Mr Lim Hng Kiang, Minister for Trade and Industry on Integrated Resort on 18 April 2005
Introduction
Mr Speaker, the Prime Minister has explained clearly why the Government has decided to
proceed with two Integrated Resorts, or IRs, after serious deliberation. I wish to elaborate
on the tourism and economic considerations.
We have been facing challenges in the tourism sector…
Tourism has always been an important sector for the Singapore economy and not simply for
the tourism receipts that visitors generate. The more attractive we are as a tourism
destination, the easier it is for us to develop our convention and exhibition industry, and
grow as an aviation hub.
However, our tourism sector has faced major challenges over the past decade. Our total
arrivals and tourism receipts have declined. Between 1993 and 2002, visitor arrivals stayed
relatively stagnant at about 6.5 to 7.5 million visitors. Over the same period, tourism
receipts fell by 17%, from S$11.3 billion to S$9.4 billion. The tourism sector has not been
keeping up with the growth in the rest of the economy and consequently tourism’s
contribution to our GDP was reduced by half, from 6.1% in 1993 to 3% in 2002.
… at a time when tourism traffic is booming in the region
These developments did not take place because the prospects for tourism in the region had
dimmed. On the contrary, tourism traffic grew strongly in the Asia Pacific, at about 6.4%
each year. With our tourism earnings falling at a time when the regional tourism market is
expanding, this means that our slice of the tourism pie is getting smaller. Singapore’s share
of the Asia-Pacific tourism receipts fell sharply, from 13.1% in 1993 to 6% in 2002.
Underperformance partly due to under-investment…
How do we explain this? One key reason is that we have not been investing sufficiently in
quality tourism products. Remember, we start off with a handicap. We cannot boast
breathtaking scenery or spectacular wildlife. Being a young nation, we do not have historical
relics or world heritage sites. We do not even enjoy seasonal variation that gives rise to
specialty attractions like the sakura in Japan, the foliage of New England or the ice
sculptures of Harbin. Under such conditions, having compelling man-made tourism products
becomes vital in attracting visitors.
Apart from a number of sizeable investments in cultural attractions such as the Esplanade
and the museums, we have not made major investments in tourism attractions over the
past decade. The last significant investment in a tourist attraction was really the Night Safari
in 1994. Moreover, several tourism investments made in the early 1990s turned out
unsuccessful, like the Haw Par Villa, Tang Dynasty, Asian Village and Fantasy Island.
… and partly due to intense competition
At the same time, our competitors are not standing still. Many cities have been aggressively
investing in new tourism products to attract visitors. Some of our innovative “success
formulas” are being copied. For example, Night Zoos can now be found in Guangdong,
Sichuan, Malacca and Cairns, with another soon to open in Chiangmai. The Underwater
World in Sentosa was novel when it first opened in 1991, but such aquariums now exist in
many cities. Some are bigger than ours.
Other destinations are coming up with ever bigger and bolder plans to “wow” tourists. Hong
Kong’s Disneyland is due to open later this year. Dubai is having its own version called
“Dubailand” - a comprehensive tourism, leisure and entertainment city.
We have been successful so far as a convention city but others are catching up. Kuala
Lumpur and Bangkok aspire to be successful convention cities. Macau has reclaimed land for
the COTAI Strip where a total of 10,000 hotel rooms are planned for Phase 1 development.
Venetian Macau, the centrepiece of the COTAI Strip, will have 1 million sq ft of convention
and exhibition space, a 2000 seat theatre, and a 15000 seat arena. Macau will also be a
major Meetings, Incentives, Conventions and Exhibitions (MICE) competitor to Singapore
once the COTAI development is operational in 2007. So, to keep ahead, we cannot afford to
make merely incremental improvements.
We must act boldly and swiftly…
Clear trends are emerging in the global tourism industry. Forecasts by the World Tourism
Organisation showed that the number of tourists from this region will double by 2015. This
is fuelled by the growth of the middle class in China and India, as well as the falling costs of
air travel.
Opportunity is knocking on our door. We can take full advantage of this opportunity, but
only if we are prepared to act boldly. It is in this context that the Government decided to
proceed with the two IRs.
… but not at the expense of other strategies
I must emphasise that the two IRs are by no means our only response to the challenges we
face in growing the tourism sector. The Singapore Tourism Board has been hard at work,
attracting other investments in the tourism sector. It is also leading efforts to revitalise the
Singapore River and Orchard Road. Having an IR, therefore, will complement our many
efforts to remake Singapore as a tourist destination.
