,000 people.

Besides the long term tourism growth and revenue expected from the project, short term benefits include massive job creation. The company has promised to create 10,400 jobs for the project, of which 75 percent will be reserved for Singaporeans.

But there are risks with entering the casino market. The casino will be foreign owned, leaving Singapore with less control over operations. The casino is expected to be popular, but there will be local opposition in the conservative country. For a country that has only recently started opening up, a casino may be a step too far for a minority of its citizens. There have also been discussions of limiting access to the casino to only the wealthy.

The increase in foreign investment, tourism, revenue, employment and taxes resulting from the casino are sure to be a boost to Singapore during these difficult economic times. However, Singapore needs to be weary of the risks associated with introducing gambling to a conservative country and should proceed cautiously.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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