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TOC Op-Ed

Choo Zheng Xi / Editor-in-Chief

In the 2005 debate on the introduction of the Integrated Resorts (IRs), leader of the Worker’s Party (WP) Mr Low Thia Kiang said in Parliament that ‘if the Government’s judgment is wrong it would lead the nation and our people on to the “river of no return”, where the cost would be very real and very heavy.’

Three years on, there is no doubt we are quite some way down that river without a paddle. The Marina Bay Integrated Resort (IR) is in trouble.

But the IR has a political price tag that far exceeds its construction cost. Understanding just how much political capital has been expanded on this project might be the key to catching a glimpse of when the next elections might be called.

The odds

The numbers tell a grim tale. Shares in LVS have lost an astonishing more than 90% in slightly over a year, and it was US$8.8 billion (S$13b)in debt as of last Thursday. The share price it was trading at early week was hovering above US$6, down 94% from it’s high of US$122.96 in December 2007

Attempts at putting a brave front on the state of Las Vegas Sands’ (LVS) ability to finish the IR on time, or at all, are starting to smell of desperation.

Just how dire the situation has become is evident from Minister of State for Trade and Industry S Iswaran’s open discussion of the Singapore Tourism Board’s (STB) legal options if LVS fails to deliver. STB has begun talking about a ‘staged opening’.

This is the backdrop that the “reassurance” of LVS’ CEO Sheldon Adelson’s US$525 million loan to LVS needs to be seen against. Not very reassuring.

The stakes

One thing is sure: blame for the IR’s failure will be placed squarely on Prime Minister Lee Hsien Loong.

Mr Lee acknowledged the responsibility when announcing the decision to introduce casinos in 2005: ‘As Prime Minister, I carry the ultimate responsibility for the decision’.

Blaming Mr Lee for the parlous state of LVS’ finances would hardly be fair, any more than he can be blamed for the current global financial crisis or global warming.

But the fact remains that the decision to put Singapore’s eggs in the IR basket was made by him, and not without expending large chunks of political capital.

The decision to introduce a casino into Singapore was made against the strong objections of not just the Christian and Muslim communities, but social workers and concerned citizens from all walks of life. Even members of the PAP voiced their personal discomfort with the casino’s

introduction, and Minister Mentor Lee Kuan Yew flagged his initial hesitation with the plan, stating he was ‘emotionally and intellectually’ against having a casino.

If indeed LVS fails to deliver, Singaporeans will be reminded daily of the largest white elephant ever to grace our shores as they commute to and from the Central Business District (CBD). This spectacular eyesore will be seared into the collective consciousness of the electorate, an omnipresent reminder of failure that no Suzhou Industrial Park or Buangkok could ever have hoped to match.

The gamble

Is it a coincidence that the Elections Department began designating civil servants to be elections officials less than a week after LVS’ auditors submitted their regulatory filing to the US Securities and Exchange Commission that began the furore over how bad LVS’ financial position was?

Perhaps.

Pundits have said that a snap election early next year after the Budget is unlikely because of dissatisfaction on the ground over the structured products fiasco, job losses and sluggish economic growth.

But one would be foolish to underestimate the size of an electoral issue a failed IR has the potential to become. If the IRs do not materialize in 2009 and 2010, the sentiment on the ground will not just be sour, it will be rancid. And there is no certainty that the recession will have subsided by then: God forbid, it could get worse.

Mr Lee might just decide to cut his losses and call an election before the IRs go belly up and become an albatross around his neck. Could the government bite the bullet before LVS bites the dust?

If I was a betting man and wanted to know when the next elections were to be called, I would keep my eye on LVS’ share price.

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