Question No. 48 of Notice Paper No. 24 of 2006 For Oral Answer
Name and Constituency of Member of Parliament
Ms. Lee Bee Wah, Member of Parliament for Ang Mo Kio GRC
Question No. 48
To ask the Minister for Trade and Industry on the two Integrated Resorts:
(a) if mechanisms have been put in place to monitor the work-in-progress to ensure compliance with the contract awarded;
(b) if he will provide an update on the work-in-progress with regard to these two projects; and
(c) what recourse is there if the companies fail to meet their contractual obligations, such as completion deadlines.
The obligations of the Integrated Resort (IR) operators are clearly outlined in the Requests for Proposals and the Development Agreements. The two IR operators are contractually bound to deliver the overall IR concept and all the components of the IR as detailed in the accepted proposal. Any changes to the accepted proposal would require the Government's approval.
Furthermore, the IR operators must start construction within three years and complete the construction within eight years from the date of the signing of the Development Agreement. They also have to incur 100% of the development investment within three years from the first issuance of the casino license, or eight years from the date of signing the Development Agreement, whichever is earlier.
If the IR operators fail to meet their contractual obligations, the Government reserves the right to forfeit the security deposit which is 5% of the development investment, or about $200 million for each IR. If necessary, the Government can also repossess the IR land.
Let me assure members that while we have put in place robust safeguards, the IR operators themselves have every incentive to complete their projects on time and on budget. The two IRs have an exclusivity period of only 10 years, and every month of delay translates to not just substantial revenues forgone, but also interest costs incurred for the IR operators. The cost of delay will thus be high especially given the large investments involved.
The Government will closely engage the two IR operators to ensure the successful implementation of the IRs.