1 – I understand the government now has agreed to include investment in infrastructure etc in the special economic zones as part of the total minimum investment required for an integrated resort. Do you know if this has been fully ratified, or whether there are further salient details?
– Under Decree 03/2017/ND-CP, one of the conditions for obtaining an Investment Registration Certificate (“IRC”) for casino-integrated project is an investment capital of at least USD 2 billion. In addition, the investor must have disbursed at least 50% of the total investment capital in order to obtain a business certificate/operation license in casino.
– The latest Ministry of Finance proposal seeks to allow investors, who have invested in other projects in special economic zones and/or areas prioritized for investment where investors register to implement the project with casino, to include capital invested in such projects to fulfill the disbursement requirement; and the project’s total disbursement rate does not exceed 25% of the total investment capital stated in the IRC of the casino/casino-integrated project.
– In any case, this remains at the proposal state and has not been ratified by the Government.
2 – How would you rate Vietnam currently as a destination for casino/casino-integrated resort investors? Where do you see the most potential for casino/casino-integrated resort? Is the prohibition on locals gambling (apart from Van Don and Phu Quoc) a deterrent to foreign investors?
MoF reports on the state of the market:
– 8 casinos currently in operation: Hai Phong (1), Quang Ninh (3), Lao Cai (1), Da Nang (1), Vung Tau (1), Phu Quoc (1).
– One further casino (South Hoi An) granted license to operate and currently under construction.
– 2 further casino-integrated projects granted IRC: Laguna Lang Co in Hue and Casino KN Paradise Cam Ranh in Nha Trang.
– Casino-related revenues for the 8 operative project rises from ~VND 1.2 trillion (apprx. USD 52 million) in 2017 to VND 2.5 trillion (apprx. USD 108 million) in 2019. Rate of growth was 31% in 2018 and 60% in 2019.
Factors in favor of investors:
o Vietnam’s economy: dynamic and rapid expansion with rising metropolitan middle class.
o Huge potential for tourism – abundant coastlines, natural landscapes etc.
o Government eager to attract foreign investment.
Potential obstacles for investors:
o Ban on locals gambling still a major hurdle – Govt seems reluctant to ‘open the floodgate; only one casino (Phu Quoc) currently opens to Vietnamese on a 3-year trial basis. If foreign investors cannot access local customers, they will have to rely almost exclusively on tourists – this may be particularly challenging in the short term due to Covid.
o Requirement that casino project be integrated to a wider hospitality project means high entry costs e.g. large areas of land probably required as well as vast investment in connecting infrastructure.
o Profitability is uncertain – current casinos still regularly report (large) losses e.g. The Royal Casino Ha Long loses ~ VND 72 billion in 2019; Ho Tram Casino (also in Ha Long) suffered accumulated loss of ~ USD 300 million between 2016-2017; Phu Quoc Casino (despite being allowed to admit locals) loses VND 2.5 trillion (over USD 108 milion) in 2019 alone.
o Legal framework and regulations still incomplete and developing – obtaining approvals, licensing etc. may be slow and cumbersome.
Please do not hesitate to contact the author Dr. Oliver Massmann under [email protected]. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.
