Inside Asian Gaming

October 2008 | INSIDE ASIAN GAMING which is located 80 kilometers from Ho Chi Minh City. So does the US$4.2 billion price tag. But while talk is cheap, it still raises the question as to why should it be Vietnam, rather thanCambodia,that is being touted as the next big thing in Asian land-based gaming after Macau and Singapore. More alike than different Vietnamafter all has some of the same issues as Cambodia when it comes to transparency and international standards of corporate governance. Talk to any real estate developer about how things work in Vietnam, and they will tell you the country is divided up into competing fiefdoms run by army generals. In order to get the necessary paperwork to advance a real estate project, the right people need to be ‘consulted’ and, if necessary, paid off. The challenge in the Cambodia market is more subtle but potentially more problematic. It’s that it appears to be relatively easy to get a slot club licence, and that this could pose a threat to the development of the casinos’ mass market sector, and to the slot clubs themselves, by fragmenting an immature market too sharply and too quickly. When the APG conducted its mutual evaluation of Cambodia’s financial and regulatory systems last July, it found that the Casino Management Department of the Ministry of Economy and Finance had just ten staff to supervise a market then consisting of 21 casinos and more than 50 slot clubs. “The current supervisory regime is very limited and concentrates on financial reporting for taxation purposes,” said the APG report. This, combined with a liberal interpretation by the authorities as to what constitutes a slot game, could put at risk not only the prospects of the gaming clubs themselves, but also the casinos. If we take NagaCorp as an example, in theory the company has a franchise monopoly covering a 200-kilometer radius of the country’s capital Phnom Penh. When this is coupled with the fact there are no restrictions on its further expansion in terms of locations, number of tables or size of premises, it looks potentially like a licence to print money. 13 Cover Story Room for Improvement Opacity in Cambodian business practice is still a barrier to foreign investment L ooked at from the perspective of outside investors, there are some structural issues with Cambodia that are as evident today as they were when the APG gave its assessment a year ago. The chief obstacle to long-term foreign investment remains financial and governmental transparency, or rather, a shortage of it. It’s worth noting that global financial meltdown notwithstanding, it’s Vietnam rather than Cambodia that’s being talked about as kicking on to the next level of gaming industry development, with the ambitious Ho Tram Strip project. Thisisaninterestingextension,inmodern business terms, of the historic economic and political rivalry between the two countries that pre-dates even the VietnamWar and the upheavals of the Khmer Rouge revolution. The recent assertion by Canadian company Asian Coast Development Ltd that it was considering a US$1 billion initial public offering to help fund Vietnam’s Ho Tram scheme now looks wildly ambitious given the parlous state of global equity and debt markets. So does the 2010 projected completion date of the first phase of the site,