What the Integrated Resort is not
It is worthwhile, at this juncture, to paint once again the picture of the sort of Integrated
Resort that Government is considering. In the course of the nation-wide debate on the IR, it
became clear at times that people were talking at cross-purposes because they had
different mental pictures of the IR. Many drew conclusions based on their personal
experiences at the old Macau, Genting, Batam, Australia, or just on the cruises to nowhere.
Let me be clear. The Government is not interested in a stand-alone gambling hall that offers
only table games and slot machines. In fact, if we were building just a gambling hall, we
would not attract large numbers of tourists. Tourists would not fly many hours to visit a
casino that can be found nearer their homes. So what would make tourists come to
Singapore?
Iconic, world-class attraction offering a multi-faceted experience…
If you look at casinos developments around the world, you would find that they form an
entire spectrum. At one end of the spectrum, you would find the exclusive gambling clubs in
London or the exclusive casinos in Monaco. Next in the spectrum would be casinos situated
in hotels like in South Korea. Then you have stand-alone casinos like those in old Macau.
They can be more upmarket or downmarket. Next, in the spectrum, some operators would
include some entertainment elements in their casino, facilities like on cruise ships, Genting,
Perth or Melbourne. At this end of the spectrum, you would find large scale entertainment
developments with a small gaming component in it, like some of the recent developments in
Las Vegas. This is what an IR is all about.
The Integrated Resort that we envisage in Singapore is a large-scale development offering
multiple world-class attractions. We are not talking about one or two hotels of several
hundred rooms with a casino attached. We are talking about an entire complex of classy
hotels, luxury shops, fancy restaurants, spectacular shows, convention centres all found in
one single destination. The gaming component will occupy not more than 3 - 5% of the total
area of the IR development. Visitors are drawn to the resort not because of gambling, but
because it offers a wide range of world-class leisure and entertainment choices, with
something for everyone. Casino gaming is an important part of the mix, but only a part.
Examples of overseas IRs that we are looking for include the Bellagio and Venetian in Las
Vegas, as well as the Atlantis in Bahamas.
More importantly, we are looking for IR operators with the ‘software” to market the resort
extensively and transform the world’s view of Singapore as a tourist destination. This
involves high-end, innovative marketing and distribution that secures international
primetime media coverage, and access to an exclusive network of top artists and
performers. The best IR operators can secure world-famous celebrities to grace their resort,
and persuade TV executives and filmmakers to use their resort as a backdrop. This
maximises the global exposure of the destination and ensures that it is one of the first
things that come to people’s minds when they plan a vacation. This kind of marketing ability
will greatly boost our own efforts at branding Singapore, such that it becomes widely
recognised as a leading city in the Asia-Pacific, the way New York, Paris and London, are
regarded as leading cities in the West.
RFC surfaced serious interest and exciting proposals
As the Prime Minister explains, we received a total of 19 submissions when we conducted a
Request for Concepts (RFC) to test the viability of an IR in Singapore. This showed there is
serious interest from world class companies. Many of these companies have extensive and
impressive track records for developing, managing and marketing successful worldrenowned Integrated Resorts.
We also learnt from the RFC exercise that the economic benefits from this project are
substantial. The proposals envisage investments in the order of $5 billion for 2 IRs,
generating direct employment of more than 10,000 jobs.
Critics may point out that Singapore is also capable of landing investment projects of this
order of magnitude in the other sectors, such as manufacturing. This is true. But, as I had
earlier described, success in tourism will stimulate many other sectors of our economy. The
IR will help to revitalise our tourism sector and enhance our appeal in hosting conventions
and exhibitions, and strengthen our status as an aviation hub. This is why the economy-wide
impact of two IRs, taking into account direct and indirect effects, is huge. With the two IRs,
the incremental annual GDP is estimated to exceed $1.5 billion and total incremental
employment is about 35,000 jobs.
In addition, our analysis suggests that the consequent growth in the tourism pie would be
more than what the Integrated Resort alone could absorb. Therefore, overall, there will be a
net positive benefit for existing players, with spin-offs for the whole tourism industry and
the overall economy. This addresses concerns that the Integrated Resort would negatively
impact on existing businesses.
Scale and innovation key to IR’s appeal
Some of the prospective investors have released elements of their proposals to the media.
Architects like Daniel Libeskind; museums like the Guggenheim; theme park operators like
Universal Studios. I am not at liberty to divulge what is not already in the public domain so
as to safeguard the proposers’ competitive and intellectual property interests. But I can say
that what the prospective investors have not divulged are as impressive and exciting as
those elements which they have made public.
Another reason why Singaporeans may find it hard to imagine the impact that an IR would
create has to do with scale. Let me illustrate with an example. If I were to say that one of
the attractions in the IR could include an aquarium, the average man in the street might
think of the seawater aquarium in the basement of Wisma Atria, or the Underwater World
in Sentosa, and think, well, that doesn’t sound so extraordinary. But what if I said the
aquarium will be large enough for a whale to freely swim around? That gives you an idea of
the scale of projects that we are looking at.
