Bets are off for Macau gambling boom - Monday 12th of January 2009
Macaus landscape shows the far reach of human ambition - land reclamations have joined up the two islands of Coloane and Taipa to make a gambling and shopping sprawl called the Cotai Strip.
Flashy casinos and garish hotels tower over what was once a sleepy trading town at the mouth of south Chinas Pearl River Delta.
But now some of those towers stand half-finished, the sound of building work has gone. Only dust and concrete remain.
The thousands of construction workers who poured over the border into the territory from China every day now have much less to come for.
The US-based Las Vegas Sands group has halted construction of five new hotels, huge shopping centres and several new casinos.
About 10,000 foreign workers and 2,000 workers from Macau have lost their jobs so far.
A member of Macaus Legislative Assembly, Jose Coutinho, believes the workers are paying the price for the developers overweening ambition.
Macaus economy is highly dependent on its gaming industry
"I feel pity for those foreign workers that came in with a dream," he said.
"Most of them have never, ever dreamed that their stay in Macau would be so short.
"But the main culprit, its the company that has done a big step beyond its own capacity, I mean its financial capacities to cover the long step that its done."
Gambling revenues in Macau outstripped those of the Las Vegas Strip last year, but global financial worries, and Chinas domestic concerns, are taking their toll.
Managers of the Venetian hotel and casino complex in Macau blame the global credit crunch for their difficulties.
Some have also blamed China, for turning the tap off on the seemingly unlimited supply of gamblers from the mainland.
Even before the world financial meltdown, China had begun restricting access to visas for mainlanders eager to gamble (gambling is illegal in mainland China).
Mr Coutinho is convinced that China does want to support Macau - but has worries of its own about gambling.
"It has brought a lot of problems like money-laundering, like loan sharks, like prostitution, like collecting debts in mainland China," he said.
As a result of the extension of gambling-related problems into mainland China, the central government has come under increasing pressure, he said.
Other commentators have noted that now is not the time for China to see its hard-earned cash frittered away at casino projects largely owned by foreigners.
"In our view, since Macaus economy is highly dependent on the gaming sector and most casino patrons are from mainland China, Macaus economic development and social stability are actually at the mercy of Chinese policies," wrote Gabriel Chan, research analyst for Macaus gaming sector at Credit Suisse.
Quality of life
The boom in Macau, a former Portuguese colony which was returned to Chinese rule in 1999, may have bumped up revenues, but it also exposed some of the tiny territorys weaknesses.
Corruption boomed along with the massive new infrastructure projects, as did traffic jams and social problems.
The construction boom has also exposed Macaus weaknesses
Some of that was clear when the former secretary for transport and public works, Ao Man-long, was brought to trial and jailed for a long line of kickbacks.
Some in Macau are pleased to see the expansion of gambling slowed down, if only to force a re-think of values in a society where young people leave school early to become croupiers.
"Do you think that happiness is looking at the majority of young people in Macau [dealing] cards? I dont want to see the future of Macau being an international city where the majority of the workforce is giving cards at the gaming tables. So I dont think thats a good place to live at all," said Mr Coutinho.
Macaus chattering classes are now looking beyond the gloom to June, when the territory will get a new chief executive.
"I dont see any changes before the next chief executive - he must come out with some good news for the people of Macau," said Mr Coutinho.
"The mainland government has lost trust in this government and thats why theyre not doing enough until the next chief executive and new government is born."
His views are reflected in Macaus press, which now seems obsessed with guessing who the new leader might be.
Bet on the future?
At the very least, investors are hoping that a change at the top might herald a loosening of the visa rules by China to spur more arrivals.
Betting on when construction might resume at Macaus casinos is more risky.
But some research suggests that the current slowdown is good reason to bet more heavily on Macaus future.
"We turned positive on the Macau gaming sector since October , anticipating that some operators may delay their new projects, resulting in a more balanced supply-demand dynamic," said Mr Chan of Credit Suisse.
As the saying goes, sometimes less is more.
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