Denial as Japan’s IR Development Strategy

Whatever hand wringing may be taking place in private, the Shinzo Abe government’s IR strategy remains one of publicly pretending that all is well, that the ship is still on course, and its full speed ahead. We’ve seen this approach from the Abe government before, and one doesn’t need to reach back very far into history to discover a key example—it is the Tokyo 2020 Olympics all over again.

Even as the Covid-19 coronavirus had spread deeply into Europe and governments around the world were shutting down their borders and instituting strict lockdown policies, Prime Minister Abe still felt comfortable enough to hold a national press conference in which he insisted that not only would the Olympics be held according to schedule, but that they could go forward “without a hitch.”

We cannot know what Abe may have had inside his mind, but outwardly he projected the belief that holding the Olympics on schedule was simply a matter of having a strong enough will. If the nation’s leader stood unbending and resolute, then the crisis would dissipate like an unwelcome mist, and a great triumph would be pulled out of the jaws of defeat.

But there’s a world of difference between being decisive and resolute, on the one hand, and stubbornly refusing to grapple with obvious realities on the other. Leadership requires more than a strong will—it also necessitates farsightedness and wisdom.

Unfortunately, neither farsightedness nor wisdom are at all evident in this week’s main IR policy headline: Minister of Land, Infrastructure, Transport and Tourism Kazuyoshi Akaba insisted in Diet debate on Monday that there would be no change in the nation’s IR development schedule as a result of the Covid-19 crisis.

Moreover, Akaba seemed to suggest that the interested local governments had not requested any delay in the national policy. Meanwhile, the interested local governments have indicated that they will stick to the existing schedule because the central government has not signaled that there will be any delay. Each side seems to be looking to the other for permission to openly admit that all is not well.

As should be patently obvious, all is not well.

Let’s overlook the fact that international companies cannot currently move their staff between one country and another. Let’s overlook the fact that even inside many countries, staff is currently not supposed to physically come into their local offices, and adjustments to teleworking and other schemes are underway. And let’s even overlook the fact that the national government itself has yet to publish their basic plan guiding the IR industry, has yet to take any responsibility for the lawmaker bribery scandal, and may have neither sufficient political capital nor the administrative ability to see its current IR policies through to fruition. Yes, let’s leave all that aside.

Instead, let’s consider whether or not the international IR operators themselves are currently in a situation in which they can credibly make US$10-12 billion investments to build major IRs in Yokohama and Osaka.

Las Vegas is shut down. Macau is running on fumes. All the casino companies are taking on major financial losses with no guarantee about when this situation will end.

No one knows how long the Covid-19 pandemic will grip the world. Will there be second, third, and fourth waves requiring multiple future lockdowns? Will a vaccine be found that eliminates the coronavirus, or will medical professionals be stumped for years to come? We simply don’t know yet.

But one thing that is pretty obvious even now is that the global gaming industry will not be the same when the pandemic is over. Each company will need to reassess their own businesses and figure out their best way forward. Potentially, this could mean that the era of building a monster, world-beating US$12 billion IR at Yamashita Pier in Yokohama is already a dead letter, and that more modest schemes are what will be needed from here on.

At any rate, trying to push forward without delay is only making the Abe government look silly. The Tokyo 2020 Olympics finally fell apart only when Canada and Australia made clear that they wouldn’t be sending their athletes. Will the Abe government once again wait until the wheels actually fall off the vehicle before admitting that this is the time for a judicious pause? (AGB Nippon)