Stakes are high as Vietnam lifts casino ban for locals

By Tuan La   January 21, 2017 | 03:00 am PT
While news of Vietnam opening up the lucrative industry probably comes as music to the ears of investors, critics are more cautious.

Phu Quoc Island's long pursuit of a casino may finally pay off.

Since at least 2007, shifting rumors about the casino's location and investors cast a pall of uncertainty over whether and where the Mekong Delta's most popular tourist destination would have a casino.

Nothing obscured those questions quite like the country’s ban on local gamblers, which limited any prospective casino to a mere playground for the 20 percent of Phu Quoc's visitors who hold foreign passports.

All that changed this week when the government decided to scrap the long-standing ban, allowing locals over 21 years old with a monthly income of at least VND10 million ($445) to enter local casinos from mid-March under a three-year pilot program. Vietnam's average annual income was around $2,200 last year.

The move came after  Prime Minister Nguyen Xuan Phuc announced last December that the Politburo, the decision-making body of the ruling Communist Party, had granted permission for Vietnamese citizens to gamble at two casinos: the one being built on Phu Quoc Island and the other set to open in the Van Don Special Economic Zone near the Chinese border.

News of the government opening up the lucrative industry probably came as music to the ears of investors and property developers.

But critics warn the casinos could prove a risky gambit.

According to analysts, Vietnam needs the capacity to manage gambling, before it can truly enjoy the projected $3 billion in annual rewards it can bring. Since the government seems convinced casinos will boost tourism, this argument merits careful scrutiny.

“The social-environmental costs of these projects need to be critically taken into account,” Amruta Karambelkar, a former Southeast Asia researcher at the Institute of Peace in India, wrote in an article several years ago. "Singapore is successful because of its governance.”

Vietnam has cast Phu Quoc as a tourism magnet. Since March 2014, foreigners have been able to visit for up to 30 days without a visa—a waiver that also applies to foreigners who stop at any domestic airport or seaport 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 media reported.

On the flip side, helter-skelter development has already robbed the island of the pristine, tranquil charms that once provided its biggest draw, a fate suffered by other parts of the country caught in the throes of commercialization.

“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.”


"Development" underway in Phu Quoc's northwest. Photo by VnExpress/Calvin Godfrey

A gambling getaway?

International casino developers have been circling Vietnam for some time now.

With a population of nearly 92 million, analysts say that by lifting the domestic gaming ban, Vietnam could reignite interest from investors who pulled out of casino projects due to the high barriers to entry.

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 $2 billion and have 10 years of experience in the casino business.

Opponents of the ban say it has only sent droves of Vietnamese gamblers abroad. Cases of Vietnamese citizens being forced to sell off property or pay ransoms to recover relatives held in foreign casinos have been reported, particularly in Cambodia.

According to a study by Augustine Ha Ton Vinh, an academic who has extensively researched Vietnam's gaming industry, the country hemorrhages as much as $800 million per year in tax revenues from Vietnamese punters who cross the border to Cambodia.

Vietnamese authorities have endorsed Vinh's findings.

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 recently reported 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.

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 provide low-paying jobs near the bottom of the service sector. A large casino could 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 and range from addiction to crime.

“What often goes unreported is the link between casinos and organized crime," Abuza said. "Look no further than the casino in Cambodia: this place has been laundering Southeast Asian drug money for nearly two decades.”


Ham Ninh, a fishing village in Phu Quoc Island. File photo

'Out of the blue'

Analysts say fears of social costs may be dwarfed by the significant potential gains, at least for those who have been betting on a fast-changing and growing Phu Quoc.

Mai Thi Phuong, a successful property investor, said that since the island opened its door to development over 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 land was acquired for property projects. Never having seen large sums of money, many quickly squandered their compensation payouts and find themselves without land to farm.

Phuong said many people have already suffered this fate and fears that many more will follow if the island opens a casino.

“I expect more [bankruptcies]," she said.

Related news:

It’s official: Vietnam OKs casino gambling for locals

Following twists and turns, Vietnam may lift casino ban on locals after all

Phu Quoc feels growing pains as development booms

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