INTEGRATED RESORTS

INTEGRATED RESORTS:

(Mechanisms to monitor work-in-progress): 9.

Ms Lee Bee Wah asked the Minister for Trade and Industry in view of the large investments involved in, and the high profile of, the two Integrated Resorts (a) if mechanisms have been put in place to monitor the work-in-progress to ensure

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compliance with the contract awarded; (b) if he will provide an update on the work-in-progress with regard to these two projects; and (c) what recourse is there if the companies fail to meet their contractual obligations, such as completion deadlines.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Sir, the obligations of the Integrated Resort (IR) operators are clearly outlined in the Requests for Proposals and the Development Agreements. The two IR operators are contractually bound to deliver the overall IR concept and all the components of the IR as detailed in the accepted proposal. Any changes to the accepted proposal would require the Government's approval.

Furthermore, the IR operators must start construction within three years and complete the construction within eight years from the date of the signing of the Development Agreement. They also have to incur 100% of the development investment within three years from the first issuance of the casino licence, or eight years from the date of signing the Development Agreement, whichever is earlier.

If the IR operators fail to meet their contractual obligations, the Government reserves the right to forfeit the security deposit, which is 5% of the development investment, or about $200 million for each IR. If necessary, the Government can also repossess the IR land.

Let me assure Members that while we have put in place robust safeguards, the IR operators themselves have every incentive to complete their projects on time and on budget. The two IRs have an exclusivity period of only 10 years, and every month of delay translates to not just substantial revenues forgone, but also interest costs incurred for the IR

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operators. The cost of delay will thus be high especially given the large investments involved.

The Government will continue to closely engage with the two IR operators to ensure the successful implementation of the IRs.

Ms Lee Bee Wah (Ang Mo Kio): Sir, now that Singapore has awarded one of its biggest projects on Sentosa to a Malaysian company, can the Minister please inform the House whether he expects that Singapore companies will find themselves more welcome when they invest in Malaysia, especially the south Johore economic zone?

Mr Lim Hng Kiang: Sir, we awarded the IR to the Malaysian company entirely on the merits of their proposal. And we hope that our neighbours - Malaysia, Indonesia, whichever country - will welcome Singapore investors on the merits of their investment proposals. I think this is the best way for an enduring and sustaining relationship. Of course, with more economic contacts with our companies, the economic linkages and the people-and-people linkages will help facilitate relationship between us and our neighbours.