Scale, innovation and top-class creative talent are key to the IR’s appeal. These are the
elements that will produce a “distinctive and lasting visitor experience”. What exactly does
this phrase entail? It doesn’t just mean having a good time for a couple of days. It doesn’t
just mean building something that is hip, chic, cool or happening. It means keeping millions
of individuals, groups and families entertained, excited and intrigued. It means creating
happy memories that people will cherish and share enthusiastically with all their friends and
relatives. It means people will actually regret it if they cannot make it to Singapore.
I am confident that among the concepts that have been proposed to us are projects that are
capable of creating this “distinctive and lasting visitor experience” for all those who visit us.
Casino is a critical component
During the course of the debate on the pros and cons of having an IR, some people have
asked me, “Why can’t we have the IR without the casino?” If investors are willing to develop
a similar entertainment product without a casino on their own, we warmly welcome these
investments. But in reality, none of them have done so because these large-scale projects
are not viable without a casino or some form of government funding. For example, out of
the total project cost of S$5.8 billion for Disneyworld, the Hong Kong government is
committing a total of S$4.8 billion . This is unlike the Integrated Resorts that we are
attracting which will be entirely driven by private sector funding.
We should not be surprised by this finding. If indeed it is true that non-gaming amenities are
viable on their own, savvy investors would have jumped on this opportunity already. They
could trigger any site on URA’s reserve list, or approach the URA or Sentosa Development
Corporation directly, but none have done so. Even for the RFC exercise whereby investors
were not required to include a casino, none of the submissions came without the gaming
component.
This is because the casino is the economic engine that generates the bulk of the profits for
the resort. The higher profits from gaming are used to offset the lower profits of the nongaming attractions, which are vital to drawing large numbers of visitors to the resort. This
will in turn feed traffic to the casino and generate gaming profits. It is this symbiotic
relationship between the gaming and non-gaming components that keeps the Integrated
Resort viable independently.
Timing is critical
Today, we face a small window of opportunity. Only recently have top IR operators started
looking at expanding their operations to Asia because their own home markets have
matured. Just a few years ago, we would not have garnered the same level of interest from
them even if we were prepared to consider establishing an IR. Now, Singapore could be an
early-mover in the region to develop an iconic, world-class Integrated Resort.
With this decision, we can now move to the next stage and launch a Request for Proposals
(RFP) in the 2nd quarter of 2005. The RFP would close in the 3rd quarter and we would
award by the end of 2005. This would mean that the Integrated Resorts will be operational
around 2009.
Wider implication
We have seen that the economic benefits of the IRs are considerable. While there are valid
concerns about the social impact of casino gaming, the Government is prepared and
committed to put in measures and resources to control and mitigate it. This leaves us still
with one important consideration.
A sentiment voiced directly or indirectly by a large number of Singaporeans goes beyond the
social ills of gambling. They are concerned that a casino would change the tone of society
that we have so carefully nurtured over the years.
I am sure we will debate this point thoroughly over the next few days. I can only say that if
the Integrated Resort would put the future of Singapore as a safe, wholesome society at
grave risk, then we would not have supported it. The Swiss Minister for Economic Affairs
was in Singapore 2 weeks ago. Switzerland allowed casinos 5 years ago. The Swiss Minister
told me they decided to allow casinos because casinos were already freely available across
their frontiers. They decided they cannot stay put. I think we are in a similar position. We
cannot stand still either. Has the reputation of Switzerland as a trusted financial centre, a
land of hardworking people, or a wholesome society suffered as a result of having casinos?
The answer is no. So, I am confident that with adequate safeguards, we too can preserve
our societal values with the integrated resorts.
Conclusion
Mr Speaker, Sir, The Integrated Resort is neither the panacea to all our economic challenges
nor will it destroy our social and moral fabric, or the strong foundations on which Singapore
is built. We have to adopt a holistic and realistic perspective, look at all relevant facts, make
sure the economic benefits are real and not fluff, and put in place the necessary measures
to contain the downside social impact. This pragmatic approach has served Singapore well
in the past, and we should approach the Integrated Resort in the same manner.
The Integrated Resort is one of the many strategies that Singapore is pursuing to boost its
tourism appeal and generate economic growth. Whilst it is not the only strategy in our
tourism masterplan, the two resorts will serve as the engine of our leisure sector and bring
in significant and wide-scale benefits for Singapore. We should move boldly and swiftly, and
seize this opportunity to entrench our hub status, before it is too late.