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No more war talk
In an exclusive interview with Macau Business gaming tycoon Stanley Ho Hung-sun has called for the city’s casino operators to bury the hatchet and form a united front to take the industry forward. In this candid interview, ‘Mr Macau’ also gives valuable insights from his long life of challenges and reveals he has little interest in Las Vegas Sands properties but is quite keen to branch out into Asia, especially Japan. By Paulo A. Azevedo
Macau Business: The industry in Macau is changing. Some things were difficult to predict, like the world economic crisis, and others are the consequence of a new environment. What are the main changes you think still need to be made?
Stanley Ho - The original intention of the government’s liberalisation of the gaming industry was to build on the strength of the industry and the expertise of casino operators to make a moderate move towards diversification of the economy. For example, to bring in more conferences and exhibitions, and to attract more family tourists from overseas. I hope to see more diversification instead of only keen competition in the core gaming business.
What are the main goals that the six operators aim for?
We (the six operators) earn the biggest amount of money and we have given a level of tax to the government which is very high, not even the government could have expected so much. So, it is very logical that the six of us should stop talking of war. We should start working together, form an association and work for the benefit of Macau, for the benefit of the government and at the same time for the benefit of ourselves. Because when we fight, we offer too much commission to the gaming promoters. We have been working very hard to earn this title of concessionaire. And what is the point fighting among ourselves to benefit the gaming promoters? So really, this association should have been formed much earlier.
Horse and dog racing
Some investors are expecting the liberalisation of sports betting in Macau. You have a monopoly in this area, so how do you react to this possibility?
I have no objection to this. Because sport is not gambling and our chances against Hong Kong are very low. How can you compete with a non profit-making concern? They are so wealthy and strongly supported by the government, like the Hong Kong Jockey Club, it is not easy to compete. I doubt we would ever be very successful in competition.
Horse racing and dog racing is losing popularity in Macau. Or so it seems. Will you continue to have them and cover the losses or do you think that sooner or later they will disappear because gaming is changing?
The main reason for keeping horse racing and greyhound racing is to add more diversified elements to Macau’s gaming and tourism industry. The management of these two institutions are working hard to adapt to the changing conditions, and they have my support.
How should Macau grow?
A certain amount of diversification is desirable, but to be successful it should build on our existing strengths. With such limited land area and population, long-term growth will necessarily involve a greater degree of integration with the surrounding region.
The nearby Hengqin Island is a good solution, and this has been clearly spelled out by Vice President Xi Jinping during his official visit to Macau.
Which areas [of business] should be part of that integration?
I reckon that a small part of the island is useful to Macau. The remaining huge area, they should reserved, like the forest area. But we must admit that land in Macau is too limited, much too limited. In Hong Kong, you can expand by reclamation, and get more land for development. But in Macau, it is different. We need permission from the mainland for reclamation.
Macau, as you see, is already so limited in area, especially the old area, which needs to be rebuilt. And yet, we haven’t done that, so therefore, the idea to diversify into Hengqin is a good one.
How about the progress of new SJM projects?
We have two exciting projects scheduled to open this year: L’Arc around September and Oceanus around year-end. Both are on the Macau Peninsula, and are mass market oriented casinos. We are funding them internally. This means that we do not suffer from the same external pressures of some other gaming operators.
The redevelopment of the Hotel Lisboa has been put on hold for a more opportune time, when do you think that project can restart?
SJM will redevelop this project jointly with STDM. We will evaluate market conditions carefully before committing to a timetable for the overall benefit of SJM and in the best interests of our shareholders.
Little interest in LVS properties
If Las Vegas Sands is forced to sell parts of its properties here in Macau, either the fifth or sixth or whatever, which of those would you be interested in acquiring?
Well, to be very honest, I am very happy with what I have in Macau Proper – in the best areas – Nam Van Lakes, Outer Harbour, Avenida de Ribeiro, Lisboa, Mandarin. I never admire the Americans choosing to go all the way to Cotai.
I never believed this would be a success because Macau is a tiny little place, tourists who come here have very little time for the casinos, and to go all the way to Cotai, I think it’s too far away. So very honestly, if one day [Las Vegas] Sands needs to sell parts of its properties, I will be the one who is least interested in acquiring them.
Las Vegas is not doing well but Macau is still going strong. The VIP market is slowing down but the mass market is still growing. Were we all too pessimistic?
Macau is different from Las Vegas. The correct strategy can still yield good results in Macau. Our gaming industry has a strong potential for growth. It is now consolidating after several years of rapid expansion and stunning increases. Amidst global economic downturn, the gaming industry of Macau was still able to achieve actual growth in 2008 over the previous year.
Almost 50 years in the gaming business in Macau is quite a while. The industry is not an easy one and I’m sure you’ve had plenty of surprises over the years. What have the most rewarding times been since you got the monopoly concession in 1962? And what were the main victories that you still keep in your heart?
When I opened the first casino in 1962, I said ‘the view that our enterprise is merely one of gambling is a misconception. Our purpose is to bring a new prosperity to Macau and improve the welfare and living standards of its citizens’. History proves that I have made good on my promise.
What were the most rewarding and victorious times? For me, fulfilling my obligations to society is a wonderful source of happiness and satisfaction.
I have lost count of how many people have commented to me about how difficult four decades of gaming monopoly must have been for you in the place like Macau. What exactly were main obstacles you needed to overcome?
