Tuesday, October 21, 2008

10,000 duds?

I never cease to wonder at the optimism that Singapore, or more precisely, the people who are in the tourism business seem to display, even in these recessionary times. Mr George Tanasijevich, GM and VP of Singapore Development, Marina Bay Sands Resort (aka the Marina Integrated Resort), wants 10,000 line workers (see also Today Online) to staff his brand new Resort, which is slated to be opened in late 2009. This has given a boost to the morale of the Singapore workforce, and even the Singapore government in these bad economic times. Minister Lim Hng Kiang even went so far as to say that the economy will see recovery in 2 years' time when the IRs are ready. That's a fantastic instance of crystal-ball gazing, but I guess the government has an army of analysts who can make such predictions, and more importantly, realise them. They have both prophets and Gods on their side. How wrong can they be?

I hope that he is right. I am not so optimistic, though. There seems to be an underlying assumption, even at the highest levels of government, that "if we build it, they will come". I am of course referring to the Marina and Sentosa IRs. With the world slipping into the worst recession in 70 years (someone made the calculation back to the Great Depression of the 1930s and early 40s), and with the worldwide stock markets losing near half of their values at their peak, many people's income and investments have taken a direct hit. Coupled with inflation, everybody, except the poor, have become substantially poorer. (You see, the poor have nothing to lose, so they cannot become poorer). Even business travel is going the budget route, via low-cost airlines rather than the full-service ones. Businesses are reluctant to expand, as banks become more guarded in lending. I would have thought that in such an environment, the first businesses that will be hit are the leisure and entertainment business. Businesses may continue to organise events and conferences (hey, you need to drum up businesses when there is none, right?), but the extra expenses, extra stays, the leisure and entertainment part will likely be cut back drastically. You'd probably witness more fly swatting than finger massages. How long this state of affairs will continue no one is predicting exactly nor can do so with any sense of reality. Many are already saying that it will be a long winter. Some are still in dreamland.

So I wonder if the rosy predictions about the tourism in 2 years' time is warranted at all. Why exactly 2 years? Because that's when the 2 IRs will have become fully operationalised - assuming that the Marina IR and LV Sands haven't folded by then. Already, we are getting not-so-rosy news out of Las Vegas that LV Sands may be facing a credit crunch. Its resort and gambling businesses in Macau have also reported poorer results.

On the other hand, some smart people are arguing that the Marina and Sentosa IR will not be allowed to fail because they are Singapore government initiatives. What does this mean? That the government will be forced to throw good money, taxpayers' money no less, into bad investments, like what the US has done? We are talking S$5billion or more here. I hope we do not end up with white elephants again, the last of which were spotted near an MRT station in the North-east of Singapore. If it is does appear, it will be far larger than the ones we have seen.

The thought makes me shudder.

Image source: http://en.wikipedia.org/


auntielucia said...

Haha! Thought u were writing abt the 10K people who invested in Lehman minibonds. U write well. Write positively. Leave the bad calls to those analysts at broking firms and investment banks (any more left standing at last count?)Goldman Sachs called for oil to be at USD200 a few mths ago. What are these profets of boom who turn prophets of doom calling now? Have a good long week-end.

Anonymous said...

It appears that 10K is symbolic of the bad times Singaporeans are or will be facing.

Anonymous said...

IMHO, I think the 10,000 jobs are just meant to pacify the panicking public for the time being.

Does one really think that they are that stupid to start the payroll for the 10,000 jobs in the next month or so when the casinos would only be ready in at least a 15 mths time?

Anonymous said...

Whether Sands stands or not, Singaporeans are still the real losers.

Losing even before we have a casino.

World class.

Mockingbird said...

Hope springs eternal.

Buangkok Station is no longer a white elephant since it is already open. I think Punggol Marina looks more like a ghost town even though it's now open to the public.

God knows when the west loop of the Punggol LRT system will open. Even the nearest LRT stop to Punggol Marina is at least around 20 to 30 minutes walk.

Mockingbird said...

Marina Bay Sands IR will not be completed by end of 2009. Perhaps that's not entirely a bad thing. Since it's only early days of the current global recession. If it gets completed by early 2010 or mid-2010, the recession might have blown over. This only means better chance of getting brisk business for Marina Bay Sands IR.

Mockingbird said...

This only means better chance of getting brisk business for Marina Bay Sands IR when it opens by then.