The puritan-clean city is betting on a Macau-type boom following last week’s granting of its second casino licence to Genting.

It will build and operate a S$5.2bil resort on Sentosa Island. Work has already started on the S$5.05bil Las Vegas Sands, the first casino, at Marina Bay.

Sentosa is a coup for Genting International and Star Cruises. It is Malaysia’s biggest single private investment in Singapore, with observers seeing it as a catalyst to further investment exchanges.

The idea of a casino was long rejected by Mr Lee Kuan Yew, who now seems to be enthusiastically embracing it. After visiting Las Vegas recently, he announced that Singapore could do with more than two.

Will Singapore enjoy the same success as Macau? Or will it face competition from an over-crowded casino market when other powerful players join in?

The debate is irrelevant for Singapore. There are few options and the resorts could not have come sooner.

The government hasn’t advertised it but tourism, an important pillar, had been – in relative terms – declining for some years.

Between 1993 and 2002, for example, tourism’s contribution to GDP had declined from 6.1% to 3%, according to official statistics.

The nine million tourists here pale in comparison to Macau’s 18 million and Genting Highlands’ 11 million.

“The Singapore economy could ultimately be the big winner and is likely to see a Macau-type tourism boom from 2010 when the resorts are ready,” said Hak Bin Chua of Citigroup.

Some foreign analysts view Singapore as lacking any thrust in the economy that can significantly extend its prosperity.

Recently, in a strong e-mail comment to clients, Morgan Stanley’s Asian economist Andy Xie pointed out that the island’s per capita GDP had stagnated around US$25,000 for 10 years (while China’s had tripled).

It had been benefiting from the influx of “hot” money from Indonesia, but not much now because Jakarta’s economy was slowing down.

“So Singapore isn’t doing well. To sustain its economy, it is building casinos to attract corrupt money from China,” he added.

Xie quit or was asked to leave; no reasons were given.

Not many economists, however, share this degree of pessimism.

It is, of course, true that Singapore is facing severe competition from China and India and had been forced to move quickly towards a higher-tech economy before its workforce was ready.

What makes the resorts crucially important is that its efforts to establish service hubs have achieved only mixed results.

Returns from its much-touted biomedical sector, upon which the republic depends so much on, are not meeting expectations.

Singapore has plowed more than S$3bil (US$2bil) into biotech over the last five years.

Recently, two prominent World Bank economists described that the sector had failed to yield any significant pay-offs so far. It had only a 50-50 chance of succeeding in this generally high-risk venture. Similarly, other “restructuring” schemes to move to a higher plane – ie producing more Singaporean entrepreneurs and encouraging more enterprising or creative enterprises – are achieving scant, if any, success.

Two other “hub” areas – education and healthcare – have had better results but the latter is facing regional competition, especially Thailand.

Exceptional success

One field is, however, red hot: finance. Singapore is rapidly achieving a reputation as Asia’s “Switzerland”.

Foreign funds managed in Singapore have reached US$200bil and high-end property at choice locations are attracting more rich foreigners.

The number of private banks operating in Singapore has nearly doubled to 35 in the last six years.

With its clean, safe environment, the city is increasingly attracting many of the region’s rich businessmen to make Singapore their first or second home.

An American commented: “It’s a match made in financial heaven”, because the city-state wants to establish itself as Asia’s newest private banking hub by pulling in the super-wealthy – and their bank accounts – away from places such as Hong Kong and Switzerland.

Premium condo prices have been leaping (hitting S$3400 per sq foot) that some people are worried about a bubble building.

But there is a caveat. Some of these “hub” investments – attracting wealth, biotech, etc – may contribute more to the GDP than immediate benefits to Singaporeans.

In fact, the large influx of wealth may push up the cost of living for ordinary Singaporeans. “The government is getting richer, while the people are getting poorer” is an anti-government slogan here.

The rich-poor gap has widened and the trend is likely to continue in the years ahead. The government promises to alleviate the plight of the poor when it announces next year’s budget.

This explains why the tourism projects are so important. They generate mass (estimate 30,000) employment after 2010 and extend business to thousands of individuals.

The number of visitors to Singapore will double to 17 million – Universal Studio itself five million – and tourism receipts will triple to S$30bil.

The story is not just about casinos, Sentosa or the Orlando-style Universal Studio and the world’s largest oceanarium.

The government has plans to develop Southern Islands into the next big tourist draw and make them a getaway for the rich and a spaceport at Changi by 2009 to provide space flights.

These projects could turn Singapore into a vibrant global entity, attract a greater influx of foreigners – rich and talented – to make it their home.

o Seah Chiang Nee is a veteran journalist and editor of the information website littlespeck.com

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