Macau land row rattles casino bosses ahead of 2020 licence talks

Capital Estate

04/08/2017 09:46

* Casino executives see Macau take hard stance in land 
disputes 
    * They worry govt will adopt equally tough stance in licence 
talks 
    * Adds uncertainty ahead of renewal talks for casino 
licences 
    * Casino licences start to expire in 2020 
 
    By Farah Master 
    MACAU, Aug 4 (Reuters) - A no-nonsense approach by the Macau 
government in disputes with land developers is rattling the 
nerves of casino executives, who fear it portends a rough ride 
from authorities in talks they will hold to renew operating 
licences. 
    The government has seized more than 100 plots of land from 
developers under a 2013 law it says is intended to root out 
corruption and better utilise land that has stood idle for over 
25 years. 
    For casino executives, the government's uncompromising 
position in the land disputes despite protests from investors, 
some lawmakers and would-be residents, is a flavour of the 
uncompromising attitude they expect to face when they negotiate 
to renew their gaming licences, which start to expire in 2020. 
 urn:newsml:reuters.com:*:nL4N1KO39J 
    "It's really a warning sign that the government is not 
backing down for the casino concessions," said a senior casino 
executive. Like others interviewed for this story, he requested 
anonymity due to the sensitivity of the issue. 
    "Nobody really knows what is going to happen." 
    Macau is the world's biggest gambling centre by revenues and 
casino operators, such as Galaxy Entertainment Group's  0027.HK  
Galaxy Macau to Wynn Macau's  1128.HK  Wynn Palace, have 
invested some $30 billion into the centre. 
    The government's fight with land owners has no direct 
connection to the casino owners' licence negotiations. The Macau 
government has said it has no intention to change the land law 
and would only say it will analyse several options for how it 
will conduct the licence renewals. 
    The first licences to expire are those of SJM Holdings 
 0880.HK  and MGM China  2282.HK . 
    "Just because you have a licence now doesn't mean you will 
have one in the future. They are setting our expectations that 
some operators may not continue," said a second senior casino 
executive. 
    The licences were first awarded in a complex process in the 
early 2000s. Government officials have said there may be a new 
public bidding process when they expire. 
    Sands China, MGM China, Galaxy and Wynn declined to comment, 
while SJM did not respond to a request to comment. Melco said it 
hoped to continue working with the government. 
    "Melco has deep roots in Macau, we are confident that the 
government will set and communicate clear and appropriate 
renewal guidelines and criteria," a company spokeswoman said. 
     
    DIPLOMACY 
    The land disputes have their roots in a real estate boom in 
the 1990s and early 2000s, when many developers rushed in to buy 
up plots of real estate hoping they would appreciate in value. 
    Critics say the government is using the land seizures to 
deepen its control over the special administrative region. 
    In one example, a parcel of land was seized even though the 
developers had carried out infrastructure work including 
building underground tunnels, roads and manmade lakes. 
    The tough stance helps prevent future graft cases, said one 
civil servant, who was not authorised to speak to the media. In 
July, Ho Chio Meng, the territory's chief public prosecutor 
until 2014, was jailed for 21 years for graft in a case that 
prosecutors said involved about 2,000 public contracts that were 
illegally awarded. 
    Despite the concerns of the gaming executives, the casino 
sector is a huge part of the economy. Casino resorts employ 
two-thirds of Macau's workforce, and their taxes produce around 
80 percent of government revenues. 
    The casino executives said their companies are taking action 
to make sure they stay on the right side of authorities. This 
includes efforts to take on more local staff and working more 
with small local companies and suppliers. Conversely, many 
executives are subject to shorter-term contracts given the 
uncertainties of the licensing round. 
    The casinos are also pushing soft diplomacy. In July, for 
example, MGM hosted an event to provide the elderly with health 
checks. 
    Within the companies, the tempo of internal meetings to 
discuss the upcoming licensing rounds have become more frequent, 
the executives said. 
    "It's all very sensitive at the moment," said a fourth, 
senior executive at a casino company. "We are just trying to 
understand what the government wants." 
 
 (Reporting by Farah Master; Additional reporting by Anne Marie 
Roantree in HONG KONG' Editing by Clara Ferreira Marques and 
Neil Fullick) 
 ((farah.master@thomsonreuters.com; +852 28431631 , +852 9631 
8262; Reuters Messaging: 
farah.master.thomsonreuters@thomsonreuters.net)) 
 
Keywords: MACAU LAND/