Vietnam’s ruling Communist Party has decided against lifting its long-standing ban on locals visiting the country’s 30 casinos, potentially snuffing out hopes for the region as the next casino hub.
[dropcap]I[/dropcap]n its latest draft decree, Vietnam’s Ministry of Finance confirmed this week that casinos will still not be permitted to take wagers from anyone without a foreign passport.
The announcement not to repeal the decades-old restriction has come as a surprise to analysts and investors, many of whom were trumpeting Vietnam as the new ‘regional casino hub’ under the auspices the law would be reversed this year.
Also to remain unchanged is the minimum initial investment required of foreign firms, still set at $4bn (E3.57bn). On top of this down payment, prospective investors must also have at least ten years experience in the casino trade, and make commitments to build integrated resorts (IR) – hotels, dining and leisure facilities – to support the gambling business.
No casino orientated group will invest that sort of sum where locals are not allowed to play
In this context, denying Vietnam’s casinos access to the local market is being seen by many foreign investors as a stretch too far.
“It kills any interest for large gaming companies to invest in IR projects,” Shaun McCamley, head of Asian operations at Global Market Advisors said last week. “No casino orientated group will invest that sort of sum where locals are not allowed to play.”
If given access to the local market, even under restricted conditions, casino execs and industry analysts believed Vietnam’s gambling market would experience an immediate influx of FDI.
The local market is a game-changer: the Vietnamese population is now close to 95 million, almost 60 percent of whom are under 35, and its middle class is expected to more than double in size by 2020 (from 12 to 33 million). In addition, research on those who play the state lottery or travel to casinos in neighbouring Cambodia, shows that the Vietnamese, especially the younger cohort, have an acute propensity to gamble.
While this latter perception makes Vietnam an attractive prospect for investors, it has however become the fly in the ointment for the Politburo. Despite endorsing the projection that lifting the ban would add as much as $800m (E713m) in tax revenues, it evidently deems the social costs of liberalisation to be even higher.
“We are continuing to study and gauge the social impacts of letting Vietnamese punters into casinos,” a senior official at the Finance Ministry said last week. “We want to report to the higher-ups about the ramifications this could have such as organized crime, gambling addictions, money laundering and other illicit activities.”