China gambles on theme park, whale sharks to lure punters from Macau casinos


By Farah Master

HENGQIN ISLAND, China, Oct 6 (Reuters) - It's being toutedas China's answer to Orlando, a $5 billion resort and theme parkcomplete with a mega rollercoaster and a whale shark tanksituated on a sleepy southern island next to the world's biggestgambling hub Macau.

Chimelong, which is set to partially open next month, is thelinchpin of China's ambitious plans to expand Hengqin into aleisure hub similar to the coastal U.S. city globally renownedfor its natural attactions and theme-park resorts by Walt DisneyCo and Universal Studios.

And while some extravagant infrastructure projects in Chinahave turned into white elephants, the odds are on Hengqin's sidelargely due to the support of the Beijing government and theisland's proximity to the millions of tourists who throng to Macau every year.

"I don't have many doubts that it will be successful," saidPhilip Tulk, director of equities research at Standard CharteredBank in Hong Kong, referring to the island which the governmentdesignated as a special economic zone five years ago.

"The mainland people are looking for entertainment andtravel options that are reasonably easy. They strongly desirenew and interesting places to go and if Chimelong can deliver onthat it will be massively successful," he added.

The construction boom on Hengqin, just a 10-minute drivefrom Macau, comes at a time when mega-resorts are beingdeveloped in Asia in places like Taiwan, South Korea, thePhilippines and Vietnam to tap the region's growing ranks ofwealthy tourists.

Most of these visitors are Chinese and many choose to stayclose to home, heading to Macau, the only place in China wherecasino gambling is legal and where gaming revenues grew by morethan a fifth last month to just over $3.5 billion.

Macau welcomed almost 30 million visitors last year, but thegovernment's plans to increase that number are being stymied bya lack of land and strained infrastructure and services.

Enter Hengqin, which is three times the size of Macau andwhich boasts long, sandy beaches and thick, mountainous forests.

"Macau is small and there are too many people. It needs tobe expanded. Chimelong is a good complement. It is positioned asleisure tourism," said Niu Jing, director of the administrativecommittee, or local government, of the Hengqin New Area.


Hengqin has been part of the central government's plan todevelop the Pearl River Delta since 2008, and the island isbeing groomed as a test bed for political and economic projectsbetween the southern Guangdong province and the specialadministrative regions of Macau and Hong Kong.

The Hengqin model also fits in with China's plans to boostconsumer spending to lift the economy and wean growth away fromthe manufacturing sector.

Local officials say Hengqin has so far attracted investmentsworth 240 billion yuan ($39 billion) from companies like HongKong conglomerate Shun Tak, Italian luxury yacht makerFerretti and Starwood Hotels & Resorts Worldwide Inc.

Ferretti, controlled by Chinese machinery group ShandongHeavy Industry, is building its Asia Pacific headquarters on theisland as well as a yacht club and a navigation school.

Pansy Ho, Hong Kong's richest woman and managing director ofShun Tak, calls Hengqin the perfect solution for Macau. Theproperty-to-transport conglomerate is building a complex thatwill include offices, homes and a hotel on the island.

"We need to work on a plan to assimilate and to make surethat in the future, Macau would be in the centre of things butalso integrated with the development and the future of the wholePearl River delta," Ho, the daughter of Macau gambling godfatherStanely Ho, told Reuters.

The government has banned gambling on Hengqin, but that hasnot deterred Macau's billion-dollar casino operators. GalaxyEntertainment is considering investing in sportsstadiums, golf courses and a marina on the island to complementits Macau casinos, Deputy Chairman Francis Lui told Reuters.

"The customer is wanting a bigger and bigger experience...and in Macau, we just don't have the land and it would be tooexpensive," he said. "So Hengquin is going to be very importantfor us."


Hengquin is connected to Macau through two underwatertunnels. By 2016, it will also be linked to Macau in the eastand Hong Kong to the north by a bridge. Rail services will alsobe extended to Hengqin.

Forests of cranes and scaffolding jut out from pockets ofHengqin as companies like Zhuhai Huafa Group Ltd andShimao Property Holdings Ltd race to develop theisland, where wooden stilt houses still dot parts of theshoreline.

Property prices have soared, with new houses near thecentral business district costing more than double the amountper square metre than in the nearby Zhuhai island.

Palm-fringed, six-lane highways line the island whileresidential high-rises are cropping up as the pace ofconstruction has picked up in the past year.

Home to fewer than 8,000 people now, officials forecast theisland's population to rise to over quarter of a million inseven years time.

The marine-themed Chimelong resort, headed by Chinesebusinessman Su Zhigang, is the biggest project to open on theisland this year. Its coral-hued towers, topped by blueonion-domes, will house 1,880 hotel rooms, a conference centre,a spa and an indoor water park.

Macau University which finished construction of its Hengqincampus in July this year on a site 20 times larger than itsMacau location, will formally welcome students in Febrary nextyear. The university, which can accommodate up to 15,000students, will be operated under the laws that govern Macau, andnot mainland Chinese regulations.

Major lenders such as Bank of China, Bank ofCommunications and Agricultural Bank of China have set up temporary offices in Hengqin's centralbusiness district to help drive its development.

The island is also hoping to lure business with tax breaksand new financial policies that include allowing companies todevelop offshore business in foreign currencies and piloting the exchange of the renminbi, Macau pataca and Hong Kong dollar.

"The special thing about Hengqin is that it is a naturallyisolated island, so the risk is controllable," says Hengqin'sNiu. "Hengqin, without exaggeration, is unique."

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