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Holiday wish for Vietnam

Newsdesk by Newsdesk
Mon 27 Dec 2010 at 07:47
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Among the AGI’s many seasonal wishes for the industry is that Vietnam opens up its casino market to local players.

That’s not because we’ve suddenly entered the lobbying business. It’s because without such a move, it’s difficult to see how the country could support not one but TWO USD4 billion casino projects. Is ‘4’ the magic number that guarantees support for integrated gaming resorts in the minds of Vietnam government officials?

The latest project—announced recently for Hoi Nam in Quang Nam Province is half way between the major cities of Hanoi in the north of the country and Ho Chi Minh in the south. Like the MGM Resorts International-backed Ho Tram Strip project on the South China Sea coast, Hoi Nam has the backing of recognised industry participants. Hoi Nam is a joint venture between Malaysia’s Genting and Vietnamese fund manager VinaCapital Group. No firm timetable for the project has yet been announced.

Vietnam had a population of 85.8 million at the 2009 census. The country’s annual GDP will surpass that of New Zealand in 2015, according to recent estimates by the Economist Intelligence Unit. But currently none of those economically ambitious Vietnamese are allowed to gamble in the country’s five currently licensed casinos.

Vietnam had an estimated 4.5 million tourist arrivals in 2010, according to the Vietnam National Administration of Tourism. Macau clocked up 21.7 million visitors in 2009, according to Macau government statistics. Those Macau visitors currently support a market that has spent an estimated USD10 billion on casino infrastructure since the first foreign-owned casino, Sands Macau, opened in 2004. Vietnam is proposing USD8 billion in casino and hotel investment in a market currently supported by only a fifth of the tourists Macau receives. Do the maths. Even if the spend is spread out over five years or more, something has to change in the structure of the Vietnam tourism market to make it all viable.

The developers of the Vietnam projects might reasonably argue, however, that with around 65 percent of Macau’s gross coming from a tiny number of VIP baccarat players, they could make a very good living by marketing directly or through junkets, to high net worth players. Both Genting and MGM have some track record for effective marketing in their existing operations. MGM has, though, been slower than its Macau market rivals to utilise the junkets there to feed it VIP players. That’s an oversight it is now correcting.

That ‘something’ is the opening of the casino market to locals. As background to the current legal position, Articles 248 and 249 of Vietnam’s Penal Code criminalise gambling in Vietnam. Certain exemptions allow casinos and electronic gaming that caters exclusively to foreigners. For practical administrative purposes, ‘foreigners’ includes Vietnamese who hold the passport of a foreign country. These are known as ‘Overseas Vietnamese,’ many of whom or their parents left the country during or after the Vietnam War. This diaspora amounts to approximately 3.7 million people, of whom 1.6 million live in the US or have the right of residency there, according to the US Census Bureau.

The Law on Investment (Article 37) and related Decree No. 108 of September 2006 provide the legal framework for casinos in Vietnam, although provincial authorities can and do issue detailed regulations within this framework. This accounts for why new projects are announced by provincial authorities rather than by the central government. Under Article 37 of Decree 108, however, only Vietnam’s prime minister can give ultimate approval for a casino licence. Electronic gaming is governed by Prime Ministerial Decision 32 on Regulations on Prize Winning Electronic Games for Foreigners, though the Vietnam government recently announced its intention to issue a law to regulate sports gambling for local Vietnamese.

To get some idea of the relative immaturity currently of the existing legal casino market in Vietnam, in a July 2009 report the Asia/Pacific Group on Money Laundering—an international and inter-agency body promoting best financial practice in financial industries and the gaming industry in the region—estimated that the Haiphong Bay casino had a turnover of only USD3 million a year with a maximum payout per wager of only USD2,000 (available on roulette, one of the most popular games).

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Newsdesk

The IAG Newsdesk team comprises some of the most experienced journalists in the Asian gaming industry. Offering a broad range of expertise, their decades of combined know-how spans multiple countries across a variety of topics.

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