“Development” underway in Phu Quoc’s northwest. Photo by VnExpress/Calvin Godfrey
Analysts weigh in, probably for the last time, before anticipated rules lift a long-standing ban and let Vietnamese enter casinos.
For years the Mekong Delta province of Kien Giang, home to the tourism-haven Phu Quoc Island, has been pursuing a casino project as its next big gamble to pull in visitors.
Since at least 2007, news of various suitors circulating the development and of the location getting changed has evoked an air of uncertainty, somewhat aptly for a gambling venture.
But nothing hangs over the project like the country’s ban on local gamblers, meaning that the casino would need to solely depend on foreign tourists, who account for just around 20 percent of all visitors to the island.
In an explicit gesture of support for casino development in Phu Quoc, Prime Minister Nguyen Xuan Phuc said at a meeting last week that the Politburo, the decision-making body of the ruling Communist Party, has already given permission for Vietnamese people to first enter two casinos, one in Phu Quoc and the other in the Van Don Special Economic Zone in the northern province of Quang Ninh, which borders China.
News of the government finally moving forward with gambling regulations for locals is certainly music to the ears of investors, and a boon to property developers, analysts say.
But critics say without the rule of law and oversight similar to those of Singapore, considered a success story of the regional gaming industry, opening casinos to Vietnamese is a consequential move, if not a risky one.
According to analysts, Vietnam needs to be well-prepared to be able to ward off the negative social ramifications of gambling before it can rake in huge revenue, projected to hit $3 billion a year. Since the government seems convinced that casinos would help boost tourism, this argument needs to be looked at carefully as well, they say.
“The social-environmental costs of these projects need to be critically taken into account. Singapore is successful because of its governance,” Amruta Karambelkar, a former Southeast Asia researcher at the Institute of Peace in India, wrote in an article several years ago. “A country needs to build infrastructure in line with its goal.”
Vietnam has cast Phu Quoc, an island in the Gulf of Thailand, as a tourism magnet. Since March 2014, foreigners have been able to visit there for up to 30 days without a visa. The visa waiver also applies to foreigners who transit at any airport or seaport in Vietnam on their way to Phu Quoc.
The central government has promised to consider granting Phu Quoc special administrative region status, something akin to Hong Kong, to enable “local authorities to stand on their own feet,” local mediareported.
On the flip side, helter-skelter development has already robbed the island of the pristine, tranquil charms that once captured the essence of Vietnam to many early travelers, tourism experts say. Its fate seems similar to that of other destinations in this country undergoing the throes of commercialization.
It is in this context that critics are forced to grapple with a vexing question: What role will casinos play in Vietnam’s economy?
“Vietnam seems to have this deep insecurity that its natural beauty and scenic landscapes are not enough,” said Pamela McElwee, an assistant professor of human ecology at Rutgers University, who has extensively researched Vietnam’s protected areas.
“They must be ‘improved’ with cable cars, casinos or loud karaoke,” McElwee said.
Residents swim in the ocean near a pier at Phu Quoc Island. Photo by AFP
A gambling getaway?
International casino developers, for whom Asia has become a global gaming engine following the stagnation in the U.S., have been circling Vietnam for some time now.
With a population of nearly 92 million, analysts say that by lifting the ban on locals gambling, Vietnam could reignite interest in investors who had previously pulled out of casino projects due to tough entry barriers.
Foreign investors seeking to operate a casino in Vietnam have to build large-scale integrated resorts with malls, restaurants, entertainment facilities and luxury hotels. They also need to invest at least $4 billion and have 10 years of experience in the casino business.
Singapore has no such minimum and neither does Macau, the world’s biggest casino market. The Philippines has an investment threshold of $1 billion, but only for Manila, and the market there is 80 percent domestic.
Opponents of the ban say it only sends droves of Vietnamese across the border into Cambodia, Macau or Hong Kong, given the entrenched gambling culture in Vietnam. Many cases of people selling off their property or even being kidnapped for ransom have been reported due to debt accrued in foreign casinos.
According to a study by Augustine Ha Ton Vinh, an academic who has researched Vietnam’s gaming industry extensively, the country is hemorrhaging as much as $800 million a year in tax revenue from Vietnamese punters who cross the border to Cambodia. Vietnamese authorities have endorsed this study.
According to Forbes, the country’s eight licensed casinos, mostly small and established under earlier rules, and around 20 slot clubs generate an estimated $300 million in annual gaming revenue. The magazine said in a recent report that last May, a group of investors led by local property developer Imex Pan Pacific Group announced plans for a $4 billion project in Ho Chi Minh City.
A foreign consultant acknowledges that Vietnam’s proximity to China does play a crucial role in drawing casino companies, but adding that the $4 billion investment threshold “does not make any sense if there is no local mass market.”
“They are looking either to invest much less than $4 billion or the brokers may have promised them access to locals,” he said on condition of anonymity, citing the “sensitivity” of the issue.
On the other hand, anti-gambling activists point out that grand casinos never employ as many people as the investors claim they will, and for the most part they are low-paying jobs, the bottom of the service sector. A large casino will suck away the needed investment in infrastructure such as roads, electricity, water and sewerage, and from other sectors that will provide more sustainable growth over the long term, they say.
“I cannot point to any casino in Southeast Asia that has reinvested its revenues in non-gambling ventures or made investments in their host communities,” Zach Abuza, a Washington-based Southeast Asia expert, said.
The social costs of gambling are enormous, including addiction, indebtedness and crime, analysts say.
“What often goes unreported is the link between casinos and organized crime. Look no further than the casino in Cambodia: this place has been laundering Southeast Asian drug money for nearly two decades,” Abuza said.
Residents look at ships anchored at a local base at Phu Quoc Island. Photo by AFP
‘Out of the blue’
But at the end of the day, fears of social costs may be dwarfed by high immediate gains, analysts say. At least for those who have been betting on a fast changing and growing Phu Quoc, more developments cannot come at a better time.
Mai Thi Phuong, a successful property investor, said since the island opened its door to real estate projects more than a decade ago, land prices have skyrocketed.
“A hectare [2.47 acre] of land worth VND80 million 10 years ago now fetches up to VND20 billion depending on the location,” she said, looking at a fleet of steamrollers working on a major property project on the island.
“I’ve seen many people make a windfall out of the blue,” Phuong said. “But I’ve also seen many of them go bankrupt just a few years later.”
Media reports have highlighted the plight of people around Vietnam whose lands were acquired for property projects. Never having seen large sums of money, many of these people quickly squandered the compensation payouts and no longer had agriculture, their main livelihood, to fall back.
Phuong said that many people she knows have already suffered this fate. With a casino on the island, she said, more will.
“I expect more [bankruptcies].”
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