A Dose of Mediocre Governance

This item will no longer be continued due PAP fatigue.

The PAP government has essentially pushed the nation into a zero-sum economic endgame. First- breaking the cardinal rule of investments- Over 30% of Singapore's Sovereign Wealth Funds (SWF) into one mess of an American financial sector. Second- possible pipe dream hopes of Integrated Casinos boosting local economy.

Bottomline, I can't really care about what we've already lost. I'm more worried about what we will potential lose in the future if the current decision makers continue down the path.

State of the Local Economy

BAD NEWS

• Deteriorating economic conditions in the US and Europe accounting for 33% of our non-oil exports. 20% exports to Indonesia, Malaysia & Thailand combined.
• IMF surveys indicate US and European economies to CONTRACT 0.5% and 0.7% this year.
  

GOOD NEWS

• Based on 2006 figures, SMEs account for 42% employment but only 24% of output. Ergo improving productivity and efficiency of SMEs might go a long way to sustaining economic activity (employment and output).
• Chance to rethink policy of over dependence on MNCs perhaps?
  

Our economy is tanking and poor investment foresight of our SWF aside, the focus of this article is to look at PM Lee Hsien Long's trump card to raise our sinking economy- the Integrated Resorts (IRs).

The Casino Game and its KNOWN Players

• Las Vegas - Long time player
  
• Macau - Initial dark horse, overtaken Vegas
  
• Taiwan - local parliament has legalised gambling for offshore islands
• Singapore - Underdog

Potential new ASIAN players
With talks of relaxing Gaming regulations in the following nations:

• Thailand
• Vietnam
• Japan

The Players' Hands (demand/visitors)

• Las Vegas - Based on 2008 figures: 37.5 million. (2005: 34.7 million)
  
• Macau - Based on 2005 figures: 14.7 million visitors (60% Mainland Chinese 30% HK 10% others)
• Taiwan - 2008: Close to 4 million. New regional player expected to operate 2013 (Quite possibly sharing 14.7 million china pie especially if cross-strait relations improve. Not counting home market.)
• Singapore - Based on 2008: 10.1 million. New regional player expected to operate by 2009-2011 (2-4 yrs headstart, unknown if China will allow cash outflow from territorial Macau to Singapore - probably not. Home Market: 2.47 million assuming our entire workforce gambles. Not taking into account flight of foreign labor as downturn worsens).

The casino breakeven game

• Gilbert Koh, Senior Researcher at Institute of Policy Studies: Singapore IRs need 8 million visitors to keep afloat.
• 2008 arrivals in Singapore: 10.1 million
• Even with Singapore Grand Prix, arrivals were down 2% from 2007.
• Protracted global downturn will affect arrival figures further.

Long Story Short
Unlikely Singapore will meet required visitor figures. Unlike Macau, we can't even depend on local demand for gaming industry.

Consumer Psychology admist a Downturn

• Consumers avoid big holidays during recessions. -1 Singapore
• Depression gamers gamble closer to home. -1 Singapore