Macau Leader Pressures Casino Operators
By KATE O'KEEFFE And JONATHAN CHENG, www.wsj.com
Macau's top leader used his first policy address Tuesday to pressure casino operators to solidify development plans on government-granted land-or risk losing it.
In remarks to the press after his speech, Macau's Chief Executive Fernando Chui said that "the government will follow legal procedures" to repossess any idle land being held by developers without concrete plans to develop it. "The whole process will be made very transparent, but the land has to be taken back and some of it will be used for social housing," Mr. Chui said in his remarks.
Analysts largely wrote off the tough talk as political posturing, given complaints about rising property prices, but concern over construction delays in Macau is real. In Macau's Cotai area, long seen as the primary growth area in the Chinese gambling territory, Las Vegas Sands Corp. unit Sands China Ltd. and Hong Kong-based Galaxy Entertainment Ltd. shelved their expansion plans for over a year as the financial crisis forced the companies to reconsider their plans.
Repurposing the land for public housing is "very unlikely," said Nomura gaming analyst Kenneth Fong. He and other analysts believe Mr. Chui's statement was probably aimed at sending a message that casino operators shouldn't always expect favorable treatment.
Mr. Chui's words are nevertheless likely to be seen as a shot across the bow for Sands China, which despite building some of Macau's largest properties, still has a number of vacant sites in Cotai. Another stalled project, called Macau Studio City just south of Sands China's massive Venetian Macao resort, has been bogged down in legal disputes for over a year. Spokespeople for Sands China and Macau Studio City didn't respond to requests for comment.
Wynn Macau Ltd., a subsidiary of Wynn Resorts Ltd., said last year that it was applying for use of a parcel of land in Cotai, while MGM Mirage and SJM Holdings Ltd. have also stated their intention to eventually develop properties in Cotai.
Foreign casino operators have been particularly vulnerable to criticism for reaping excessive profits in Macau even as the social costs of gambling's boom add up. Officials in Beijing and Macau have consistently voiced their desire to see Macau's economy diversify beyond just gambling.
Mr. Chui didn't mention plans to institute a cap on the total number of gaming tables in Macau as some had expected, an idea that had been raised by Mr. Chui's predecessor.
Gaming revenue in Macau surged nearly 70% from a year earlier in January and February according to media reports, adding to signs the casino market is back on its feet following the global downturn and the imposition of visa restrictions on travellers to the special administrative region from the Chinese mainland.
During his speech, Mr. Chui offered a few populist touches, including a plan to build 19,000 public-housing apartments by the end of 2012, and his intention to continue the custom of doling out 6,000 Macau patacas (about US$750) in cash to each Macau resident once a year.
