Malaysia’s Landmarks Bhd., backed by Asia’s largest gambling company, hopes to build Indonesia’s first legalized casinos in a USD 3.1 billion resort project to compete with Las Vegas Sands Corp. in Singapore.
The „objective is to develop a new destination for Indonesia,“ Chief Operating Officer Lim Boon Soon said in an interview in Kuala Lumpur. The gaming element „will accelerate the whole integrated development in Bintan,“ an island in Indonesia, which has the world’s largest Muslim population.
The planned casinos in Bintan will compete with gaming resorts that Las Vegas Sands and Genting Bhd., Landmarks’s biggest shareholder, are racing to build in Singapore, which is a 55-minute ferry ride away. The regulated gambling market in the Asia-Pacific region may expand 16 percent a year to USD 30.3 billion in 2011, according to PricewaterhouseCoopers LLP.
„It could work, though the execution risks are there,“ said Keith Wee, an analyst at OSK Research Sdn. With casinos in Malaysia as well as Singapore, „competition will be tough.“
Singapore plans to double the number of overseas visitors to 17 million annually and triple tourism receipts to SGD 30 billion (USD 22 billion) by 2015. The island-nation ended a four- decade ban on casinos in 2005 amid surging gambling revenue in the Chinese city of Macau.
Landmarks aims to capture the spillover from Singapore, targeting about 3 million visitors a year to Bintan, eight times more than the 370,000 tourists now, Lim said.
Landmarks climbed 2.5 percent to close at 2.45 ringgit in Kuala Lumpur, the highest level since March 27. It earlier rose 5.4 percent. Genting was unchanged at 6.35 ringgit after gaining 2.4 percent.
Bintan, the largest island in the Riau archipelago of Indonesia in the South China Sea, is being developed into one of Asia’s biggest holiday resorts by the governments of Indonesia and Singapore and a group of companies.
Resorts there include the Banyan Tree Bintan, Bintan Lagoon Resort and Club Med Ria. Occupancy rates for resorts in Bintan climbed to 61.4 percent last year from 54.9 percent in 2006, according to the Web site of Bintan Resorts International Pte, the marketing consultant for resorts in Bintan. There are more than 1,300 hotel rooms in the island, it said.
Landmarks’s project, which will be valued at SGD 4.2 billion (USD 3.1 billion), will have as many as five resorts, condominiums, villas, health spas and water canals, Lim said in an interview yesterday. „Five years down the road, having a casino won’t be special.“
‚Gambling Is Banned‘
The casinos may be opposed by local politicians. „The plan to build casinos uses a newly issued regional regulation,“ said Ferry Mursidan Baldan, a member of the Indonesian parliament’s domestic and regional affairs commission. „This is a problem“ because „the national law says that gambling is banned.“
Should gambling be legalized in Bintan, „then other regions would follow suit,“ he said. „This we don’t want to happen.“
Landmarks will build the resorts over eight years at a development cost of SGD 2 billion. The company plans to sell five so-called integrated resort lots of about 25 hectares (62 acres) each to investors, Lim said. Each of them comes with a „casino offering,“ he said.
The company, based in Kuala Lumpur, agreed in February to buy the 26 percent it doesn’t already own in Bintan Treasure Bay Pte, which owns 338 hectares of land in Bintan that’s being developed into an integrated resort called Treasure Bay, for SGD 157 million in cash.
Not Just Casinos
Part of the land for Landmarks’s project has been designated for activities such as gaming and medical tourism to help boost the development potential of Treasure Bay, it said in January. The statement didn’t mention casinos. Treasure Bay will have other facilities apart from casinos, Lim said. The floor area for gambling will be „minimal,“ he said.
The casino license is held by PT Wisata Hiburia, an Indonesian entity. „In the zoning agreement, they are the ultimate approving party as to which operators they want,“ Lim said.
Landmarks aims to sell at least two lots by the end of the year. It may retain one and manage a hotel with a casino to provide recurring income, he said. It also may sell private homes, including 120 villa units and 4,000 „high-end“ condominium units, and retain ownership of stores in the town center for rental income,“ he said.
„We have not really finalized the terms and conditions of the gaming business, so our priority is to get the land ready,“ Lim said. The project will create as many as 30,000 jobs in Bintan, he said.
Genting, which is opening a SGD 5.75 billion casino-resort on the Singapore island of Sentosa in 2010, owns 30 percent of Landmarks.