More expensive bets

Well, news that Genting International will incur a cost overrun of S$800m for its casino resort (Pix source: Genting International Proposal listed by Wikipedia) on Singapore's Sentosa Island due partly to higher construction expenses has not come as a surprise.

Genting International, a unit of the late Malaysian tycoon Lim Goh Tong's Genting Bhd, now expects to spend as much as S$6 billion to build the Sentosa casino, up 15 per cent from an earlier estimate of S$5.2 billion.

The Reuters report said the new budget for the casino, which includes a contingency provision of S$250 million, also covers the cost of six new attractions as well as improvements to transportation and access infrastructure.

Singapore is undergoing a construction boom due to the award of several large projects such as a new financial centre, the two casino resorts, several shopping malls and a slew of redevelopments of private apartments known as en-bloc deals in Singapore.

Similarly, Sophie's World reckons that cost overrun is expected for the other casino project -- Las Vegas Sands' 20.6-hectare piece of waterfront land at Marina Bay.

Apart from the tight construction market, Singapore is facing a higher import bill for sand and other building materials due to the ban on the sale of sand by neighbours Malaysia and Indonesia.

In addition, the construction job for the Marina Bay Sands project on the reclaimed land is likely to be way more complex than Genting's project. According to an engineer, a lot of big boulders were used in the reclamation of the land in the 1980s. This makes it more difficult to extricate the boulders for the foundation work. By the way, Sophie's World has never seen so many construction cranes on a single site!

So, will the two casino resort developers be able to complete the mammoth projects -- each resort will cost as much as the Circle Line subway system in Singapore -- by 2010 as planned?

Don't bet on it!

Mickey Mouse going to Malaysia?

This is an old story that just won't die, but not as old as Mickey Mouse (Image from Wikipedia)

According to Malaysian weekly The Edge, Walt Disney Co is looking to build a theme park on a 500-acre (202-hectare) site in southern Malaysia. The theme park will reportedly be sited at Bardar Nusajaya near the second link bridge in the Iskandar Development Region zone in Johor. The report said it would be ready in six years if a deal is signed.

The proposed Disneyland theme park and resort is slated to be bigger than Hong Kong Disneyland and about the size of Tokyo Disney Resort, the report said. Although the talks with Disney are progressing fast, discussions with other theme park operators, including Warner Bros Entertainment and MGM, have not ceased, the report said.

Will Mickey Mouse learn to speak Malay and appear at the theme park in Johor, which is next to Singapore?

Can Disney compete with the two integrated resorts and casinos that are coming up in Singapore? Las Vegas Sands and Genting International have gone full-steam ahead in building their resorts that are expected to be completed in 3-4 years. The casinos in Singapore are set to attract many gamblers and their families to Singapore. Casinos can help subsidise the rest of the resorts and theme park that are generally less profitable.

But any new theme park or resort in Malaysia won't have a casino. Unlike Singapore, Malaysia still has a ban on new casinos or gaming outlets since it granted the sole casino licence to the late Lim Goh Tong's Genting more than four decades ago.

Maybe there will still be room for Mickey Mouse in Malaysia as its concept is different from the two resorts in Singapore. But there are many problems at the Johor end.

Johor has the land and the resources to undercut Singapore but Malaysian planners simply lack the ability to execute their grand plans.

Johor has a long history of false starts in many overly ambitious projects -- Desaru, Waterfront City, a theme park by ex-UN Sec Gen, and even Universal Studios, which has since teamed up with Genting for the resort on Sentosa in Singapore.

The Iskandar Development Region is a grand plan but the government can't even resolve some basic problems in the state like proper city planning (Malaysia has since scrapped the proposed passport-free zones in Johor), crime, flooding and the failed attempt to jointly build a new bridge to replace the old causeway with Singapore.

So don't bet your last dollar that Mickey Mouse will finally learn to say "Selamat Datang ke Malaysia"*.

* Welcome to Malaysia in Malay

S'pore's bubbly property market, part 3

Singapore property giant Kwek Leng Beng recently made the most bullish forecast for the Singapore property market so far, according to a Bloomberg interview. He's second from right in the larger pix that was published in local newspapers last year. Leng Beng stood next to famous architect Moshe Safdie (with moustache) in the winning bid for Marina Bay integrated resort and casino project, which will be developed by Sheldon Adelson of Las Vegas Sands. Leng Beng is on the left in the inset with younger brother Leng Joo. Notice how Leng Beng has an expressive way with his hand! :-)

But Leng Beng's prediction is plausible. He is one of the most astute readers of the local property market. He and his late father Hong Png of the Singapore Hong Leong empire have had an uncanny ability in reading the Singapore property market. They got so many cycles correct, including the latest bull run by Kwek junior.

And while everyone wrote off Las Vegas Sands in its bid for the Marina Bay integrated resort site, Leng Beng was the sole public backer of the American developer. Er, the other backer was dad, who correctly predicted the winners of the Marina Bay and Sentosa integrated resort and casino tender exercises.

Singapore Images in 2006

Some images of 2006 captured by The Business Times of key business and political events in Singapore and business deals linked to Singapore entities overseas.

Big stakes, buoyant sentiment
By VINCENT WEE

2006 was a year of big numbers, big stakes and bullish sentiment. The resurgent economy brought waves of investment and optimism to our shores, but also winds of change. Meanwhile, those who strayed from the straight and narrow were brought to account as the law took its course.

