Q: What Does Jeff Bezos Have In Common With A Drug Lord?

A: They Are Both Cashing In On Covid-19

“There are only six smart people in the world, and one of them is me”

— Mark Zuckerberg

One question you don’t hear asked so much is: “who’s winning off the recent Coronavirus lockdown policies?” Look no further than third world Drug Lords and Big Tech companies.

It’s a pretty widely understood fact that companies such as Facebook, Amazon, Google and others are having a ball with everyone much more engaged in their online habits and consuming mass media stories like they are episodes of The Kardashians.

This story of an unlikely defiance of a shadowy pool of actors cashing in while everyone else is out of work brings to mind the recent windfall fortunes that a Chinese entrepreneur living in the midst of Laos seems to be enjoying.

With revenue down as much as 98%, Macau’s 57,000 full-time employees in the gaming and hospitality industry and the employers who pay them monthly wages were by late June eagerly waiting for any signs of a reopening of any of China’s 23 provinces. The situation for Macau, much as for the one facing Las Vegas businesses right now, is complicated due to the fact that it is still very unclear when the country’s different regional governments will allow their populations to leave their home jurisdictions. Zhuhai, a port city in Guangdong, south China, famously known as the Chinese Riviera, is the one to watch for signs of a return to normal, say observers.

A political official in nearby Hong Kong told me recently that the only way a meaningful re-opening of Macau’s economy would be undertaken was to allow Hong Kong, as well as Macau and somewhere that connects the two islands to the mainland to open simultaneously. Zhuhai, a port city in south China, is where everyone’s focus is right now, she said.

“If Hong Kong, Macau and Zhuhai open together, then [that is] very meaningful,” Ka-Lin Liang, a Hong Kong resident who is a part-time mediator for the Hong Kong Department of Justice, told me. “One place opening is meaningless.”

While Macau’s casinos are technically still open, for casino managers to see any impact to their bottom lines the island needs for mainland China holidaymakers and gamblers to come back and spend. Right now, that is out of the question since Chinese citizens cannot cross Province boundaries (China’s equivalent of State lines) within the mainland.

Around 60% of Macau’s $55 billion in annual GDP is accounted for by gaming revenue, and as much as 80% is derived from hospitality more broadly. Over half of all this comes from mainland China. Since the COVID-19 lockdown in February, casino owners have been bleeding between $1.5 million to $2 million a day in maintaining overhead alone, according to local reports. Incoming visitors have dwindled to just a few thousand arrivals a day.

Liang’s point was that Hong Kong government officials will only consider re-opening their economy entirely on the condition that Beijing allows its own borders to open up a bit too.

In May, China officials allowed those such as her sister who live in Zhuhai and commute to Macao to resume travelling to and from the former Portuguese colony. As of May 11, Macau workers in Zhuhai who carry Zhuhai ID or residence permits for the city and who have passed nucleic acid tests, which can identify SARS-CoV-2 specifically, were allowed to commute to Macau for work. The city’s non-quarantined inhabitants do not now have to be tested when travelling to Macau, either.

The lift of the travel restrictions is welcome since they have placed a degree of uncertainty on everyone who is working, Liang added. Her daughter, for example, is an employee for Cisco Systems Inc. in Shanghai but has been unable to return home from Hong Kong for the past four months. With its international airport Hong Kong is acting as the go-between venue for Macau’s residents who are trapped overseas in countries such as India and who want to get back.

“We really don’t know how long it will continue, though [China’s] government is presenting [the situation] in a different way,” Liang concluded. Her frustration at the wide berth between the official story and the one that was actually going on seems fairly commonplace right now.

Despite there being no evidence that COVID-19 ha struck anywhere else in the world, there were a few signs that a few hundred people had died on the mainland of the virus. Zhuhai’s website gave a mixed impression of how well China is faring at keeping the virus from spreading within its own borders. Alongside the news of free passage for the city’s ferry and rail commuters to Macau sat the announcement of a state-of-the-art $172 million, 5G-enabled women’s and children’s hospital scheduled for opening next month. According to the website, the hospital will contain 850 beds, over a tenth of which are assigned to ICU capacity equipped with “imported breathing machines and apparatus.”

Now everyone was inconvenienced by the shut-down, however, and so it was that joss struck twice for an American enemy by the name of Zhao Wei, who was counting the profits that would surely enough arrive in the coming months as Macau’s casinos remain grounded to a halt.

Contrast this scenario now with another industry-related announcement that occurred in April when a Chinese casino group sanctioned by the U.S. Treasury department announced that it would be delaying the opening of a planned extension to its existing Laos casino and resort until August.

The company, listed on the Hong Kong stock exchange, barely budged a notch downwards in value. Investor’s enthusiasm for the shares clearly wasn’t waning as holders of Hong Kong Stock Exchange-listed Macau Legend Development Ltd. anticipated another sharp influx of players in light of the South East Asian region’s lesser-infected COVID-19 status.

