Philippines: The market to watchBy Den Somera
Philippine Daily Inquirer
The Philippines is a highly mineralized country. It is increasingly attracting foreign investments that could lead to more economic growth and development.
Likewise, due to its good sun, beautiful mountains and seashores, along with its distinctive brand of hospitality—coupled with the presence of new property venues—the Philippines is poised to be a top contender not only for rest and leisure but as a travel destination for games and amusements, more particularly “gaming.”
The Philippines still has to clarify its policy on the mining industry, but the government has—fortunately—readily opened its options in the gaming business as another strategy for development.
Based on the market study published by Citibank’s Citigroup Global Markets Inc. dated February 8, it said that “South and Central Asia are home to four billion people where gaming demand is underserved by just 200 licensed venues (versus 1,600 and 1,200 in North America and Europe, respectively).”
The report further cites the Philippines as one of the four “frontier markets” that is poised to take on the “burgeoning opportunities” presented by the “underserviced” gaming business in the Asian region.
The three other frontier markets particularly cited to vie as well as pose some challenge to the Philippines would be Cambodia, Vietnam and Sri Lanka.
In contention is Naga Corp. (listed), which “has a license to operate casinos in Cambodia with the exclusive right to operate within a 200-kilometer radius of Phnom Penh (called Designated Area).” In addition to its already installed facilities, it recently built an additional 220-room tower that has been partially opened “to cater to the Vietnam bus market.” The company will also establish sales offices in Ho Chi Minh City (Vietnam) and Bangkok (Thailand) to capture business overflows, which “represent the greatest growth markets” of the company, according to the study.
In place for operation in early 2013 in Vietnam is the “MGM Ho Tram project of Asian Coast Development of Canada (unlisted),” of which Pinnacle Entertainment Inc. of the United States has a 26-percent equity stake. It has an “Investment Certificate from the Government of Vietnam that is given the right to develop five large-scale integrated entertainment centers in Ho Tram, situated some 127 kilometers from Ho Chi Minh City on a 164-hectare beach front fringing the South China Sea.”
Initially starting with a 540-hotel room, 90 tables and 1,000 slots, MGM Ho Tram has a “13,000-square-meter entertainment area, retail, restaurants, bars, lounges, shows conference and meeting areas, an 18-hole Greg Norman-designed golf course, and other leisure amenities.”
Taking steps “to pursue future gaming opportunities in Sri Lanka and at the same time capture the market overflows in the Indian border is Delta Corp.” (India listed company, with business interests in entertainment and gaming, hospitality and real estate) “and Genting HK” (which belongs to the Genting group of Malaysia which, in turn, is connected with one of the four locally licensed gaming companies).
On the basis of existing property venues reviewed, the study’s 2012 estimated gross gaming revenues of the world are as follows: Macau, $40 billion at 20-percent growth; Singapore, $6.9 billion at 13-percent growth; Malaysia, $1.55 billion at 3-percent contraction; Philippines, $1.7 billion at 17-percent growth; Cambodia, $0.26 billion at 19-percent growth; Vietnam, $0.18 billion; Sri Lanka (still to be determined); Las Vegas, $6.1 billion at 2-percent growth; Atlantic City, $3.3 billion at zero growth; and Australia, $17.1 billion at 4-percent growth.
Notice in the foregoing forecast, Las Vegas is expected to be overtaken by Singapore as the second-biggest gaming market in the world. Macau, according to the study’s estimates, too, will be adversely affected as additional property venues, like those in the Philippines, will shortly go on stream.
In this connection, the study reflected some indirect conclusions on the quarrel between Wynn Resorts Ltd., on one side, and Kazuo Okada, Aruze USA Inc. and Universal Entertainment Corp. (Okada), on the other.
Local gaming observers and enthusiasts were even more direct and articulate on the matter: Okada, through its subsidiaries, is one of the four gaming companies awarded by Philippine Amusement and Gaming Corp. to build a hotel-resort complex in the Entertainment City, wherein he obviously did not include Wynn.
Based on the 2010 financial report of Wynn Resorts, Las Vegas contributed “31 percent of total revenue, [on] 70 percent of assets, [at] 57 percent of total cost” while Macau contributed “69 percent of total revenue, [on] 30 percent of assets [at] 43 percent of cost.”
The quarrel has turned ugly, even casting a bad reputation on the country. But to the aforementioned parties, the controversy is nothing but a simple case of Wynn getting sore at Okada. Wynn was clearly left out of the Philippine market whose business is estimated to grow at a double-digit rate.
It is very evident that the Philippines is now at a crucial stage to grab economic greatness that eluded it in the past. No extensive body of information is yet available that clearly captures the adverse costs from the exploitation of mineral resources to environment and gaming (or gambling) to society. On the other hand, both have undeniable roles in historically fostering economic development in the United States and in Europe.
The economy of Singapore is a patent product of gaming as a source of new revenue and instrument to further stimulate the economy.
The government should act now. Prolonged indecisiveness may lead to losing its current chance to promote national development and global competitiveness.
(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at email@example.com, densomera@ msn.com or at www.kapitaltek.com.)
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