Located near thriving economies such as Vietnam and Thailand, with Japan, South Korea, Australia and economic juggernauts such as China and India only few hours away, Cambodia is rising as the entertainment destination for the region’s gamblers, including the high rollers.
Under Prime Minister Hun Sen, who has been in power since 1985, casinos are bringing much needed investments into Cambodia — a tiny country that faced civil war barely two decades ago — and boosting tourism and entertainment. The more, the merrier, it seems.
Currently, about 105 casino licences have been issued and there are 48 operational casinos, mostly concentrated in Sihanoukville, where casino construction is booming. There are also casinos in Poipet and Pailin on the border with Thailand, and in Bavet and Kampot near the border with Vietnam.
But NagaWorld — operated by Hong Kong-listed NagaCorp Ltd, whose casino licence is good for 70 years and includes a 40-year monopoly within a 200km radius of Phnom Penh — is no doubt the most prominent casino in Cambodia, boasting 600 gaming tables and more than 5,000 gaming machines.
Those who have heard of NagaCorp should know that the largest gaming entertainment company in the Mekong region is owned by Malaysian gambling billionaire Tan Sri Dr Chen Lip Keong, who won Cambodia’s first casino licence in 1994.
Cambodia has had a long tradition in gaming — ranging from card rooms to lotteries and sportsbook such as boxing matches — which means the market is already mature, catering for residents and non-residents alike.
However, the promotion of gaming-related events and gaming activities is still strictly forbidden in Cambodia. That is because Cambodians are prohibited from gambling. As the casinos are strictly for foreign gamblers only, some say the idea is to rob the rich to give to the poor.
Cambodia is currently enjoying a surge in tourism, with international arrivals increasing by 12% to 5.6 million visitors in 2017 and arrivals at Phnom Penh International Airport growing by 21% over the same period.
Visitors from China grew by 46% to 1.2 million during the period, making the republic the leading source of visitors (22%), followed by Vietnam (15%) and Laos (9%). The Ministry of Tourism Cambodia is aiming to attract seven million visitors by 2020, of which two million are expected to be from China.
Buoyed by Cambodia’s rapidly growing tourism industry, gaming has enjoyed steady growth in recent years. But such rapid expansion also requires tighter regulatory controls, which is why the government has been drafting a new gaming law that will provide clear and precise regulatory standards for the local gaming industry.
RGB International Bhd managing director and substantial shareholder Datuk Chuah Kim Seah points out that Hun Sen’s administration is showing no signs of slowing the issuance of new licences or cracking down on gaming businesses.
“Cambodia has been appearing more and more on the casino map in the last several months, and that’s to be expected. (With the government’s aim of) boosting a liberal economy where investors and ideas are welcome, it was only a matter of time before casino operators started to flock to the Kingdom of Wonder,” he tells The Edge.
Cambodia plans to enact more gaming legislation later this year to boost its thriving gaming industry and attract foreign investment. The new regulations, which government officials have been working on for the last three years, seek, among others, to streamline the industry by imposing a 4% to 5% tax on casino revenues.
As expected, the proposed tax rates have not gone down well with the casino owners, who together remit US$50 million out of their US$4 billion revenue in taxes every year. However, Cambodian officials defend the move, citing similar rates in Singapore and other neighbouring countries, adding that the law will help position the country as a regional gaming and casino hub.
This is not the first time Cambodia has used legislation to oversee the sector. In 1996, the government passed the first gaming law that banned minors from gambling, shut down unlicensed establishments, prohibited illegal games and restricted the importation of gaming equipment.
But instead of dying out, the banished establishments found a ready market near Cambodia’s borders. Southeast Asia has a high demand for gaming, but countries in the region, including two of Cambodia’s neighbours — Vietnam and Thailand — also have many gambling restrictions and prohibitions.
By relocating to the border crossings, Cambodia’s casinos attracted Thai and Vietnamese gamblers, creating two vibrant gaming hubs away from the capital.
However, officials are keen to attract another important group of gamblers, the Chinese. Since last year, the bulk of tourists visiting Cambodia are no longer from Vietnam but China. In response, the government has eased visa restrictions for Chinese arrivals, pushing their numbers to more than one million.
“Although Macau remains the preferred destination of Chinese gamblers, officials hope to market Cambodia as a cheaper alternative. But to do this, they need the junket agents,” says Chuah.
As a pillar of the local gaming and casino industry, these tour operators attract foreign VIP gamblers through travel discounts and free or discounted accommodation.
“Due to their efforts, the industry thrives, despite the volatility of the VIP market. With their help and that of the government, the Cambodian gaming industry has a bright future,” says Chuah.
Source: The Edge Markets