The Politburo's decision to allow Vietnamese to gamble in a casino could bring back foreign gaming investors who pulled out earlier, but they will wait for the final shape of the law
Tourists read the map in front of the Casino Grand Lisboa, operated by SJM Holdings Ltd., in Macau, China, on August 4. Vietnam's top leadership has given the green light for locals to enter one of the country's casinos for a trial period, saying if locals are barred from gambling at home, they will just find other avenues in Macau, Cambodia, or Hong Kong. PHOTO: BLOOMBERG
In a surprise twist, Vietnam's top leadership has given the green light for locals to enter one of the country's casinos for a trial period.
The Communist Party's decision-making Politburo has 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, deputy speaker of the National Assembly, Nguyen Thi Kim Ngan, said at a meeting of the house Standing Committee held August 15 to debate a bill on betting and gambling.
But since last year the government has been saying that this issue is off the table, even enacting a law last month to slap fines of up to VND200 million ($9,500) on casinos who let locals in.
Minister of Finance Dinh Tien Dung maintained that position at the August 15 meeting, saying the ban needs to be in place to limit the impact of gambling on social safety and stability.
But, given the entrenched gambling culture in the country, the ban on entering casinos at home sends droves of Vietnamese across the border into Cambodia to gamble in casinos there. Stories abound of people selling off their properties or ending up being kidnapped for ransom after getting into debt there.
"If locals are barred from gambling at home, they will just find other avenues in Cambodia, Macau, or Hong Kong," Ngan, also a Politburo member, said at the meeting.
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, she said.
The Politburo's decision seems indicative of a country whose economy has not been performing well and critically needs investments, and casinos fit the bill.
Karl John, chief expert at the UK-based Asia Trade Experts which has advised casino developers in Vietnam for more than a decade, thinks so.
"I think the government is facing pressure from various parts of Vietnamese society and the international investment community," he said.
Vietnam, once seen as a rising tiger, recorded a 13 year-low economic growth of 5.03 percent last year.
"The motivation for introducing such a subject at this time must be to improve the 'feel-good factor' amongst society in general and also to attract investment from investors who have been waiting to make a move for some time," John told Vietweek.
Vietnam has been on the radar of international casino developers, for whom Asia has become the global gaming engine following the stagnation in the US.
With a population of 90 million, analysts say Vietnam, by lifting the ban on locals gambling, is poised to lure 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 also comprising malls, restaurants, entertainment, and luxury hotels. They also need to invest at least $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.
"It is inevitable that we consider scrapping it," Le Dang Doanh, a veteran economist and former government advisor, told Vietweek. "Hopefully many investors will take notice [of the new move].
"To the best of my knowledge, the ban has been not too effective since Vietnamese gamblers just need to pay security guards $10 to enter a casino."
It is not clear, however, when the full house will debate the bill on betting and gambling and approve it. It is also unclear how the government will lay down income requirements and issue a "good conduct" certificate to would-be gamblers as considered by the lawmakers.
House speaker Nguyen Sinh Hung said the country must first create a clear regulatory framework spelling out the number of casinos the country would need and the criteria for their operations and locations.
The government has made plans to build a multibillion-dollar recreational center with casinos and betting facilities in the 1,800-hectare (4,448-acre) Van Don Economic Zone 160 kilometers east of Hanoi.
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 the country when it opened on July 26 in Vung Tau.
The government has also agreed in principle to license another major casino project, the Nam Hoi An, in the central province of Quang Nam, home to the UNESCO heritage town of Hoi An.
Of the licensed casinos, four are in the nort one each in Lao Cai and Quang Ninh provinces bordering China enabling Vietnam to pull in increasingly affluent Chinese gamblers, experts say.
But they otherwise remain skeptical about the locations of the northern casinos, which they say are not convenient for international visitors.
Vietnam's casinos, with the exception of the newly-opened Ho Tram, situated two hours away from HCMC, have not helped boost the economy or tourism in Vietnam, experts say, blaming it on the existing system that only allows low-limit games, foreigners, and limited hours.
"You have to remember for this type of tourism you are competing with Singapore and Macau where the casinos are less than 30 minutes from an international airport and offer not only casinos but shopping and entertainment for families as well as gamblers," Kenneth Atkinson, chairman of the Vietnam Business Forum Working Group for Hospitality and Tourism in HCMC, said.
Insiders say while casino developers welcome the Politburo's move, they will wait to see what the final regulations look like before venturing into Vietnam.
Colin Pine, general director of the Ho Tram Project Company, the developer of the Ho Tram Strip, is "impressed with the clear effort that relevant ministries and other government bodies have taken to understand best international practices in casino gaming."
But analysts warn foreign investors should not become too excited soon. Introduction of gambling into any society will require an overhaul of the existing system, they point out.
Readying itself for gambling means strong financial institutions, effective and efficient law and order situation and transparency is needed, they say. There also needs to be proper regulation on all aspects of gambling, they add.
Vietnam is infamous for its erratic laws, with laws often differing between provinces and between the central and provinces.
"Unless there is transparency and a level playing field, only those investors who gain by way of illegitimate deals will prevail," Amruta Karambelkar, a Vietnam expert based in India, told Vietweek.
"Such convenient investors may not necessarily be useful to attract tourists and fetch the benefits Vietnam is expecting," she said.
At the end of the day, analysts say, the recent draft regulations will send a positive signal for investors planning to build casinos in Vietnam.
But whether or not to set a maximum daily betting limit is one of the most important issues to be resolved.
Analysts say if the authorities set the limit too low, it will encourage "proxy betting" by big punters who will use others to wager on their behalf.
Such gangs will be criminal in nature, they warn.
"Vietnamese officials have made many study trips to gambling centers around the world, they should be able to incorporate best practices from those centers in the Vietnamese environment," John said.
"Savvy investors will make plans now but not act until they see the final regulations."
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