Below is the transcript of a CNBC interview with Lui Che Woo, Chairman, Galaxy Entertainment. The interview was first broadcast on CNBC's Squawk Box Asia on 27 August 2018.
All references must be sourced to a "CNBC Interview'.
Interviewed by CNBC's Emily Tan
LUI CHE WOO (LCW): In the past, prizes were usually set up for technology and medical development, but I took these two out as they're very developed now. I think we lack the two big categories which are welfare and sustainability for the world, and everyone understands we need positive energy. When Galaxy negotiated with the Philippines government, our plans were to turn Boracay into an internationally acclaimed island. First, it will be low-density and second, we want to restore the beautiful natural scenery to how it was before. Our plans are for a low-density environment, like in the Maldives, instead of a big casino floor like in Manila or other places that are dense or busy. We want to lure high-end customers to come and enjoy, and to help the Philippines lift its status. It is no longer the top-tier natural scenic place it once was due to pollution and sub-standard facilities. Gaming will actually be a small portion, we expect a few dozen tables, as this is not our focus for Boracay. We hope it'll become a truly good tourism spot and return it to the beautiful island it once was. This is very different to what is being said out there. We don't pay attention to unofficial commentary. As you know, the environment in the Philippines has changed over the years. When we first indicated our interest to invest, many people misunderstood and misinterpreted us, we don't care about this. We're waiting for the final decision from the government as to how it wants to develop Boracay. We will follow their directive to achieve their goal.
Emily Tan (ET): Are you confident that you'll be able to build your project on Boracay?
LCW: We are very confident. From the beginning until now, our plans have not changed. Unless the government has other plans, we will follow their decision.
ET: In your international expansion plans, how does Japan fit in? You've teamed up with Monte Carlo SBM for a casino license to try to play in bid for one. Who is your Japanese partner?
LCW: As we all know, we are working with Monte Carlo in Macau. And recently, we acquired a small stake in Wynn Resorts. They are a partner and a high-end gaming company, not just any regular company. We aim to go down this path. As for Japan's ambitions in gaming, we honestly care and are really interested in participating. Japan is a high-end market, and we will cater to this segment, but the focus will not just be on gaming. We have always said we need more non-gaming than gaming businesses. When we got a Macau license, many journalists asked about that. I told them we concentrate on both gaming and non-gaming - but of the two we hope to focus less on gaming. In our designs for Phase 2, 3 and 4 on Cota, more than 90 percent of the infrastructure is intended for non-gaming, meaning we reduce the gaming part. The fact is this is the trend. Honestly, not everyone gambles. Some people treat it as entertainment. So when you ask me about Japan, we want to invest there and will also follow the same principle and work with good partners. Of course we have been looking for a partner, but it's not appropriate to say it here. What if I told you and then they decide to pull out?
ET: Macau's gross gaming revenues have seen continued growth for 24 months now. What is your outlook on the sector?
LCW: Today, Macau has everything, family gatherings, MICE, F&B, retail, and also cultural performances. In our future plans, we will continue to build more MICE facilities and performance theatres. They'll be big, even bigger than the Hong Kong Convention Center. This is a shift from just concentrating on gaming to follow the new trend. Macau's growth can be attributed to following this trend. Transportation will also make Macau better. The Hong Kong-Zhuhai-Macau Bridge will open soon, so will the High Speed Rail, as will the eight-lane highways. This not only attracts gamblers to Macau, but regular visitors for sightseeing and tourism. Hong Kong's property market is very strange. Why are prices so high? Compared to Macau, I still think there's a difference. Hong Kong's property prices are definitely more expensive than in Macau. How will it change in the future? In my opinion, it won't change.
ET: Hong Kong has consistently ranked as the world's most expensive city for property, and property prices have gone up for 27 straight months. With rising interest rates, is that going to cool the market?
LCW: If you are simply referring to Hong Kong land prices, many people didn't expect it, even I didn't expect for it to keep rising. There are a few reasons. Number one, Hong Kong interest rates are very low, there's demand, and favorable bank lending conditions. Plus, global inflation is high. Chinese people also like to own property and that drives even more demand. Mainland China is developing and many mainland residents are buying property in HK. Once the Greater Bay Area is formed, Hong Kong will become bigger. Currently, the perception is there isn't enough land supply in Hong Kong. I'm joking when I say that HK has a lot of land, it's just that some people won't allow for the land to be developed. There's no solution here. Supply and demand are disproportionate, so land prices go up. Interest rate hikes are to be expected, together with the trade war and currency war, when rates goes up, it will keep a lid on property prices. Without this downward pressure on property prices, HK will be hugely impacted. If you've purchased a property, and rates are high, mortgage payments may become more difficult, then it's a downward spiral. I hope people will stay rational and stop buying property at high prices. Buy only if you can afford it. Maybe it's better not to, if you can barely afford it.
ET: China is a growing economic power house. And it is changing the dynamics on the global stage. Companies and economies are having to adjust to these changes. What is your advice to business, navigating a Sino-US trade war, as well as volatilities in the market?
LCW: Speaking as a regular citizen, this trade war shouldn't be happening. Just like the Lui Che Woo Prize, we hope people will understand and help each other, and come up with solutions to resolve a problem rather than starting a fight so easily. Both countries are strong. China wants to rise. You can't say China will remain like how it was 2 to 300 years ago, when it had to surrender land to other nations, and face invasion by the Japanese. That's not the way it should be. Both countries need to be equal and need to survive. As a normal citizen I hope everyone can be more peaceful, and solve problems through dialogue. Other countries like Turkey, Spain, and many others are having financial issues. If I can just say one last thing, don't be foolish.
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