Malaysia's Landmarks Bhd, backed by Asia's largest gambling company, hopes to build Indonesia's first legalised casinos in a US$3.1 billion resort project to compete with Las Vegas Sands Corp in Singapore.
The 'objective is to develop a new destination for Indonesia', chief operating officer Lim Boon Soon said in an interview in Kuala Lumpur.
The gaming element 'will accelerate the whole integrated development in Bintan', an island in Indonesia.
The planned casinos in Bintan will compete with gaming resorts that Las Vegas Sands and Genting Bhd, Landmarks's biggest shareholder, are racing to build in Singapore, which is a 55-minute ferry ride away.
The regulated gambling market in the Asia-Pacific region will probably expand 16 per cent a year to US$30.3 billion in 2011, according to PricewaterhouseCoopers LLP.
'It could work, though the execution risks are there,' said Keith Wee, an analyst at OSK Research Sdn. With casinos in Malaysia as well as Singapore, 'competition will be tough'. Singapore plans to double the number of overseas visitors to 17 million annually and triple tourism receipts to S$30 billion by 2015. The island-nation ended a four-decade ban on casinos in 2005 amid surging gambling revenue in the Chinese city of Macau.
Landmarks aims to capture the spillover from Singapore, targeting about three million visitors a year to Bintan, eight times more than the 370,000 tourists now, Mr Lim said.
Bintan, the largest island in the Riau archipelago of Indonesia in the South China Sea, is being developed into one of Asia's biggest holiday resorts by the governments of Indonesia and Singapore and a group of companies.
Resorts there include the Banyan Tree Bintan, Bintan Lagoon Resort and Club Med Ria. Occupancy rates for resorts in Bintan climbed to 61.4 per cent last year from 54.9 per cent in 2006, according to the website of Bintan Resorts International Pte, the marketing consultant for resorts in Bintan. There are more than 1,300 hotel rooms in the island, it said.
Landmarks' project, which will be valued at S$4.2 billion, will have as many as five resorts, condominiums, villas, health spas and water canals, Mr Lim said in an interview on Tuesday. 'Five years down the road, having a casino won't be special.'
The casinos may be opposed by local politicians. 'The plan to build casinos uses a newly issued regional regulation,' said Ferry Mursidan Baldan, a member of the Indonesian Parliament's domestic and regional affairs commission. 'This is a problem' because 'the national law says that gambling is banned'. Should gambling be legalised in Bintan, 'then other regions would follow suit', he said. 'This we don't want to happen.'
Landmarks will build the resorts over eight years at a development cost of S$2 billion. The company plans to sell five so-called integrated resort lots of about 25 hectares each to investors, Mr Lim said. Each of them comes with a 'casino offering', he added. -- Bloomberg
Source : Business Times - 17 Apr 2008
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