Experts at odds over proposed $4b casino investment requirement
According to Timothy Horton, general manager of Cushman & Wakefield Vietnam, the proposed $4 billion investment is at the higher end of expectations, but what it does is entice the larger, more influential groups to look at Vietnam and set a high standard of gaming in the country.
“These developers will also then help to drive on gambling tourism in Vietnam. I think that the Vietnamese government needs to be very strict on who they allow to have the licences so that the quality of the industry is not compromised,” said Horton.
Lawyer Vu Xuan Tien agreed that the stipulation for minimum-required capital was a must. “If we do not set this restriction, then any and every hotel could apply to set up a casino. And then how could we regulate the quality, not to mention the sheer volume?” Tien said.
Chris Murphy, head of valuations and advisory for JLL Vietnam said the capital restriction was aimed at ensuring that only large-scale reputable developers would be able to enter the industry, and ultimately this would be beneficial.
“However, capital investment alone will not produce a successful operation. It is necessary that the investment environment is transparent and encouraging for investment by casino operators from overseas. Sadly, the experience so far in Vietnam is not promising, with MGM pulling out of Ho Tram, citing difficulties in licensing procedures,” he explained.
“The related fields,” Murphy said, “would presumably be hotel and resort development, and so yes, the industry would welcome firm clarification of government requirements in this field.”
Meanwhile, the proposal received a different reaction from many other consultants. Troy Griffiths, deputy managing director of Savills Vietnam said that it would prevent the best possible outcomes.
“For major capital investments of national importance, it should be decided on a case-by-case basis. By imposing prescriptive measures, the most creative solutions are not found, and opportunities are missed. Casinos are well known as employment generators, and hotels and resorts contribute greatly to the local economy. Having a mandatory capital provision will preclude many smaller but possibly highly effective integrated casino resorts. Naturally, this will mean less employment and downstream investment in the local economy,” Griffiths said.
He said that the $4 billion hurdle was arbitrary and would immediately dissuade many good operators, and that it seemed regressive to restrict such an opportunity for investment.
“There are very few global operators that can comply with this provision. The few that have this capability will also be considering far more competitive destinations,” he said.
Ha Ton Vinh, a consultant on casinos, said this minimum limit of investment capital must be clearly explained to developers. He claimed that the investment capital should depend on different criteria, such as the venue of casinos, the number of players, the project’s lifespan, as well as taxation and revenue.
The minimum figure of $4 billion in investment capital, according to Vinh, will not entice developers.
“I think the Vietnamese government should invite many developers to propose their plans, and they should choose the most suitable and appropriate according to their capacity and the market demand. This should be the criteria for selecting developers, it should not be set in stone as a capital barrier,” Vinh said.
Furthermore, Griffiths said it would restrict the number of operators to major players, thereby excluding many others that could make a strong contribution.
“By limiting [the developers] to major players, the government’s negotiability is restricted. This will necessarily allow only mega-projects, which can be both good and bad. There are valid arguments for restricting casino operations to certain geographies to contain any social consequences,” he added.
