Interview: Casino contractor

Interview: Casino contractor

The Macau construction industry can expect good times to roll for up to 10 years on the back of renewed casino development and government infrastructure spending although labour shortages will remain a difficult problem, according to one of Macau’s leading contractors Top Builders.

Speaking exclusively to Construction Post last week, managing director of Top Builders Group and Top Builders International Forest Tang Hon-cheong said industry was now riding on a second wave of casino development.

Hong Kong listed operators such as Galaxy Entertainment (0027), Sands China (1928), Wynn Macau (1128) and MGM China (2282) are currently all busy adding more space to their portfolios.

His casino building operation, Top Builders Group, was awarded the superstructure works for the Galaxy phase 2 last month on top of the foundation and substructure package awarded last year.

It previously worked on parcels 1 and 2 for the Venetian Macao Resort and is now working on parcel 3.

The company is also working on the latest project of Wynn Macau.

In its 2011 interim report, Wynn Macau said it would be investing US$3.5 to 4 billion (HK$27.2 to 31 billion) for its Cotai project.

To accommodate the new casino space and new visitors, the Macau would have to upgrade its infrastructure.

For example, the Macau Light Rail Transit, with an estimated cost of up to 11 billion MOP (about HK$11 billion) started construction work last year.

Top Builders is currently working as main contractor on three contracts for the light rail including the Cotai section and a depot.

Tang said there would be a knock on effect as casinos attracted tourists which in turn attracted more retail and restaurants, and hence more investment in commercial, hotel and residential projects.

Figures from the Macau Government Tourist Office make for impressive reading.

In 2004, when the first foreign casino Sands Macao opened for business, the former Portuguese enclave welcomed 16.7 million visitors but this figure had jumped by 68 percent to 28 million by 2012.

Gross domestic product recorded even better performance even after allowing for a slowdown due to the 2008 global financial crisis.

In 2012, Macau’s GDP was 348.2 billion MOP, about 4.2 times that recorded in 2004.

“So in the next 5 to 10 years, this would be a very busy time,” Tang said.

Managing Director of Top Builders Group and Top Builders International Forest Tang Hon-cheong  (Danny Chung)

Managing Director of Top Builders Group and Top Builders International Forest Tang Hon-cheong (Danny Chung)

However a major headache was the shortage of construction workers and all manner of professional and supervisory staff.

During the first wave of casino development from 2002 onwards, Macau could attract Hong Kong staff during the territory’s construction downturn but now all that has changed.

Hong Kong is now in the midst of its own construction boom with major infrastructure and private building projects.

Figures from the Macau Census and Statistics Service show an increase in daily wages for some trades.

For example, the daily wage for a concreter and drainlayer in the fourth quarter of 2012 was 602 MOP, up 11 percent year on year while that for a plant operator was 744 MOP, up 18 percent year on year.

Welders had a slightly lower wage at 723 MOP but only after it saw an annual increase of 22 percent.

Professionals such as engineers, quantity surveyors and quality assurance staff were hard to come by.

“Even if [the offered salary] is higher, if the person is a Hong Konger, lives in Hong Kong and has a family there, it’s all convenient. They will not come here,” Tang said.

The Macau government has shown understanding of the difficulties faced by the construction industry by allowing labour imports.

In this regard, Tang said the government has shown more flexibility than the Hong Kong government.

“This is easy to understand. Previously the population was only about 400,000. How many people actually work in construction as workers and managers?” Tang, who has over 30 years experience in the industry, said.

The Ruins of St Paul's. According to official statistics, Macau welcomed 28 million visitors in 2012. (Danny Chung)

The Ruins of St Paul’s. According to official statistics, Macau welcomed 28 million visitors in 2012. (Danny Chung)

Right now the company was considering recruiting workers from further afield such as from Australia, Singapore, Taiwan and Malaysia.

However this required the Macau government to allow labour imports from these countries.

“There are no restrictions on what people we use. But government policy should show co-ordination,” Tang said.

For now, Tang said he would maintain the distinction between local work and foreign investment work.

Top Builders International handles the local work while Top Builders Group does the casino and foreign investment work.

Tang, who worked on the Sands Macao, said the casino work involved such wholesale changes in contractual documents, management techniques and mindset that it was necessary to set up a separate company in 2004 just to handle the work.

The influx of contractors such as Hsin Chong, Leighton Asia working as construction managers or main contractors and other Hong Kong companies working on subcontracts had raised the level of standards expected of local contractors.

Top Builders as a result had to raise its own game in order to compete.

“If there is a requirement, then there is a need to improve,” Tang said.

For the local work, Tang said the company would concentrate on the prestigious and technically challenging projects as the company had to make prudent use of its resources and manpower.

Having seen how foreign contractors work, Tang hoped that some aspects would take root in Macau especially on dispute resolution.

Unlike the casino work where the possibility of disputes was foreseen and provision made for it, for the local work, if there was a dispute, the usual route was to slug it out in court, which could take years with no guarantee of a satisfactory ruling.

But Tang said Hong Kong was already using dispute resolution methods and partnering techniques and Macau should also adopt them.

Danny Chung

 

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