Singaporean economy receives a boost from two casinos

This year, the two IRs are expected to pull in us$ 2.8 billion in casino revenue, which will almost double to us$ 5.5 billion next year, their first full year of operations, the consulting firm said in a recent report.

The IRs have played a large part in raising Singapore's profile as a tourism destination. Tourism receipts this year are expected to rise 50 % to between us$ 17.5 billion and us$ 18.5 billion, even as the number of visitors is likely to grow at only half that pace to between 11.5 million and 12.5 million by the end of this year, according to the Singapore Tourism Board (STB).

"The higher growth in tourism receipts compared with arrivals means the average visitor here is actually spending more," said STB CEO Aw Kah Peng.

The excitement created by the IRs is palpable in the stock market as well. Genting Singapore, which runs Resorts World Sentosa, is the most traded stock for the year. On average, 121 million Genting Singapore shares changed hands every day this year as the stock climbed 60 % to close at us$ 2.08 on Monday. In the two reporting quarters for which its casino was up and running, Genting clocked revenue of about us$ 1.72 billion.

Add the boost to retail and restaurant businesses from high-spending tourists, and the IRs are a winning hand for the Singapore economy.  "A tourism hub is the mother of all hubs," said economist Tan Khee Giap, an Associate Professor at Lee Kuan Yew School of Public Policy.

That is because a successful tourism hub can serve as a building block on which a lot of other economic activity can ride. It provides a small city-state such as Singapore the much-needed "critical mass" for it to become a hub for "healthcare services, education services and aviation-related services", Professor Tan added.

Successful as they have been, the IRs have had their share of teething troubles. At RWS, one of its main attractions, the "Battlestar Galactica" roller-coaster ride was stopped by authorities for not being safe enough. At the Marina Bay Sands, the organisers of an Inter-Pacific Bar Association conference were left fuming about toilets that did not flush, lifts that got jammed and the stage lights that went out in the middle of the programme.

The success of the IRs is also making some people angry, especially across the Causeway. Malaysian politicians, such as Johor assemblyman Tee Siew Kiong, have raised concerns over the outflow of money from their country, estimating that Malaysians spent us$ 3 million per day on gaming in Singapore. By industry estimates, some 3,000 Malaysian tourists arrive here by the bus daily to head for the two integrated resorts to gamble and shop.

But the IRs can also help tourist inflows into Malaysia and the rest of the region. "When tourists come to Singapore, they look at the map and they see the bigger countries that surround us," Professor Tan said. "So Malaysia is directly benefiting from the spill-over effect of our IR-driven tourism."

Singapore's success with IRs has not gone unnoticed. Other countries have plans to emulate the model and analysts say the Republic must be on guard from increasing competition for gaming dollars in the region.

"Macau, as an example, when it first started out, it was just gambling: Casinos and more casinos. However, more recently, they are adopting an integrated-resort type of approach towards the gaming industry," said Mr Song Seng Wun, a regional economist at CIMB Research in Singapore. But for now, Singapore's integrated resorts enjoy a strong competitive advantage that is unlikely to be eroded in the short term.

"The IRs aren't even complete yet - there's still plenty of construction going on," said Ms Aw. "So we do expect the two IRs to continue opening different parts of the entire resort, and that will continue to generate excitement."

Last weekend, American skating icon and Olympic silver medallist Michelle Kwan opened a synthetic ice skating rink at MBS, which also expects to play host to the famous Lion King musical in March. A Louis Vuitton store that will open next year "will have a unique underwater passageway from the entrance to the store", said John Postle, MBS' executive director of retail.

RWS, when it is fully operational next year, will have a Marine Life Park and a Maritime Experiential Museum.

Overall, market watchers expect tourism receipts to account for between 6 and 7 % of Singapore's GDP next year, compared with an estimated 5 to 6 % this year. That this forecast may well come true is a fairly safe bet.