UPDATE: Sands China Likely To Get Macau OK For Cotai Labor In October - Source
October 18 2010 - 2:00AM
Dow Jones News
Sands China Ltd. (1928.HK) will likely receive permission from
the Macau government later this month to circumvent the
government's tough labor policy and hire the foreign construction
workers needed to restart its US$4 billion expansion project, a
person familiar with the situation said Monday, removing the major
obstacle to the completion of a long-delayed casino resort.
The Macau government told company officials that construction
companies employed by the Las Vegas Sands Corp. (LVS) unit should
receive approval to hire the 5,000 foreign workers they need to
immediately restart work this month, the person said.
Government officials didn't respond to requests for comment.
The Macau government imposed new regulations earlier this year
requiring that one local construction worker be employed for every
construction worker from outside Macau. A shortage of labor in the
Chinese territory had earlier prompted developers to import many of
their construction workers from elsewhere, especially mainland
China.
Sands China, which initially suspended construction on the
project in November 2008 at the height of the global financial
crisis, earlier said it had resumed building this spring and
targeted an opening in the third quarter of 2011.
However, the company said in August the project would be delayed
further to the fourth quarter of next year because of an
insufficient number of construction workers, highlighting the
consequences of Macau's foreign-labor restrictions on
businesses.
Sands China rival Galaxy Entertainment Group Ltd. (0027.HK) has
also been struggling to hire necessary construction workers to
complete its enormous project in Macau's Cotai area, which is home
to Sands's flagship Venetian casino resort.
Analysts said construction companies will need about a month to
recruit workers once they get the go-ahead to hire. This would
imply a mid-2012 opening date for the Sands project given the
company's earlier statement that it would take approximately 16
months to complete the first phase of the project once it had
"sufficient labor to ramp up construction activity to requisite
levels." RBS analyst Philip Tulk estimates the property will open
on July 1, 2012, or about a year later than company executives' had
indicated just months earlier.
Sands China Acting Chief Executive Mike Leven said in July the
company had about 1,300 construction workers on site--half of what
was needed at that time--and nowhere near the 10,000 to 11,000
workers required at the peak of construction. Leven is also chief
operating officer at Las Vegas Sands.
Industry observers have speculated that the labor restrictions,
proposed at the end of April just days ahead of a sensitive
anniversary, were aimed at appeasing disgruntled labor activists.
On May 1, 2007, violent clashes broke out during a Labor Day
protest by Macau workers over corruption and use of illegal
laborers in the construction industry.
Macau's casino boom, with gambling revenue up 63% so far this
year, has transformed the economy of this once-sleepy former
Portuguese colony, but it has also led to rising social tensions
such as labor frictions as some residents don't feel they have been
a part of the growth story. A new administration in Macau that came
into power in December has emphasized the need for balanced
growth.
But many Macau residents have complained that the labor
crackdown isn't helping anyone. Given the Chinese territory's
unemployment rate of just 2.9%, the restrictions are taking a toll
on a variety of other construction projects unrelated to casinos,
including the government's plan for a new light-rail system and
private residential real-estate developments. Businesses that
aren't building have also been subject to stricter quotas on
foreign labor, which they complain has affected operations.
Some industry observers said a relaxation of the restrictions is
likely to follow the Oct. 18 conclusion of a top level meeting in
Beijing in which top Chinese officials discuss priorities for the
country's next Five Year Plan, which will be unveiled in 2011.
Macau officials have kept the restrictions in place to prevent
another bubble in the Chinese territory's labor market and are
unlikely to make a move without a nod from Beijing, they said.
However, others said Beijing isn't involved in decisions about
Macau's labor market and that the restrictions are an example of
botched local policymaking.
It remains unclear if any decision to let Sands China hire
foreign construction workers for its project would prompt a
territory-wide relaxation of labor regulations. A large amount of
labor will also be needed when Sands China and Galaxy open their
resorts, and when Wynn Macau Ltd., SJM Holdings Ltd. and MGM Macau
start their respective expansion projects in Cotai.
-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002;
kathryn.okeeffe@dowjones.com
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