“Discussions are still ongoing” with Melco Crown Entertainment Ltd. (MPEL), Packer and Ho’s casino venture, said Cristino Naguiat, chairman of the state-owned Philippine Amusement & Gaming Corp. “I think they’re serious,” he said in a Sept. 2 interview in Shanghai, as he accompanied President Benigno Aquino on a state visit to China.
The Philippines awarded four licenses in 2008 and 2009 to operate casinos in a gambling and entertainment complex the government plans to build in Manila. The Philippines is seeking to accelerate construction as bettors in Asia fuel casino growth in Singapore and Macau. Casino gambling revenue in Macau was four times that of the Las Vegas Strip in 2010 and has grown 47 percent this year to 173 billion patacas ($22 billion).
“The government’s strategy of bringing in key investors is good as it creates a critical mass,” Leo Venezuela, a Manila- based analyst at CLSA Asia-Pacific Markets, said today. “You can’t just have one or two players and call it a gaming center. You have to have a handful to provide variety and a more dynamic industry.”
Each Philippine licensee agreed to invest $1 billion over five years, Naguiat said. Three of the four that were given licenses in 2008 to 2009 were a venture between Genting Malaysia Bhd (GENM) and Alliance Global Group Inc., Philippine property developer Belle Corp. (BEL), and Philippine ports magnate Enrique Razon’s Bloombury Investments Holding Inc.
Naguiat declined to name the fourth, saying only that it’s a Japanese company. Universal Entertainment Corp. (6425), a Japanese maker of so-called pachinko pinball machines, started building its project in June and plans to open by 2014, Kazuma Ishioka, a Tokyo-based spokesman, said by phone today.
Melco Crown fell 3.9 percent to $12.34 in Nasdaq trading on Sept. 2, paring its gain this year to 94 percent.
The final amount of the investment will change, Naguiat said, declining to be more specific. State-owned Philippine Amusement & Gaming, also referred to as Pagcor, operates and regulates casinos in the Philippines.
Belle and Bloombury have started construction while the rest will begin by the first quarter of 2012, Naguiat said.
The Philippine government’s move to boost its casino industry may help meet its goal of increasing tourist arrivals to the archipelago of more than 7,000 islands to 6 million by 2016, according to analysts. Thailand had almost 16 million visitor arrivals last year.
“Unlike Singapore and Macau, the Philippines has other attractions,” CLSA’s Venezuela said. “Tourists can go to other destinations apart from casinos. Aside from that, it’s strategically located in Asia. It’s a short flight from North and South Asia.”
The Philippines and China, which provides a steady traffic of customers to Macau’s casino, said in a Sept. 1 communique that they plan to double two-way tourist arrivals to 2 million people in the next five years.
Geoffrey Davis, Melco Crown’s chief financial officer, didn’t reply to an e-mail and voice message seeking comment. Gary O’Neill, a spokesman for Melbourne-based Crown Ltd. (CWN), and Maggie Ma, a spokeswoman for Melco International Development Ltd. (200), didn’t immediately respond to calls seeking comment.
Lawrence Ho’s Melco International and Packer’s Crown each own 33.5 percent of Nasdaq-listed Melco Crown, according to data compiled by Bloomberg. Ho is Melco Crown’s chief executive officer and both men are co-chairmen of the company that owns the City of Dreams and Altira casinos in Macau.
Melco International fell 1.5 percent to HK$8.08 at the 4 p.m. close of trading in Hong Kong. Crown dropped 0.9 percent to A$8.15 at the 4:10 p.m. close in Sydney.
Pagcor promoted the 1,976-acre gambling and entertainment complex in 2007 after Congress renewed its license to run gaming operations in the nation for an additional 25 years.
Pagcor operates 13 casinos in the country, according to its website. Its revenue rose 11 percent to 17.2 billion pesos in the first half and contributed 6.35 billion pesos to the treasury, the tax bureau and the Philippine Sports Commission, according to the website.
The first phase of Pagcor City, as the project is called, will include a casino resort and a theme park that will take two to three years to develop, Efraim Genuino, the company’s chairman in 2007, said at the time. It will take at least seven years to complete the project, he said, with most of the development to be built on land that has yet to be reclaimed from Manila Bay.
Genuino at the time estimated Pagcor City could boost overseas visitors into the Philippines by fourfold to 10 million in five years. About 80 percent to 90 percent of the complex’s revenue could come from tourists, including those from China and Japan, he said then.
Alliance Global and Genting’s venture, which operates Manila’s biggest casino, committed in 2008 to spend about $1.1 billion to develop 91 acres in Pagcor City into a complex of hotels and a theme park. Belle, which is selling shares in a 4.5 billion peso rights offer this month, plans to open part of its $750 million Belle Grande Manila Bay casino in the second quarter of next year, Belle Vice Chairman Willy Ocier said in April.