By KATE O’KEEFFE
Of DOW JONES NEWSWIRES
HONG KONG—Macau’s government is proposing a new law that would restrict the number of nonresident workers on construction projects, potentially disrupting ambitious expansion plans by the territory’s casino developers.
The legislation would require one local construction worker be employed for every worker from outside Macau brought onto a project, a government spokeswoman said this week. She didn’t say when the law might be put into place.
The restrictions, if enacted, would make it difficult for casino operators to hire the workers they need to complete their projects without severe delays. A shortage of labor in Macau has prompted developers to import many of their construction workers from elsewhere, especially mainland China. Macau’s unemployment rate in the first quarter held steady at 2.9%, government data show.
Sands China Ltd., a unit of Las Vegas Sands Corp., could be particularly vulnerable to the new legislation. Analysts estimate the company will need upward of 10,000 workers to complete a massive expansion of its existing operations in Macau’s Cotai area, home to the Venetian Macao.
The company’s chief executive Steve Jacobs said last week that it plans to hire all 2,000 qualified workers he estimates are available in Macau for the project, but that the rest of the construction force would need to come from Hong Kong or mainland China. The company hopes to launch the new property in the third quarter of 2011.
The impact on Hong Kong-based Galaxy Entertainment Group might be less severe as construction of its US$1.8 billion Cotai project is further along, said analysts.
Other projects, not just casinos and hotels, could be affected by the government’s proposed guidelines, including plans for a new light-rail system and residential real-estate developments.
“The quicker we get a long-term policy on foreign labor the better,” said an executive at a casino operator, who also expressed concern about the news earlier in the month that the government would impose a levy of about 200 patacas (about US$25) per month on employers for each foreign worker they hire.
People familiar with the casino operators speculate that the latest government proposal was aimed at appeasing disgruntled labor activists ahead of a sensitive anniversary. On May 1, 2007, violent clashes broke out during a Labor Day protest by Macau workers over corruption and use of illegal laborers in the construction industry.
It’s unclear how the law would be enforced, or what penalties a company might be subject to for violating it.
Macau’s casino boom has transformed the economy of this once-sleepy former Portuguese colony, which last year saw its real gross domestic product grow an estimated 13.2%. But it has also led to rising social tensions such as labor frictions.
A new administration in Macau that came into power in December has emphasized the need for balanced growth. One of its officials is Francis Tam, Macau’s Secretary for Economy and Finance, who is bringing a new approach to managing the gambling industry, according to Carlos Lobo, a former government official.
“Macau now has someone who really seems to want to do what he says—in this case, to effectively oversee the gambling industry,” Mr. Lobo said, referring to Mr. Tam. “This might be bad news for operators because for long they felt that they could do most of what they wanted,” he added.
The government has also sown some confusion in the market with a recent statement that it would cap the number of gambling tables allowed in the territory, which could tame operators’ expansion plans.
Mr. Tam said last month that the total number of gambling tables in the Chinese territory, which is currently about 5,000, will be capped at 5,500 until 2013 and that the Macau government won’t approve new casino projects until then. A person familiar with the matter said Galaxy will get 400 of those new tables, suggesting Sands China, which plans to have 670 tables at its new project, could be forced to take tables from its other properties to comply with the quota.
Las Vegas Sands Chairman Sheldon Adelson, speaking at the opening of the company’s latest casino, the $5.7 billion Marina Bay Sands in Singapore, said Tuesday he takes the Macau government’s statement on table cap seriously.
But Steve Wynn, chairman of Wynn Resorts Ltd., has dismissed worries about limits on the number of gambling tables, calling recent remarks by top officials part of “a conversation, not a reality.”
Mr. Wynn also last week announced plans to start construction next year on his largest Macau property yet.
—Andrea Wong contributed to this article.
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