One of Singapore's biggest financial scandals finally came to a conclusion when former China Aviation Oil head Chen Jiulin was jailed for four years and three months and fined $335,000 for insider trading. Likewise, former corporate poster boy Victor Tan, founder of Accord Customer Care Solutions, was jailed for four years and three months for his role in trying to cheat Nokia in 2003 and 2004. And former National Kidney Foundation boss TT Durai was charged under the Anti-Graft Act for having tried to deceive the NKF while he was its chief executive.

But a sense of stability prevailed when the ruling People's Action Party won 66.6 per cent of the vote in the May general election and was returned to power.

Big buys also made the news, led by Temasek Holdings' $6.5 billion purchase of an 11.55 per cent stake in Standard Chartered Bank from the family of the late Khoo Teck Puat, who was Singapore's richest man, and $3 billion spent on former Thai prime minister Thaksin Shinawatra's family stake in Shin Corp.

Apple's US$100 million payout for a licence to use Creative Technology's patent in its iPod ended legal disputes between them. The battle hit Creative's profits badly, but the settlement looks like a win-win result, and the local firm will focus more on making sound chips and accessories for Apple and other companies.

Waves of interest and winds of change from abroad came in through the course of the year. In May, Las Vegas Sands won the right to build Singapore's first integrated resort (IR) and casino at Marina Bay. And six months later, Asian gaming outfit Genting International/Star Cruises won the Sentosa bid. The year's foreign buzz culminated in the 16,000 visitors and delegates coming to Singapore during the International Monetary Fund and World Bank meetings in September.

The buoyant economic mood was infectious and spread to the property market, which finally got some reprieve from a decade of gloom when the luxury residential segment saw record prices, led by Marina Bay Residences which commanded up to $3,500 per sq ft in December.

Movements in the boardroom also created a stir. Robinson's chairman Michael Wong Pakshong was voted off the board at the company's annual general meeting, prompting the resignation of three other independent directors and sparking a debate on the role of independent directors. SingTel CEO Lee Hsien Yang surprised markets in July when he announced that he would step down after 12 years with the company.

Finally, the year closed with an ominous reminder of our vulnerability in the Information Age, when a post-Christmas quake off Taiwan damaged vital undersea cables and disrupted telecommunications in and out of Singapore and throughout East Asia.

March 27: Temasek hogs headlines
Singapore investment company Temasek Holdings spends almost $10 billion on two big buys. On March 27, it announces an estimated $6.5 billion purchase of Khoo Teck Puat's estate's 11.55 per cent stake in Standard Chartered. Earlier in January, Temasek paid $3 billion for Thai Prime Minister Thaksin Shinawatra's family stake in Shin Corporation. The Shin deal sparked unexpected events that eventually led to a military coup that ousted Mr Thaksin.

April 18: TT Durai charged with graft at NKF
Former National Kidney Foundation (NKF) chief TT Durai is slapped with two charges over alleged false claims with intent to deceive the foundation. The NKF fiasco has brought about unprecedented scrutiny of charitable organisations and their accountability.

May 6: PAP returned to power
The People's Action Party is returned to power with two-thirds of the valid vote at the general election. The closest fight is in Aljunied GRC, where the PAP wins 56.1 per cent of the vote in a contest with the Workers' Party. The opposition retains Hougang and Potong Pasir.

May 26 and Dec 8: Singapore hands out casino licences
Singapore awards two integrated resort and casino licences after a 40-year ban on casinos. The first licence, at Marina Bay, goes to Las Vegas Sands, controlled by Sheldon Adelson, who has roped in architect Moshe Safdie (top) for the project. The second, at Sentosa, goes to Malaysia's Genting group, controlled by Lim Kok Thay and family.

July 21: Lee Hsien Yang announces decision to step down
Lee Hsien Yang surprises the markets by announcing that he will step down as SingTel's chief executive officer after 12 years with the company. After a two-month global search, SingTel appointed its chief financial officer Chua Sock Koong as CEO.


Aug 23: Creative versus Apple
Apple agrees to pay US$100 million for a licence to use Creative Technology's patent in its iPod. And as part of the settlement, Creative, founded by Singapore businessman Sim Wong Hoo, joined the ''Made for iPod'' programme to produce accessories for Apple's mp3 player.


Dec 13: Irrational exuberance reigns at Marina Bay Residences
After a downturn that lasted a decade, the upper end of the property market rebounds. The best performer is Marina Bay Residences, where all 422 units were quickly sold at unprecedented prices of up to $3,500 per sq ft. Prices at the 99-year leasehold project, located near Las Vegas Sands' upcoming integrated resort and casino, even surpassed those of some units at the 999-year leasehold St Regis Residences in the Tanglin area.


Sept 10-20: IMF and World Bank meetings bring in 16,000 visitors
With a campaign of four million smiles, and tens of thousands of flowers lining the route to Suntec City convention centre, Singapore lays on a grand welcome for visitors and delegates to the IMF/World Bank annual meetings.

Sizzling Red Dot

A very useful map in The Straits Times of what's hot and what's not in the Singapore private residential property market.

Although only a small part of the island is currently in red to show the hot property interest, it won't take too long before the property fever spreads to the rest of the island.

The little red dot is definitely sizzling with the massive inflow of funds into property and private wealth sector. And the two upcoming integrated resorts and casinos -- Las Vegas Sands at Marina Bay and Genting-Universal at Sentosa -- will definitely add more sizzle to the island's already hot economy.

Singapore is definitely fast becoming Asia's Switzerland, or even more in the next five to ten years.