Betting on Asia's financial centers

HONG KONG The city-state of Singapore and the self-governing territory of Hong Kong have earned a global reputation as financial hubs with vibrant entrepreneurial cultures. But with rising costs and more efficient logistics, much of the light industry and many of the services on which their economies were built have migrated inland to China or elsewhere in the region.
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Policy makers in both places have started casting around for a new role - and they have their eyes on a controversial way of sustaining their wealth. Both Hong Kong and Singapore are mulling over plans to license full-on gaming casinos - and in both cities the idea has provoked intense debate.
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Those in favor of allowing casinos argue that giant gaming palaces, built in partnership with global gaming operators, will bring in valuable tourist dollars, create thousands of jobs and generate valuable tax revenues. Both Singapore and Hong Kong have shrinking revenue bases, economies that increasingly rely on service industries and retail and face higher unemployment amongst low-skilled workers.
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A casino on Hong Kong's Lantau island would take close to a decade to build and create more than 100,000 jobs, argues James Tien, the leader of the small, pro-business Liberal party in Hong Kong. In Singapore, which is farther along this road, analysts have said that a casino could generate up to $1.5 billion in revenues annually.
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These figures are impressive, but the proposal has prompted a rare showing of vociferous opposition in Singapore, where voices of dissent are usually highly constrained. And in Hong Kong, the prospect of even more freewheeling capitalist enterprise for a people who wear the right to get rich on their sleeve has alarmed the territory's Communist masters in Beijing. In both cities, religious community leaders see the casino as a threat to moral standards.
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The Singapore government, which supports the planned casino, has promised social safeguards that will restrict access to the casino by Singaporeans.
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The debate in Singapore is interesting in the way that the government has encouraged members of the public to participate and express their views. "Let us shed the nanny-state image and show the world that nothing is too taboo for us to handle," runs an online petition to city planners in Singapore written by a Singaporean named Andrew Wong. "Indeed, we embrace this opportunity to grow as a society. We shouldn't treat a casino as a big deal - it's just another Turf Club or other state-operated facility. If you're in the mood to have some fun or are feeling lucky, go ahead and try your hand."
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Both cities are eyeing the steep growth in outbound tourism from mainland China, which last year saw 28 million Chinese citizens travel outside the mainland. They also recognize that Chinese are traveling farther afield in the pursuit of high-rolling pleasure.
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But for those who worry about the impact of gambling on the prized transparency and legal security of both these cities, consider the tiny former Portuguese enclave of Macau, where casinos have operated for decades and something like $2.4 billion passes through the hands of disciplined croupiers every year, according to I-OnAsia, a risk assessment company based in Hong Kong.
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Then there is the impact on crime and morality. Macau once had one of the most violent street crime records in Asia; organized criminal groups operated with impunity out of its casinos and seedy hotels. Better law enforcement and a booming economy have helped reduce the level of violence since China assumed control of the territory from Portugal in 1999. But the worry is that if Macau's economy hits a bad patch, the crime could spike again.
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Law and order as well as high standards of corporate governance and financial transparency are premium qualities of the business environment in both Singapore and Hong Kong. Inviting casino operators in may impose intolerable strain on regulatory authorities or, if not, jeopardize the financial viability of the casinos themselves.
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