The Covid-19 pandemic might result in an extension of the end date for the 2021 application period in which local governments in Japan must approach the national authorities for the right to host a casino complex or integrated resort (IR) as they are known in that country.
That is according to one of several commentators in Japan spoken to by GGRAsia.
The current timetable is for local governments to apply to the national government within the first seven months of 2021 for the right to host a resort, after finding a private-sector partner.
“I think there is a possibility to extend the ‘end of application date’,” beyond July 2021, Masahiro Terada, a Japan-based consultant at a financial services firm, told GGRAsia.
Japan’s national government declared a Covid-19 nationwide emergency on April 16. It was not until Monday (May 25) that Prime Minister Shinzo Abe lifted the designation for Tokyo and Hokkaido, the last two places to come out of restrictions.
The disruption to the national economy and normal business life wrought by Covid-19 has come at a moment the local and central authorities already had full in-trays. A number of local governments has been racing to set up or complete request-for-proposal (RFC) phases with casino investors, and the national government has not yet issued the final version of its so-called basic policy on IRs, which is due to set out the criteria by which schemes will be assessed.
National basic policy
Mr Terada noted nonetheless that the national authorities were “on schedule” to deliver the basic policy “before July 26″ this year.
That deadline is set out in the IR Implementation Law, indicated Tokyo-based consultancy Bay City Ventures Ltd in commentary released earlier this month.
That consultancy’s managing director Joji Kokuryo and separately, tourism scholar Kazuaki Sasaki, professor in the Department of International Tourism Management at Toyo University in Tokyo, think it unlikely the start of the national application period will be pushed back. That doesn’t exclude the possibility of the closing date for applications being extended.
“In terms of will and won’t, where we stand today, the deadline for the applications will likely not be postponed,” Mr Kokuryo told us. “Japan’s current focus is on economic recovery post-Covid-19, and the IR plan is a multidimensional project that is also tied to important recovery elements such as tourism, regional development and local economies,” he added.
Ayako Nakayama, representative director of the Japan IR Association, described as a voluntary group that connects domestic and international entities interested in the IR national initiative, acknowledged to GGRAsia that there had been questions raised about whether the front-end 2021 application timetable was “realistic” in the light of the Covid-19 disruption.
The international industry had been “questioning whether the [IR] local selection process, which is planned to happen January to July in 2021, will be postponed a year or so,” said Ms Nakayama. She added however that maintaining the timetable might help to focus the efforts of all those involved.
“This timeline set by national government now works as a strong drive for regional cities to keep up their own selection processes,” she told us.
The Covid-19 pandemic has led to travel restrictions worldwide as well as disrupting casino operations across the globe. The travel restrictions in particular have hindered communications between international IR operators and Japanese local governments, as well as potential consortium partners that are locally based, Mr Kokuryo remarked.
“There is concern whether there is enough time for the IR operators to fully understand the local selection requirements before responding to an RFP and for local governments to carry out an effective competitive dialogue with these candidates,” Mr Kokuryo told us.
“Secondly, once a local government has selected an IR partner, there will need to be ample time for them to co-create a sound business plan for their central government submission. Since the numbers of development items that need to be clarified vary in range depending on the candidate site, not all timelines are equal. It will have to be a very fast-paced planning procedure,” Mr Kokuryo added.
The financial capability of the international IR operators has to a varying extent been negatively affected by the pandemic. That could have an impact on their relationship with the Japan market, where total capital expenditure of US$10 billion is routinely mentioned for a big-city IR.
“IR operators’ capability for investment on a Japan IR is now more uncertain under the Covid-19 outbreak,” the Japan IR Association’s Ms Nakayama remarked to us.
Some of the important elements relating to IR investment – such as levels and types of taxation – were still “unset”, Ms Nakayama noted. This would “directly affect the business feasibility of a Japan IR for IR operators; one of the biggest challenges they are facing in the process,” she said.
United States-based casino firm Las Vegas Sands Corp (LVS) had announced earlier this month that it would drop its pursuit of casino resort development in Japan. A number of commentators told us there were presently too many unknowns – including issues around licence security – to make feasible for Las Vegas Sands the scale of infrastructure expected by the host nation.
Other major Asian casino developers – including Genting Singapore Ltd, Melco Resorts and Entertainment Ltd, and Galaxy Entertainment Group Ltd – had however noted in recent statements that they would still pursue the investment opportunity in the nascent Japan market.
Nonetheless, some operators could reassess their investment interests in a Japan IR scheme, or follow Las Vegas Sands in withdrawing from the Japan IR race, Mr Kokuryo and Ms Nakayama separately observed.
Sep 24, 2020Two directors of Macau casino operator SJM Holdings Ltd, Timothy Fok Tsun Ting and Louis Ng Chi Sing, have seen their respective stakes in the firm reduced earlier this month, although for...
Sep 24, 2020
”Despite the re-opening of the integrated resort [Okada Manila], we believe there are significant risks to the segment’s recovery in view of travel restrictions, potential new outbreaks and further lockdowns that could weigh on earnings and cash flows”