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 (Why Asia?). 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.
Asia Times Online :: Vietnam edges towards casino capitalism