Macau Legend’s executive director Sheldon Trainer told local news outlets that the company had initially intended to open the extension to its Savan Legend Resorts Hotel & Entertainment Complex in June, but that it would wait until August to do so. Trainer was confident about the casino’s reopening prospects as mainland Chinese gamblers look increasingly further afield in the post-COVID-19 period.

Despite being a tough time for the industry overall, Macau Legend’s investment in the extensions, which upgrade the facility to include slot-machines and a golf course, as well as added guest accommodation facilities, may prove well-founded if players gravitate away from areas nearer the mainland such as Macau and favor less-infected hotspots elsewhere.

The Savannakhet casino lies near the Thai border, an area that has thus far experienced comparatively few cases of SARS-CoV-2. Still, the casino group may need to get to grips with the management of some the more controversial aspects of its ownership at some point for there could hardly be a more unusual benefactor of the COVID-19 shut-down.

Savannakhet nests in an area colloquially known as The Golden Triangle, due to its pointed triangular borders which encompass Thailand, Myanmar and Laos. Savannakhet was built by Zhao Wei himself, the mainland Chinese entrepreneur who owns the casino group, after he struck a deal with the Laos government agreeing to lease an area of 30 square miles for between 75 and 99 years in region.

As a part of the lease deal, Savannakhet was officially designated a Special Economic Zone (SEZ), and was given what human rights activists argue are deeply prejudicial labor hiring laws. Some have accused the Laos government of enabling human trafficking, as companies operating there legally employ thousands of underpaid workers from over the border in Myanmar and almost no Laos nationals due to the lease terms. The area best resembles a Chinese colony, guarded by its own police force staffed exclusively with Chinese nationals, and signage in most places is displayed in only Chinese. At the heart of area sit Zhao’s luxurious casino and sprawling resort complexes, Macau Legend and Kings Romans.

In return for being granted preferential terms on the long lease, Zhao agreed to bring large-scale development to the area.

As controversial a flag as Zhao waves to some, Zhao kept his side of the bargain. Over half a decade he constructed an awe-inspiring colossus on the once-deserted farmland, comprising five-star hotels, entertainment facilities including his two casinos with annexed professional standard golf courses and other entertainment venues. Zhao even persuaded financial institutions and schools to set up in the area, and he installed an international airport. From literally dust, rose a major place of local trade in no time at all.

Kings Romans, Zhao’s first casino project undertaking, became the subject of headline controversy in 2019 after it was robbed by a group of thieves, led by a 40-year-old Chinese national by the name of Ying. Ying and his pals entered the casino disguised as local police officers and gamblers playing at the tables, quickly holding patrons up at gunpoint as they forced the terrified customers to hand over around half a million dollars in cash. In the end, Ying was found and captured by Thai police outside Bangkok in Thailand several months later. It still had the feel of an inside shakedown to some, however.

The controversial heist was by no means Zhao’s first brush with scandal. In 2018, Zhao, as well as members of his family, including the businesses Kings Romans and Macau Legend themselves, were officially sanctioned by the U.S. Treasury Department for fraud. The U.S. government claimed that Mr. Zhao used the casinos to launder funds he gained illicitly from trafficking illegal narcotics, as well as human beings including minors who were sold into in child prostitution, and rare wildlife. Zhao hit back that he was the subject of political persecution by the U.S. authorities, and maintained that he had ceased dealing in rare wildlife as part of the agreement he struck with Laos when he entered into the lease for Savannakhet.

The scandals do not appear to have had much negative impact on the numbers of incoming tourists, however. By 2018, the same year as the sanctions were levied, the number of Chinese mainlanders arriving in the Laos special economic zone doubled to 800,000, many of which were gamblers at Zhao’s casinos and resorts.

Zhao’s story highlights an important and oft-overlooked fact to the COVID-19 pandemic: specifically, not everyone is inconvenienced by it. To be clear, is not the suggestion here that Zhao was in any way significant in bringing about the COVID-19 lockdown policies anywhere, merely that he was a beneficiary of them. If Zhao — a pretty unique entrepreneur living between the borders of some of the world’s most out-of-reach economies — is reaping gains from what appear to be a series of somewhat illogical economic policies exacted by central governments elsewhere, it is only logical to assume that there are those in very powerful positions in Tier 1 cities doing the same.

And so it is. Make no mistake about it, for tech CEOs Covid-19 came as a blessing as much as it did to Treasury Department sanctioned drugs Lords. If you bought an equal share of shares in Facebook, Amazon and Google this time last year, and at the same time, an equal share of Bitcoin, Ethereum and Ripple, you will be noticing something very unusual right now. Specifically, your Blue Chip share portfolio is outperforming your digital assets investment by some margin. The three tech companies have risen an average of 64% vs. 47% for the cryptocurrencies.

The title of this post is not intended to elicit a sense of being somehow unfair or unnecessarily pejorative. When the only two guys who are making money in an economy are a Treasury-endorsed tech company with most of its cash stashed offshore, and a Treasury-sanctioned Drug King Pin, it’s hard somehow not to wonder where we are seemingly going wrong with our economic policy.

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