May 15--MATSU (The Straits Times/ANN) -- Matsu, a clutch of islets lying 200km north of Taiwan, seems an unlikely candidate to host the island's first casino.

The archipelago, whose combined area of some 30 sq km is equal to Jurong island, is as scenic as it is rocky and barely populated. There is no land link among its islets and the two airports are frequently crippled by fog, stranding residents and tourists alike for up to a week.

And as recently as 20 years ago, it was a heavily fortified and guarded frontier post in the civil war between Taiwan and China, hosting up to 50,000 troops against an invasion from the mainland located just 9.5km away.

But it is exactly these shortcomings and its history that provide the stakes for Matsu's push to become a gambling haven for Chinese tourists. And that dream could become reality by 2019 if a draft Casino Management Act, modelled on Singapore's casino laws, gets the green light from legislators.

Matsu residents are hopeful that the creation of a casino resort would give their idyllic but isolated home a fresh lease of life.

"The people said 'yes' to a casino because there is no other way to overcome our transportation problems," Matsu chief Yang Suei-sheng told visiting foreign reporters last Wednesday -- a week after the draft law was approved by Taiwan's Cabinet before being sent for parliamentary debate. Transportation Minister Yeh Kuan-shih said then that the first casino could be up and running in 2019 at the earliest.

Matsu's residents had voted for an integrated resort (IR) in a referendum last July following months of intense lobbying by pro-gambling camps led by Yang and anti-gambling alliances.

The result came after more than two decades of debate over whether Taiwan should have a gaming industry. Parliament, controlled by legislators of the ruling Kuomintang, had voted in 2009 to legalise gambling on offshore islands in a compromise solution but any casino construction is still subject to residents' approval.

Before Matsu, residents of Penghu islands, off the west coast of Taiwan, had voted against the idea in 2009.

Matsu, said Yang, needs lots of money to build infrastructure, notably an all-weather airport that is estimated to cost NT$20 billion (S$668 million).

It also hopes for a game-changing attraction to transform itself from a one-time military outpost to a laidback tourism spot -- with just 100,000 visitors last year -- and a worthy contender for the Asian gambling dollar.

A casino will provide both, he said.

A number of potential investors have indicated interest, he added, with United States-based Weidner Resorts already waiting in the wings with a NT$60 billion (US$2 billion) IR proposal for Matsu, with hopes of a Chinese invasion of a different kind.

William Weidner, a former president of Venetian Casino Resort and the Las Vegas Sands, wants to build a 100ha resort on the Matsu island of Beigan.

The plan features a casino, five-star hotels, malls, entertainment venues, an international airport, a university, a ferry harbour and a yacht terminal.

He hopes to draw some five million visitors a year in the initial phase, an estimated 80 per cent of whom will come from the Chinese mainland.

But obstacles abound. China has indicated that it would not allow its people to go to Matsu to gamble, citing Chinese laws which outlaw gambling.

After all, it already has Macau, the only Chinese territory where gambling is allowed, and which drew some 28 million visitors last year, largely from the mainland and Hong Kong.

And it may take some time to get the Casino Management Act through Parliament. The Bill adopts the integrated resort concept and proposes strict rules for the gaming industry, including a centralised regulatory agency and plans to keep casino floor space to 5 per cent of the total resort size.

Deputy Speaker Hung Hsiu- chu noted that some legislators remain opposed to casinos while some support the idea.

Yang, the Matsu chief, was unfazed. "We will try to assuage China's concerns through strict controls," he said.

"Only 5 per cent of the IR will be gambling space, the other 95 per cent will be facilities that are suitable for all mainland tourists."

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