Thursday, December 14, 2006

there's something about ..... casinos, theme pk, shopping and GST

This is the economic piece I mentioned much earlier.

My trip to HK/China really opened my eyes. I had intended to see for myself what Singapore is lacking and what the rave was all about in HK.

But why did I sound so negative about the state of economy of Singapore? Afterall, didn't Singapore register a very strong growth the last 2 years?

The reason for my negativity is because Hong kong is taking alot of businesses away from Singapore. We used to say Singapore is Clean, efficient, bilingual etc. But these are no longer our forte in keeping businesses in Singapore. You just have to make a trip to Hong Kong, take a serious look into Hong Kong and you realised Singapore is losing our edge as a destination, both as a tourist attraction as well as a place to work and live.

Anybody who says Singapore is a shopping paradise, should think twice. Hong Kong has a vibrancy that Singapore couldn't match. Shops remains open till 11pm. Their salesperson's level of service and committment make even Singapore's Giordano's staffs looks amateurish. In the past, where they struggle with mandarin and English, they now speaks Mandarin well enough to make a deal. No doubt, some sectors in Hong Kong still struggles with English, but they are improving by the leaps and bounds. Singaporean's edge as a bilingual city is under-threat.

They also have a hunger for success that stems from the fact that they are next to China and there are lots of money to earn from China. The China market is so huge that you cannot ignore the economic benefits. The corporate tax for companies in HK is also lower than Singapore. And it just make much more sense to setup office in Hong Kong. This applies even to those MNC given the headquarters status in Singapore.

I recalled one such occurence where one of my MNC clients decided to move the whole headquarters to Hong Kong. And soon after announcing to the company's staff about this decision, the president of the company received a call from Singapore Government. While it's still an urban legend, it is understood that the HK government had called the Singapore Government to gloat about their success in luring this MNC over to HK.

Recently HK decided to abolish their plans to introduce GST after much complaints and demonstrations. On the other hand, Singapore is planning to increase from the existing 5% to 7%. Both the countries mentioned about using the GST monies to help the poor.

In Singapore, this increase in GST was met with lots of criticism on the government. Likewise, the casino decision was also much disputed by Singaporeans over the last 2 years. But unlike HK, Singaporean's complaints are unlikely to reverse our Singapore Government's decision.

But I do agree with the government's move to build casinos in Singapore. In Hong Kong, you have a macau for the gambling fix. You have a Disneyland and others for the tourist dollars. They even have a Madame Tussard.

I read an article from their local newspaper. It is reported that Disneyland has a visitorship of 5 million in their first year of operation. Out of these 5 million, 2.5m came from Mainland China. In contrast, Singapore attracted about 1m from mainland china. This figure is from tourism board. tourist statistics

Now, if that 2.5m mainland chinese spend about 3 days in HK, their total contribution to HK's economy is frightening as they would have spent on other tourists attractions, the hotel stays, the food and the shopping. The Hong Kong retailers are telling you that Mainland China is their biggest source of business now. Singapore?

So how do you persuade these Chinese to come to Singapore? I think Sentosa IR with Universal Studio could be a start. We need a big brand name in Singapore.

If we could achieve the targeted tourism numbers down the road, the likely GST receivable from the tourism numbers will be huge. And I got no doubt that these revenues will help Singapore in a bigger ways.

You can calculate the additional revenues from the additional 2%.

If we can achieve 15 million vistors a year. And assuming they each spend $500 in Singapore on food and hotel. Total GST receivable is about $525m assuming 7%. The additional 2% added $150m. So the longer the tourists stays, the more GST we can receive. And this number is also assuming that they only contribute $500 per tourist. Probably a conservative figure. So we need all the initiatives to bring in the visitors and make them stay longer.

So we do need GST to get more from the tourists and perhaps lower our company tax or personal income tax to attract more companies to setup offices in Singapore. Or perhaps lower medical costs and lower school fees or lower transport fares.

With cleaner air, we are definitely a better choice to live-in than in HK in the short term. But what happens if HK clean up their pollution? They did say that all it takes is $10billion to clean up the air. Where would that leave us again?


Anonymous said...

Dude, only ONE problem with your post. Tourists can get GST REFUNDS! Hehehe.
But the additional revenue from tourists do still help, of course.
Gahmen not stupid.

moomooman said...

Yo... tourist can only get GST refunds on shopping. Not on hotel, air ticket, tourist attractions and food.

Anonymous said...

My BAD then! But of all that you mentioned, shopping will make up the bulk of a typical tourist's spendings here.

Afterall, how many air tickets, rooms, attractions and food can 1 tourist consume?

Not to mention - what if the tourist doesn't take SIA? Accomodations are booked via his local tour agencies? Then we only get a portion of the potential revenue from local companies supporting those agencies.

Hehehehe. What the heck, why we worry? Right or wrong, we dun benefit. Ah, screw it!