OPENING OF INTEGRATED RESORTS

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OPENING OF INTEGRATED RESORTS:

(Impact of financial turmoil in US): 10.

Ms Sylvia Lim asked the Minister for Trade and Industry to what extent the financial turmoil in the United States may delay or undermine the opening of the two Integrated Resorts and whether the Government is considering alternatives if the operators are unable to deliver.

11.

Ms Eunice Elizabeth Olsen asked the Minister for Trade and Industry (a) when will the integrated resorts (IRs) be fully opened since they are reportedly only having a soft opening; (b) whether there are changes to the terms and conditions since the contract was awarded; (c) when does the Ministry expect its initial

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projection of the IRs' boost to our GDP to be achieved; and (d) whether the Ministry anticipates the financial crisis to affect the business of the IRs when they open.

The Senior Minister of State for Trade and Industry (Mr S Iswaran) (for the Minister for Trade and Industry): Mr Speaker Sir, may I have your permission to take Question Nos. 10 and 11 together?

Mr Speaker: Yes.

Mr Iswaran: Mr Speaker, Sir, the Integrated Resorts are commercial projects which take on the usual business risks and face the vagaries of the market. Consequently, they are likely to face challenges arising from the current economic environment and financial market situation.

As a result of the recent financial turmoil in the United States, several US-based companies have been adversely affected by the credit crunch. This has led to concerns about the financial health of the US-based Las Vegas Sands Corporation and any possible impact on its Singapore subsidiary – the Marina Bay Sands Integrated Resort. To address these concerns, Las Vegas Sands Corporation has embarked on a capital raising programme. Members would be aware of Mr Sheldon Adelson's, the Chairman of the Las Vegas Sands Corporation, public affirmation of his commitment to the Marina Bay Sands project. We welcome Mr Adelson's strong commitment and look forward to his company doing what is necessary to see through the completion of the Marina Bay Sands project. The Singapore Tourism Board (STB) remains in dialogue with Marina Bay Sands and continues to work with them to facilitate the project's completion.

When Las Vegas Sands Corporation won the bid for the Marina Bay IR, it

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committed to complete the entire development by the end of 2009. The project has made good progress to date, despite the resource constraints arising from a tight construction sector. The current financial turmoil has introduced additional challenges for the parent company of Marina Bay Sands. They have therefore proposed a progressive opening of their development, a request which is being carefully considered by Government agencies.

Resorts World at Sentosa, which is developing the IR on Sentosa, has also requested a progressive opening of their development. Our understanding is that this request arose from some physical on-site constraints that the company encountered when constructing the Integrated Resort.

The STB and other Government agencies are considering these requests by Marina Bay Sands and Resorts World at Sentosa with due reference to what they have committed as part of the Request for Proposal exercise. Even as we do so, our expectation remains that each development will open as an Integrated Resort, and not just as a stand-alone casino. If the requests are allowed, they will also be subject to various terms and conditions.

Ms Eunice Olsen has also asked when the projected GDP contributions from the IRs would be achieved and if the IRs' business will be affected by the financial turmoil. It would be fair to say that due to the global financial crisis and the slowdown already evident in our tourism sector, there may be some impact on the IRs' business when they open. It is, however, premature to try to ascertain in quantitative terms what the exact impact will be given the volatility in the economic environment. What we do know is that both IRs remain optimistic that their product offerings will draw visitors from

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their target market segments. On the Government's part, the STB will continue to work closely with both integrated resorts and monitor the situation.

Ms Eunice Elizabeth Olsen: I like to thank the Senior Minister of State. I have four supplementary questions for him.

Firstly, how much was financial security a consideration in awarding these contracts three years ago? And if it was a consideration, did we anticipate the scenario when the company will actually go bankrupt and did we prepare sufficiently for it? And, also, did we pay too little attention to the financial security of the companies when we awarded the contract?

Secondly, with the losses in the gaming industry now, there is a belief in some quarters that the quest in the gaming industry has been reached and past, and this begs the question as to whether it was a gamble to legalise resorts with casinos. And it was said in this House three years ago that with the two IRs –

Mr Speaker: Ask your question, Ms Olsen.

Ms Eunice Elizabeth Olsen: The incremental annual GDP is estimated to exceed $1.5 billion. So I would like to ask how confident is the Government that the two IRs will give the Government the hand that it is hoping for.

Thirdly, it was mentioned also in this House three years ago, that for the Bayfront IR, the gaming area will be less than 3% of the total floor area allowed. Has the position of the Government changed since, and if 3% of the floor space is meant to hold 600 tables and if it is to be increased to 1,000 tables, then is

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that not a disingenuous way of just getting around the 3% restriction?

Fourthly, it was reported that taxpayers' money will not be used to bail out the IR and as the public does see Temasek to be managing the taxpayers' money, does that mean that Temasek will not step in under any circumstances?

Mr Iswaran: Mr Speaker, Sir, I thank the Member for her exhaustive list of questions. I will attempt to answer them.

Financial security – was that a consideration or was too little attention paid to it? Clearly, in evaluating all the proposals, the financial capability and the ability to organise financing was a consideration in deciding which bid was to be awarded. It was one of the considerations.

I think the point to note here is, we are in now profoundly altered circumstances compared to when the IR RFPs went out, and the manner in which they were put together at that time. So, I think we have to recognise that the situation is fundamentally different in certain areas because these credit crunches that we see now are a result of quite a dramatic change seen in the US and the financial markets.

Having said that, I would want to stress that both IRs have secured project financing here in Singapore for their projects. And I think as far as we can tell, those project financing remains secured and that is the assurance they have given us.

I will take some of the other questions first on the gaming area – have we somehow conceded something to the Marina Bay Sands because of the announcement that the number of gaming tables has been increased from 600 to 1,000? The provision has never been on the number of tables. It has been on the floor area available for gaming activities

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and that number was 15,000 sq metres and that remains to be the case. So, the Casino Regulatory Authority has certain rules and guidelines required of Marina Bay Sands for compliance as it does for Resorts World and they maintain those requirements. There has been no change in that and in awarding the final licence, the layout, etc, would be reviewed and considered before the final casino licence is awarded. But the key point I want to stress is this that there is no change. It remains 15,000 sq metres, and if you look at that as a percentage of Marina Bay Sands' total development, which is, I think, in excess of 500,000, it is well within this 3%-5% range that has been quoted publicly.

Is our projection for the GDP contribution from the IRs valid? As of now, MTI's view remains that in the steady state – because our projection was always based on in a steady state in 2015 – when they are fully developed and running, the GDP contributions and the job creation numbers were based on that. And that remains our projection as in we say that in the steady state, we hold our view. But whether that would be achieved in 2015 or there may be some shifts because of changes in the industry and development, that is something we have to study and see.

And, finally, on whether Temasek will invest, I think that is a question for Temasek. It is a commercial company, and they make their own decisions.

Ms Sylvia Lim: Sir, several years back when Singaporeans were convinced that the IRs were the way to go, we were told that the job projections arising out of the IRs would be about 35,000 and because of the benefit of that, we should be prepared to accept some of the social ills from gambling.

I note that in a parliamentary answer last year, the job projection was 20,000.

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I am just wondering whether MTI has further revised the job projection arising from the IRs now, in view especially of the increased number of gambling tables and whether we are going to see a higher price being paid in terms of the social ills arising from gambling.

Mr Iswaran: Mr Speaker, Sir, I think the Member probably has not been following the numbers closely. Our job projection numbers have remained consistent. We have said the two IRs will generate about 20,000 jobs directly, and indirectly there will be 30,000 to 40,000 jobs created. That is the number we have said from the start and we have maintained that position.