Typhoon rebuild on U.S. territory Saipan hampered by casino woes

Imperial Pacific International Holdings

16/04/2019 01:00

* Imperial Pacific casino major source of tax revenue for
Saipan
    * Casino construction delayed, gambling numbers hurt by
typhoon
    * Imperial tax contribution falls by 70 pct, govt cuts
spending 

    By Farah Master
    SAIPAN, April 16 (Reuters) - More than six months after
super typhoon Yutu battered Saipan, recovery efforts are making
little traction with the government facing cash-flow problems as
its once vaunted engine of growth – a Chinese-funded casino
project - is mired in deep losses.
    Hundreds of people remain in makeshift housing and some
schools are teaching students in tents on the tiny Western
Pacific island, a U.S. territory close to major U.S. military
bases on Guam.
    Saipan's economy had been buoyed by Hong Kong-listed
Imperial Pacific International Holdings'  1076.HK  casino since
it opened as a temporary facility in 2015. The project has
contributed to around 60 percent of government revenues through
taxes and operating fees.
    However, Imperial Pacific posted a record loss in 2018 due
in part to massive uncollected debts, and is far from finishing
its glitzy resort that was initially due to open two years ago. 
    Tax revenues due to Saipan's government have dropped by more
than 70 percent, according to Imperial's annual report released
in March while legislators, executives and local residents say
the company is behind on monthly tax payments.
    Imperial Pacific declined repeated requests for comment.
    Authorities in Saipan, part of the tropical Northern Mariana
Islands, are planning to cut the budget by 10 percent for 2020
and have already cut $12 million in spending for fiscal year
2019, according to governor Ralph Torres. Austerity measures
such as reducing utility hours have also taken effect. 
    Imperial has been granted multiple extensions after missing
deadlines to complete the project and local legislator Christina
Sablan said there were concerns it would need to seek a further
extension because of problems securing the workforce needed to
finalise construction before the current 2021 deadline. 
    Labour shortages due to federal restrictions limiting the
number of foreigners allowed to work in Saipan have affected
businesses across the tiny island – home to around 50,000 people
- where tourism is the main economic driver. 
    Imperial operates its opulent gold and cream hued casino in
the heart of Saipan's main Garapan district, targeting high
roller gamblers, mostly from China. 
    However, the planned 329-room luxury hotel - to be built on
top of the casino - remains a towering construction site with
cranes and scaffolding supporting the building's windowless
shell.
    On a recent Saturday afternoon, only four of around 100
baccarat tables were occupied, while the rest of the casino lay
empty and VIP sections were closed off.
    The company is facing acute challenges with visits from high
rollers plunging after the typhoon in October and some $1.2
billion in outstanding receivables, of which $730 million was
over a year old, according to its 2018 annual report. 
    Imperial is also involved in several legal cases including
one brought by former construction workers who say they were
victims of forced labour and human trafficking. The company
declined to comment on allegations by seven Chinese former
construction workers that it “recklessly disregarded its
contractors’ exploitive and illegal practices”.  urn:newsml:reuters.com:*:nL3N2112AW
    Saipan's government is currently considering a bill to
legalise online gambling to offset falling revenues from the
casino.
    Local businessman Glen Hunter said the casino's problems had
spilled over into other businesses, with local parking and views
affected. Hunter has repeatedly called for more transparency and
scrutiny over Imperial's operations. 
    "Who is going to offset these negative impacts? We the tax
payers have been shouldering it," he said.
    Imperial's casino plan is the vision of Macau junket
executive Ji Xiaobo, who won a 40-year casino license in 2014.
    His shift away from the former Portuguese territory, where
he brought high-rolling gamblers to play, came as China's
government began a corruption crackdown which pummeled Macau's
casino revenues and sent wealthy betters to other locales such
as Vietnam, Cambodia and the Philippines. 
    Imperial is also trying to secure a 400-acre land plot on
the north west of Saipan to build a mega resort with convention
facilities and thousands of hotel rooms.
    Locals like Rizalina Liwag, principal of Hopwood Middle
School, are hoping the government can come up with funds to
rebuild their campus, destroyed by Typhoon Yutu.
    Some 900 children are currently being taught lessons out of
42 tents. 
    "Our students deserve to have a permanent structure where
they can enjoy and feel safe without being worried that the next
typhoon may destroy our tents and we will go back to scratch
again," she said.

 (Reporting by Farah Master. Editing by Lincoln Feast.)
 ((farah.master@thomsonreuters.com; +852 28431631 ; Reuters
Messaging: farah.master.thomsonreuters@thomsonreuters.net))