JAPAN

Daniel Cheng*

Japan has seen numerous twists and turns in its bid to establish an integrated resort industry, though perhaps one of the most unwelcome was the arrest of a deputy minister at the centre of a money-for-favours scandal surrounding IR development plans for Okinawa and Hokkaido.

A reticent government is putting on its bravest face as the media and opposition legislators are smelling blood and going for the jugular. The first fallout came with the announcement that the planned January release of the IR Basic Policy will be delayed by at least one month.

This may just be the tip of the iceberg with a stormy forecast of further tribulations down the road for the next eighteen months. Seven landmark events in the horizon pose potential trials.

Right off the starting block of the year’s 6-month Diet sitting, the opposition bench has been peppering questions on how far and deep the culpability goes in the IR corruption investigations. Not a day goes by without extensive coverage in all the major news media, which further raised public opposition towards IRs in both opinion polls and street protests. Each new startling revelation is akin to inflicting a deep knife wound with a potentially fatal stab if it were to embroil any of the senior LDP leadership.

‘If you can’t beat them, join them.’ That might be the anthem the LDP is playing to avoid another rout in July by incumbent governor, Yuriko Koike. Such an alliance of mutual interest could include an offer of a Tokyo IR host license among the LDP concessions to Governor Koike. In such a scenario, Osaka and Yokohama could suddenly find themselves in the crosshairs of elimination whereby either one may have to make way for Tokyo to ascend.

Three weeks after the Tokyo Governor contest, the eyes of the entire world will fall on the city of Tokyo as it hosts the 2020 Summer Olympics. Anti-casino proponents, in the legislature as well as the public, will capitalise on getting their message across under this intense scrutiny, knowing that the government dared not put a step wrong during this period. Any new IR controversy erupting during the games would pose a major setback for its passage.

The biggest lobbyist for U.S. casino interests in Japan has been none other than the President of the United States. It can be envisaged that if a new president walks into 1600 Pennsylvania Avenue come November, the U.S. camp will lose their prime backdoor dealmaker and give a psychological boost to non-U.S. bidders, particularly Genting.

The star host candidate is not without worries. Yokohama is seeing the most of public anti-casino protests. A united anti-casino lobby is pushing to void city hall’s unilateral IR decision and trigger a referendum, and they already have one-third of the required signatures to make it happen. If the mayor skirts the referendum snare, another big question mark will loom at the very penultimate juncture. One month after the deadline for submission of host IR bids in July next year, the mayor’s term comes to an end; if she is to run for re-election, it will be the first time she will be facing an electorate which has consistently polled more than 60 percent against having an IR in Yokohama. If this group conveys their disapproval into votes, a new mayor would almost certainly pronounce an eleventh hour withdrawal to host an IR, despite the highly probable fact that Yokohama would already have been a host-elect at that point.

Barring anything audacious, Prime Minister Abe is set to relinquish his position in September next year, with the accolade of being the longest serving premier in the country’s history. In the extreme scenario where the opposition snatches the reins, the IR legislation could be abolished altogether.

The timing could not be worse for the Lower House elections which need to be called a month after Abe steps down in October next year. The LDP would likely be at its most vulnerable during that time, hence it is more likely that the government will trigger the elections earlier.

* Daniel Cheng is a regular industry commentator, and formerly held senior executive positions with Hard Rock and various major international entertainment and technology companies.

The Osaka Prefectural Government said only one candidate made an acceptable bid for the Yumeshima IR project, the MGM-Orix consortium.

Presumably, this makes it certain that MGM Resorts has now become the “winner” of the oncecoveted position as Osaka’s IR operator partner.

Galaxy Entertainment and Genting Singapore were also in the Osaka race, but it appears that both firms dropped out. While MGM Japan officials will be justifiably proud in reaching an apparent success in Japan’s second-largest urban market, the circumstances seem to be far from ideal.

It will certainly be an embarrassment to the Osaka government that only one IR operator candidate came through with a bid.

Kitakyushu City and Miyagi Prefecture have dropped out of the IR race, citing their lack of critical mass and local hurdles. “We will be passing on any bid under the current IR legislation,” explained Mayor Kenji Kitahashi of Kitakyushu.

“Unless the national regulatory conditions are altered, it will be difficult for us to make a bid so long as I am in office.” Governor Yoshihiro Murai said Miyagi Prefecture’s chances of winning were low.

Also, according to the prefecture’s calculations, if an IR were established near Sendai Airport, it would take from 20 to 46 years to recover the investment, and thus was not economically feasible.