In Vietnam, casino glut looms large as local authorities race to bet on relaxing gaming laws

By An Dien, Thanh Nien News

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The five-star casino-resort The Grand Ho Tram Strip became the sixth casino in the country when it opened last July in Ba Ria-Vung Tau Province, some four hours by car from Ho Chi Minh City. Vietnam’s go-ahead for locals to enter one of the country’s casinos for a trial period has set off a rat race to lure gaming investors, which anti-gambling activists say could lead the local population into a downward spiral of debt, prostitution and crime while leaving major infrastructure needs unmet. PHOTO: CALVIN GODFREY
Vietnam’s go-ahead for locals to enter one of the country’s casinos for a trial period has set off a rat race to lure gaming investors in a country where local leaders have been chiefly judged by economic growth rates alone.
In August 2013, the Communist Party's decision-making Politburo allowed Vietnamese meeting certain criteria to gamble in a casino to be built in the Van Don Economic Zone in Quang Ninh Province bordering China. Vietnamese tycoon Dao Hong Tuyen and US firm ISC Corporation are investing in the US$7.5 billion project that includes a casino, marinas, a convention center and golf and tennis clubs.
Since that decision, “at least 10 provinces” have raced to win a casino license in their localities, Minister of Planning and Investment Bui Quang Vinh said at a recent conference.
“I’m under a lot of pressure because of this race, which is also wearing me down,” Vinh said, without identifying the provinces.
The looming casino-building spree is emblematic of how local leaders are judged only by short-term performance, analysts say. Vietnamese cities and provinces often compete with each another by building airports, seaports or golf courses, leading to a glut of infrastructure projects which only helped to boost local gross domestic product (GDP) figures thanks to construction, infrastructure, money flows through banks and new employment in the short run.
“Mayors have been judged by how much their cities have grown, regardless of whether it is sustainable,” a Vietnamese economist told Vietweek on condition of anonymity.
“So instead of focusing on projects that added value in the long term, they simply concentrated on boosting GDP figures. As a result, they ignored the environment, ignored long-term planning,” he said.
But, given the entrenched gambling culture in Vietnam, the social repercussions of the casino development frenzy could far outweigh the US dollars it could bring about, analysts say.
“I don’t understand why local leaders are so crazy about these casino projects,” Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, said.
Music to the ears
The country’s top leadership are eyeing the massive revenues that go to illegal bookies and offshore websites. They say the ban on entering casinos at home has sent droves of Vietnamese across the border into Cambodia to gamble in casinos there. Stories abound of people selling off their properties or ending up kidnapped for ransom after going into debt there.
“If locals are barred from gambling at home, they will just find other avenues in Cambodia, Macau, or Hong Kong,” Nguyen Thi Kim Ngan, deputy speaker of the National Assembly - Vietnam legislature - said at the meeting debating a bill on betting and gambling last August.
Locals should be allowed to gamble in casinos in Vietnam to “prevent the outflow of foreign currency," and there is a pressing need to regulate that, Ngan, also a Politburo member, said.
The Politburo's decision seems indicative of a country whose economy has not been performing well and critically needs investment, and casinos fit the bill. The National Assembly, where 90 percent of lawmakers are Party members, is set to vote on the bill soon.
Vietnam is on the radar of international casino developers, for whom Asia has become the global gaming engine following stagnation in the US.
With a population of 90 million, analysts say Vietnam, by lifting the ban on locals gambling, is poised to woo back a number of investors who had showed interest but had to pull out because of tough entry barriers.
Foreign investors seeking to operate a casino in Vietnam have to build a large-scale integrated resort including malls, restaurants, entertainment, and luxury hotels. They also need to invest at least US$4 billion and have 10 years' experience operating casinos.
Singapore has no such minimum and neither does Macau, the world's biggest casino market. The Philippines has an investment threshold of $1 billion for Manila and none for other places. The market there is 80 percent domestic.
The five-star casino-resort The Grand Ho Tram Strip, part of a $4.2-billion tourist development aimed at attracting foreign visitors, became the sixth casino in Vietnam when it opened last July in Ba Ria-Vung Tau Province, some four hours by car from Ho Chi Minh City.
Vietnam’s loosening gaming laws are music to the ears of casino developers.
“Vietnam does have the potential to be a regional hub for casinos but it will have to play catch-up because there are many, already established casinos,” Karl John, chief expert at the UK-based Asia Trade Experts, which has advised casino developers in Vietnam for more than a decade, told Vietweek.
“The biggest competitor is Macau, where anything goes. Is the Vietnamese government willing to loosen control and allow the good times to roll? Or will they insist on casinos with Vietnamese characteristics?” he asked.
These questions have remained largely unanswered of late, but analysts concur that without the rule of law and oversight of a country like Singapore, considered a success model for the gaming industry in the region, casinos could be a disaster.
“I cannot point to any casino in the Southeast Asia that has reinvested its revenues in non-gambling ventures or made investments in their host communities,” Zach Abuza, a Washington-based Southeast Asia expert, said.
Anti-gambling activists also point out that grand casinos never employ as many people as the investors claim they will, and for the most part they are low-paying jobs, the bottom of the service sector. A large casino will suck away other needed investments in infrastructure such as roads, electricity, water and sewerage, from other sectors that will provide more sustainable growth over the long term, they say.
The social costs of gambling are enormous, including addiction, indebtedness, increased prostitution, and crime, analysts say.
“What often goes unreported is the link between casinos and organized crime. Look no further than the casino in Cambodia: this place has been laundering Southeast Asian drug money for nearly two decades,” Abuza said.
It is in this context that Vietnam appears to be ill-prepared to be able to ward off the negative social ramifications of gambling before it can rake in the US dollars in revenues, projected to hit $3 billion a year. That is half of Singapore's 2013 revenue but 10 times that of Cambodia and on par with the Philippines and South Korea, Reuters reported, citing official and company data.
This concern is glaringly legitimate if Vietnam allows the casino-building binge to roll out to local levels, given that the country is infamous for its erratic laws, with laws often differing between provinces and between central and provincial regulations.
“The social-environmental costs of these projects need to be critically taken into account. Singapore is successful because of its governance,” Amruta Karambelkar, a Vietnam expert based in India, said.
“In the present state of affairs in Vietnam, the economic benefit visualized through gambling is an over-expectation.”

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