Mr Simon Cheong, a maverick in the business world with over 22 years of experience in real estate, banking and international finance shared with us his frank insights on the controversy surrounding the integrated resorts (IRs), and his views on what the IRs meants for the Singapore economy, SMEs and their impact in the region. This topic is part of SIIA series of business talks to tap into the expertise of prominent economic/business sector personalities to give an entrepreneur’s perspective on issues to supplement the mainstream international/regional affairs talks and seminars by regional experts.
On the subject of Competition, Mr Cheong attributed the initial success of Singapore, Hong Kong and Taiwan (the 3 Asian dragons) to the better infrastructures, the ability to produce goods faster, and the inefficiency of the neighbouring countries. However, the equilibrium of the 3 dragons has changed with the awakening of the sleeping giant – China. In his perspective, Hong Kong and Taiwan have changed for the better while Singapore changed for the worse. This is based on his belief that China will forever be a manufacturing base in the world with its pool of cheap labor which Hong Kong and China were able to benefit from the wealth effect from the Chinese Manufacturing sector.
Singapore on the other hand is vulnerable due to the absence of a hinterland and lack of natural and human resources. Mr. Chong raised some important questions to the audience - if China is Singapore’s competitor, will Singapore prosper when China prosper? What competitive advantage does Singapore have in relation to China? He described China analogous to a big vacuum cleaner, sucking out the growth in the region, causing the competitive edge of Singapore and its ASEAN neighbours especially the developing countries such as Philippines, Cambodia, Laos and Vietnam to diminish fast. The speed of development in Chinais at a rate that the ASEAN counterparts will not be able to keep up with. This can be seen in China’s rising standard of labour and the increase usage of English. Singaporeans on the other hand is a nation too comfortable and not hungry enough to match the drive of the Chinese.
MM Lee once predicted that China would take 50 years to take off in its economy; however, in reality they have taken less time to take off. Despite China’s rapid growth, it is not completely doom and gloom for Singapore. There are solutions for the future to ensure the long term survival of Singapore. Mr Cheong’s solution is to focus on the software rather than the hardware. He believed that we should cast aside manufacturing and focus on service industry like finance and tourism. Indeed, all ingredients are in place for Singapore to develop the service industries. What we lack is strong packaging for them to be attractive.
Restructuring within the economy is required to ensure that jobs are available to Singaporeans, especially the heartlanders. Industries like Biotechnology though lucrative focused more on foreign talents and are not creating enough jobs for the local population. As part of growing the essential tourism and service industry and to provide jobs relevant to the masses and subsequently economic growth, Mr Cheong felt that the IR is certainly a strategic move, a “Great Singapore Sale of a different kind”.
On the debate on moral issues stemming from the society such as the preservation of Singapore’s moral fabric of strong values, Mr Cheong cited several existing pro-gambling habits among Singaporeans such as the lottery (Toto), 4Ds, legalize soccer betting, and other social ills such as prostitution. In his view, casino in IR is simply a bigger version of a jackpot room in a country club. He believes that Singaporeans should be pro-choice within the legal limits, as control alone is insufficient in a country where citizens have the ability to travel everywhere in the world. Exposure and education should be the way forward.
However, the question in most minds is whether the IRs would be a guaranteed success? How is the IR going to attract Singapore’s neighbours and the overseas Chinese when there is a Macauand other casino competition in and around the region? Despite the absence of good weather conducive for theme park such as Disneyland, or nice beaches, Mr. Cheong nevertheless displayed his optimism that there are many other niche areas that Singapore could explore, that will complement the buzz brought about by the IRs. This includes developing Singapore into a sporting hub, such as the Wimbledon in the East, producing world class sporting events to attract top players from the region and the world. Though Singapore may not have the population advantage to select world class sports personnel, organizing sporting events will be lucrative as facilities are relatively inexpensive to build and have the potential to attract huge crowds. Other ideas include hosting concerts with world class performers and audiences, developing the food industry to cater for more restaurants etc. However, to ensure competition and talents, Singapore needs a bigger population base, at least 6 million people at all time as our infrastructures are underutilized.
In conclusion, the necessity of having more tourists, more population and more jobs makes the decision to build the IRs an imperative for Singapore to be a vibrant and cosmopolitan city.
Some of the questions raised includes, why have two IRs not one or more? Mr. Cheong felt that it is a careful decision of the government and a good start. The reasons being, firstly, one casino will have insufficient critical mass to survive. Secondly, having two IRs will create competition and ensure a fair market value for land. Thirdly, this could be seen as a strategic move to cater to different crowds i.e. Sentosa for the family oriented while Marina Bay for the hardcore gamblers and lastly, having the IR on a smaller scale will be more manageable giving allowance for dropout due to financial constraints. Also in time to come, once we are used to IRs in our midst, we may not stop at two.
Chairman Simon Tay raised the issue of China’s growth and questioned if Singapore and the region can keep up with it. Mr. Cheong is not too optimistic that the region can overtake China especially in the manufacturing sector where the human resources far exceed that of any country in Southeast Asia.
In his final remark he believes that the casino plan is in the right direction, as it would create a spin off that is essential for the economy. Casino in the IR is needed as a means to an end to bring in the investors. While the question of success and profits lies with the operators, it is no doubt that the casino will contribute positively to the economy, to break the mental block of an overregulated society and create a form of lifestyle that is pro-consumers choice. However, he also cautioned that IRs is not the answer to all our economic woes, and much more still need to be done.
Report by Joanne Lin
SIIA Researcher and Public Education Cordinator