Vietnam edges towards casino
capitalism By Karl D John
To roll or not to roll, that is the
multi-billion dollar question Vietnam's ruling
Communist Party now weighs. The casino quandary
hinges on how a nominally communist state that
still deploys revolutionary rhetoric can openly
embrace such a free-wheeling capitalist concept.
Vietnam's rulers have long grappled with
the casino concept. Party hardliners have said
legalizing gambling will open a Pandora's box of
social evils, something the communist revolution
vowed to eradicate. More moderate officials have
pointed to the potential financial boon of more
tourism and tax revenues.
A breakthrough
in the ideological struggle came in 2008 when
Prime Minister Nguyen Tan Dung almost halfway into
his first term of office approved a Las
Vegas-style casino integrated
resort. The US$4.2
billion Ho Tram Strip, under a Metro-Goldwyn-Mayer
banner, is now under construction and situated
about 80 miles (128.7 kilometers) from Ho Chi Minh
City.
Since, five other casino-style
resorts have been licensed across the country.
Interestingly, four are located in the country's
more conservative northern region. Two of these
are situated within a stone's throw of the
Vietnam-China border gate, strategically
positioned to profit from gambling-mad Chinese.
The Genting Group from Malaysia is a partner in
the Lao Cai facility and a Hong Kong company is a
partner at the facility at Mong Cai.
The
latest entry is an American-backed resort in the
middle of the country at Danang, which operates
under the same management contract of the northern
Mong Cai facility. Twice a week, Chinese punters
are flown in by charter flights from Kunming,
Guangxi and Hong Kong. Ironically, they land on
the same runway where B-52 bombers were launched
to bomb Hanoi during the American War.
In
the official lexicon, casinos do not exist in
Vietnam. However, "entertainment centers" with
"bonus games" for foreigners are allowed to exist
with proper licenses. This generally means a room
dedicated to a limited number of table games,
including Roulette, Baccarat, Blackjack, Tai Sai
and also slot machines. Besides these
purpose-built facilities, some hotels are licensed
to have a room containing slots and electronic
games.
The first of these casino-style
entertainment centers was established by Macau's
gambling czar Stanley Ho, situated about two hours
from Hanoi at Do Son on the outskirts of Haiphong
City. Presumably, the "experiment" was located
close enough for top Party officials to visit for
monitoring purposes.
All gambling
operations in Vietnam are formed under a joint
venture arrangement. The Royal International
facility owned and operated by a group of
Taiwanese investors at Halong Bay developed the
model by "equalizing" (ie public listing on the
Vietnam Stock Exchange) its operation in July
2007.
Like China, Vietnam does not allow
its citizens to gamble within the country.
Would-be punters are forced into accepting a
casino junket, where gamblers are flown to an area
where legalized gambling is available. They are
booked into a hotel-casino at the junket company's
expense in exchange for a cut of the gamblers'
turnover from the casino.
Game
changer Rumors run rife that a draft
decree on gambling will soon be put before the
prime minister. Foreign investors weighing
possible casino opportunities in Vietnam have
expressed their hopes that locals will be allowed
to gamble. Party and government watchers, however,
believe such a move is at least 10 years away.
Macau's and Singapore's success at
extracting big revenues from a small number of
tourist arrivals through the effective targeting
of high rollers will give encouragement to
Vietnamese officials to maintain its ban on locals
gambling. At the same time, it is generally
accepted that casinos would boost significantly
tourism and tax revenues at a time of fiscal
concern.
"You just have to look at
Singapore and Macau as prime examples. Singapore
has increased tourism by 20%. Macau is now five
times bigger than Las Vegas [in gaming revenue].
In other countries like Cambodia and Vietnam,
everybody's looking at gaming to drive tourism and
if you don't have it, you lose out in the race,"
said Ben Lee, managing partner of IGamiX
Management & Consulting Ltd.
Still,
foreign interest in Vietnam's gaming potential is
growing. Casino tycoon Sheldon Adelson of Las
Vegas Sands recently visited the country and
offered to build two integrated resort (IR)
complexes with a total investment of US$6 billion.
His key requirement for the complexes, which would
comprise hotels, restaurants, exhibition centers,
shipping malls, spas, theaters and museums, was
that they would be located in Hanoi and Ho Chi
Minh City.
The IRs propose to follow in
the footsteps of similar developments in Malaysia
and Singapore. The first recognized IR sprung up
in the early 1980's when Genting developed a
casino in Malaysia with a variety of leisure and
entertainment facilities. Singapore's Resorts
World Sentosa and Marina Bay Sand commenced
operations in 2010 and already earn more than the
Las Vegas Strip.
Minister of Planning and
Investment Bui Quang Vinh recently said that some
foreign investors are seeking a new policy that
will allow locals to enter casinos but that it is
not up for discussion. "Casinos can help attract
more foreign tourists and boost economic growth,
but they have to be managed well to make sure
locals do not participate in gambling," he
recently said.
Other gaming areas are
apparently open to negotiation. There are
indications that the government will soon legalize
sports gambling to limit the social damage caused
by underground gambling syndicates.
Finance Minister Vuong Dinh Hue recently
visited Singapore to study how sports betting
works there. On his return, he said Vietnam could
learn from Singapore's example in setting up a
legal and organizational framework for large-scale
betting operations.
Some have interpreted
his comments as a top leadership signal towards a
more tolerant approach to gaming. Under current
laws, only prime minister Dung has the authority
to approve new casino licenses. Recently confirmed
to another five-year term of office and with the
country facing renewed economic strains, it's a
gamble many foreign investors think he should
take.
Karl D John is Chief Expert at Asia Trade Experts (www.AsiaTradeExperts.com). He has more than a decade of experience in Vietnam and is currently based in the United Kingdom. He may be reached at karl.john@AsiaTradeExperts.com.
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