Hanoi rolls the dice on locals

The ruling Communist Party of Vietnam has recently made it clear that it supports the creation of a new gaming industry and will allow local Vietnamese to enter designated casinos on a trial basis. AGB spoke to Prof. Augustine Ha Ton Vinh about the new legislation during the East Meets West Regulators Summit in the Philippines in October. Vinh is a Vietnam gaming expert and Senior Advisor to the Van Don Special Economic Zone and Integrated Resorts. He was a guest speaker at the Summit.

AGB: We understand that the leaders of the ruling party of Vietnam have said they support the gaming industry and will allow local Vietnamese to enter casinos. Can you tell us what you know and where the country is heading?

Vinh: Late last month, the ruling party’s leaders made it clear that they support the creation of a new gaming industry. The long-awaited decision will be fresh air in the dry season. In June 2013, the Party’s Politburo announced it supported a new Special Economic Zone and integrated resort on Van Don Island, situated in the UNESCO World Heritage Ha Long Bay. Along with its support, the Politburo commissioned research to assess the socio-economic impacts of allowing local Vietnamese to enter casinos. 

After three years of soul searching and policy debates, the ruling party’s leaders believe now is the time to move ahead, creating a new gaming industry. Late last month, they made clear a number of issues of great interest to investors, operators and local Vietnamese, namely:

1. Local Vietnamese will be allowed to visit designated casinos.

2. Van Don and Phu Quoc integrated resorts are the two locations authorized to accept local Vietnamese on a 3-year trial basis.

3. In addition to the four already approved locations for IRs: Van Don, South Hoi An, Ho Tram, and Phu Quoc, two more integrated resorts are under consideration: in Hue and Cam Ranh Bay.

G.O. Max ups proposed race track investment

South Korean investor, G.O.Max I&D Company is pursuing a project to build a horse racetrack in northern Vinh Phuc province in Vietnam. Mr. Bui Minh Hong, Chief of the Secretariat at the Vinh Phuc Provincial People’s Committee said the investor has applied to increase its investment capital from $570 million to $1.5 billion and received a positive reception.

Ho Tram to get airport access

Ba Ria-Vung Tau province has agreed in principle to allow the Ho Tram Project Co Ltd to construct a small airport to be used exclusively for the integrated resort complex. The proposed airport would cover 200 hectares in Dat Do District under the build-operate-transfer model. While the airport will be used to carry tourists from other domestic airports to Ho Tram Strip, the provincial government will consider expanding the airport for tourism and economic development in the long term, local media reported.

4. Total investment for an integrated resort is US$2 billion. A minimum $1 billion has to be disbursed before a gaming license is granted.

5. Smaller casinos can be expanded, upgraded to a higher IR level if they meet financial and other requirements, e.g. significant contributions to local economic and tourism development.

6. The new and revised draft gaming casino has to be finalized as soon as possible.

AGB: The Ministry of Finance has taken years to come up with draft gaming versions that meet reasonable expectations of international investors and operators. Will the final decree by acceptable and when will it be released?

Vinh: Following the ruling party’s decision on the new gaming industry, the Ministry of Finance has come up with a new draft decree which is much more realistic than previous draft versions in 2013 and June 2016. The new version was drafted based on the Party’s decision and covered all the issues of major interest to investors, operators, etc. Some key items include:

1. MOF divides the gaming industry into two levels, large casinos with US$2 billion in investment, and small casinos with any investment below the $2 billion investment level.

2. The draft decree made it clear local Vietnamese, 21 years and above making around US$500 per month in salary, without criminal records, and no objection from family members, i.e. spouses, parents, children, will be allowed to enter casinos.

3. The Van Don and Phu Quoc integrated resorts are designated locations for local Vietnamese. There will be a trial period of 3 years from the date they receive the gaming license.

4. The gaming license will be for a period of 20 years with a one-time non-renewable extension of 10 years.

5. Investors or operators have to commit a minimum of US$2 billion for each integrated resort and a 50 percent disbursement, or $1 billion has to be made before a gaming license is granted.

6. For each US$10 million in disbursed investment, investors can operate one gaming table and 10 electronic gaming or slot machines.

Now that the Party leaders have decided on the future of the Vietnam gaming industry and the next steps, I believe MOF will soon release the final gaming decree, possibly in the next few months.

AGB: Why was the Ho Tram IR not selected as a pilot project for local Vietnamese?

Vinh: Asian Coast Development Ltd. (ACDL), through its wholly-owned subsidiary Ho Tram Project Company Ltd., is the developer of the Ho Tram Strip starting in early 2008. In April 2013, ACDL received its gaming license after an initial investment of about US$500 million out of a total commitment of about $4 billion. The Ho Tram integrated resort, under its current gaming license, can only receive holders of foreign passports. Since its opening in April 2013, the management of Ho Tram IR is hopeful that the government will allow local Vietnamese to enter its premises. The recent decision by the ruling party has put an end to this hope, at least for the next three years.

Phu Quoc support

In June 2013, the Party’s Politburo formally expressed their support for the Van Don Special Economic Zone and its integrated resort, and in October 2014, it agreed to allow Phu Quoc Island to build an integrated resort and a second special economic zone. The Party also commissioned a study to allow local Vietnamese to enter casinos in these two zones. I have written a number of reports and position papers to support the Party’s decision and most of my recommendations were accepted and reflected in the recent decision.

As to why Ho Tram was not mentioned in the decision or approved to receive local Vietnamese, I believe there are a number of reasons. From what I was told, since its opening day, Ho Tram was not authorized to receive local Vietnamese. There is no change in the party’s position on this matter. 

In addition, the government has made some concessions granting Ho Tram the gaming license even though ACDL has not reached the investment level required by the initial investment license. To many people, the ball is in Ho Tram’s court. Ho Tram needs to realize its full investment before attempting to attain new ground.

Investor draw

Since Van Don is near the China border in the North and Phu Quoc is close to Thailand and Cambodian borders in the South, having local Vietnamese in these two locations will definitely help attract much needed foreign investment to these areas which bear some resemblance to rural Macau in the past, and will help expedite the creation of the two special economic zones. I believe, under this new decision, local Vietnamese will not be allowed to enter Ho Tram, at least for the next few years.