YOU have to give kudos to Chinese President Xi Jinping and his efforts at curbing if not stopping corruption. If a government official or member of the private sector gets caught dipping their greedy hands into government money, execution is a very possible consequence. For those that are perhaps smarter or lucky to be able to get away with doing the crime, cut off the easiest access to enjoy the ill-gotten gains.
The crackdown on high-rolling gamblers, thought to be mostly corrupt individuals, to the pleasure palaces of Macau is having a devastating affect of the city’s economy. The official numbers released for this past Lunar New Year holiday are nothing short than astounding. Consider that in 2014, Macau so the first decrease in gambling revenues in history of 2.6 percent.
But that is nothing in comparison to what happened a few weeks ago. Acknowledging that the ‘official data’ is probably even more optimistic than the truth, the holiday was a disaster.
As Bloomberg.com reported, “Despite a 7-percent rise in actual tourist arrivals to Macau from China during this Lunar New Year’s holiday, ‘The Year of The Goat’ is off to an extremely inauspicious start. Even with expectations of a 40 percent drop, Macau casino revenues are now projected to crash a stunning 53.5 percent from last year”.
Conversations with some of the management in Macau indicate that the true fall in gambling revenues was closer to 60 percent from Lunar New Year 2014.
Since the corruption crackdown at the beginning of 2014, there has been a steady decline in casino income and it shows little sign of any sort of recovery in the near or even longer term future.
It is not just for enjoying the gaming tables that brings the wealthy Chinese to Macau. Shopping and fine dining is part of the luxurious experience and here too spending is way down. Bloomberg also reports that per-capita shopping expenses by Chinese tourists dipped 32.8 percent in the fourth quarter of 2014.
“Average occupancy at 3-star to 5-star hotels for the so-called Golden Week period of Chinese holiday, which ran from February 18 to 24, fell 6.9 percentage points to 87.5 percent, while average room rates declined 15.4 percent, the Macau Government Tourist Office announced”.
President Xi characterizes the corrupt, 100,000 having been caught in China’s version of money-laundering charges in Macau last year, “flies and tigers,” or low- and high-level officials. Apparently the 7 percent rise in Chinese tourist arrivals was mostly ‘flies’.
The Chinese ‘tigers’ have been looking for alternatives to avoid the snare of Macau turning to Cambodia, Singapore, and South Korea. However Cambodia is more than happy to cooperate with its largest benefactor-China-in turning over potential corrupt Chinese back to their government. South Korea is not as cooperative but has made it subtlety clear that they do not want any problems with China over gambling when China is the main force that keeps North Korea under some control. Singapore does not care much about China but does care very much as being seen as a welcoming country for illegal funds.
That all puts the Philippines in an interesting and perhaps positive position. While the listed gambling companies have seen their stock under tremendous selling pressure, which is unlikely to change anytime soon, the future looks bright. It is unlikely that China would come to PHL asking for a favor to help catch its corrupt officials. Further, the Philippines is not exactly a global paragon of virtue when it comes to illicit wealth.
Some observers have noted that the “Binondo Central Bank” is now as effective at getting money into PHL as it was in the past in getting money out of the country without attracting attention.
Once again, the Philippines may be in a good position to take advantage of someone else’s ‘misfortune’. Our local gaming companies were hoping to siphon off some of the huge market of gamblers going to Macau.
Now as that market goes into a coma, PHL looks to be ready and able to offer a good alternative to Macau outside of the prying eyes of the Chinese government. While the Chinese government is trying to limit their citizens’ access to tour operators soliciting business for the Philippines, there are a number of ‘private operators’ that cater to the Chinese high-rollers which are now steering their customer to the Philippines.
Do not discount the ability of the local gaming industry to reap great rewards from Xi Jinping’s corruption crackdown.
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1 comment
You forgot to write how dangerous it will be for these high-rollers from China once they arrive here at NAIA. With lots of kidnap for ransom groups in the Philippines, these gamblers would be better off in other countries. Maybe they will only come in droves once Manila becomes a safer place for tourists?