All my life, I have loved challenges, and I never accept ‘No’ as an answer. So I didn’t see any obstacles, I treated every one of them as a new challenge instead. I believe in the maxim ‘where there’s a will, there’s a way’, so no matter how complicated the problem is, I will find a way to solve it.
The Asia Visionary Award is the highest honour given by the American Gaming Association, Reed Exhibitions and Macau Business. It is a unique Asian award. I bet you were not surprised to be chosen?
Every award is an additional bonus to me, yet I am very happy, and indeed it is very satisfying to receive an honour from the industry in which I have spent so much of my career.
What can someone like you, who has achieved so much, still desire to achieve?
My dedication and interest in contributing to the sustainable prosperity of Macau and to the nation overall has not changed. ‘From society to society’ – this is the principle I adhere to.
Promises and more
When people call you ‘Mr Macau’ how do you feel?
I feel okay with the title. Because in many ways, I am really Macau. I will tell you why. I am Eurasian looking.
When I first came to Macau, the people here assumed I was born in Macau. I married a Macanese, half Portuguese, half Chinese. Besides, I feel that I really have done a lot for Macau, because when I got the concession for 40 years from the Portuguese, I virtually promised the moon. I said I would do everything for the benefit of Macau and its people. I would change the harbour from a very shallow one to a deep one. I succeeded. I promised Macau I would clear all the squatters in the Outer Harbour and let you have a new city. I succeeded. I cleared 1,000 families who then settled in the Outer Harbour. Not easy. I succeeded. I had to build all the resettlement blocks, with the knowledge I got from Hong Kong, in Toi Shan for these families. And I succeeded. It wasn’t an easy job.
I promised to raise the standard of living of the people in Macau. I succeeded. I promised them an airport. Without me, there would not be an airport. I promised to contribute to the building of the Macau-Taipa bridge. So, really I helped them in every way, and I achieved so much more than what I promised in 1962. People said at that time, I can still remember, ‘Don’t believe in Stanley Ho, he is the biggest liar on earth. His capital is his tongue.’ But now, I have succeeded in doing more than I promised, and I am truly very happy.
How exactly did you succeed in winning the gaming monopoly against other bidders back in the 1960s?
I remember that our bid was merely $17,000 more than the other party. And on top of that, I promised the government I would reinvest the profits in society, including the introduction of high speed ferries, dredging of the harbour, building of hotels, and contribution to charities.
Five years ago you told me in another interview that the new operators could do anything they wanted, except raise junket commissions, otherwise there would be a war. You were certainly proven to be right on the first part as the junkets were targeted because of the importance of VIP gaming. How confident are you today that everyone will play clean and respect the 1.25 percent cap?
I trust that the government will have rules and regulations to ensure that the cap is enforced. Besides, Macau is such a small society, anyone who violates the cap can be easily identified. The formation of the Gaming Chamber can also serve as a channel for cultivating mutual exchange and understanding among the six operators.
You are one of those tycoons who have everything or at least that is the perception of society in general. Is there any thing you really wanted to achieve but didn’t succeed in? And are there any outstanding goals you have set for yourself?
As I said earlier, all my life, I have loved challenges. So every day is a new challenge to me and I enjoy being a lifelong learner.
What didn’t I succeed in getting? Maybe the fact that I did not complete my university studies due to the outbreak of war, though I do hold many honourary doctorates from a number of universities. Hence I always remind the younger generation that knowledge is their life-long companion, not wealth.
SJM Dividend
The timing of the SJM IPO was not the best and shares have been hurt like other gaming companies. What should the strategy be now?
Actually, our share price has dropped the least compared to other gaming stocks. We are also the only gaming company in Macau to propose a dividend for 2008.
Our strategy is still the same: we focus on the business of gaming that we know best and provide an attractive product aimed at a targeted clientele. In response to market conditions, we always strive to balance capacity increase with reasonably anticipated demand, and to balance financing requirements with financing costs and availability.
Gaming in Asia is growing. It’s the only part of the world where the industry has plenty of reasons to be optimistic. But you seem to put your focus in Macau. Will this change in the medium term?
Having been in the gaming industry for nearly half a decade, I know the Macau market and the Asia market very well. My priority and focus is still Macau, but I would also be interested in exploring other areas should opportunities arise.
Eye on Japan
Where exactly? In Japan they are talking about going for casino gambling. Taiwan already took the first step. Would Japan or Taiwan be a possibility for investment?
The answer is yes, especially for Japan. You know, it’s also in the blood of the Japanese to gamble. I like Japan because I speak the language.
During the war years, I studied Japanese, it was compulsory because I was the supervisor for the government supplies bureau. And for my job, I had to master the language to be the supervisor and look after the barter system.
The government would give me all the surplus to exchange with the Japanese army, in exchange for food to supply the entire population of Macau.
I sold a lot of government surplus equipment to the army in exchange for food for the three years and eight months, supplying all of Macau.
You are a big property developer in Hong Kong. However, you didn’t follow the same path in Macau. With the property market expected to get strong again in 2010, do you have any plans in that direction?
Unlike Hong Kong where real estate is the pillar of the economy, Macau, given its small population, has a limited property market. My companies STDM and Shun Tak are engaged in a number of real estate developments in Macau, and have a prominent track record in the Macau property market.
Who’s your favoured candidate for the next Chief Executive?
One must be a pure Macau citizen. He cannot be a Hong Kong man to run Macau; cannot be a Canton man to run Macau. He must be a Macau man to manage Macau, according to the Basic Law. The next chief executive has to be pure Macau. The longer history he has the better.
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