Apr 06, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck
Lawmakers in Cambodia are likely to approve before the end of this year a bill to regulate the management of the country’s casino industry, reports the Phnom Penh Post newspaper.
“We believe that when we have the law in place, we can increase our [annual public] revenue [from casinos] by two times compared to our current revenue [of US$25 million],” said Ros Phearun, deputy director of finance industry for the Ministry of Economy and Finance, according to the news outlet.
The report indicated the government might seek to issue or offer tenders for new licences and that this might be linked with the new legislation.
But the newspaper quoted Son Chhay, deputy chairman of the National Assembly’s banking and finance commission, saying that while he welcomed the prospect of regulation, any new licences should only be granted after it comes into force, and such a law should reinforce an existing ban on locals gambling.
He added that once the bill was passed by the Council of Ministers, it should take the National Assembly fewer than three months to pass it. “I think it won’t take long because the government will try to push it as they need more money to fill up their recent increase of civil servants’ salary,” he added, according to the news outlet.
Casino operators in Cambodia pay a flat tax levied typically on the number of slot machines and gaming tables they operate, one of the main operators – NagaCorp Ltd, which controls the NagaWorld resort in Phnom Penh – has previously confirmed to GGRAsia. The flat tax paid on machines and tables can vary from operator to operator, and must be paid at an agreed fixed rate regardless of whether an operator has a good quarter or a mediocre one in terms of gaming operations, NagaCorp chairman Tim McNally told GGRAsia, although he pointed out the Cambodian industry’s tax burden is currently much lower than that faced by many regional competitors.
It is not clear from the reports emerging so far from Cambodia whether under the reported proposed legislation the flat tax system might change – possibly to add to it or even replace it with some form of tax on gross gaming revenue (GGR) as occurs in Macau and Singapore.
Last year, the Cambodian gambling industry generated its US$25 million in tax revenues from a total of 59 casinos – many of them small venues on the country’s borders, and serving customers from neighbouring Vietnam and Thailand. The Cambodian industry’s tax take increased 12 percent from 2013, said the government in a previous announcement.
In June, GGRAsia reported that Cambodia planned to introduce a new regulatory law for casinos. Industry sources told us it was in order to encourage more overseas investment in the local industry.
The latest report suggesting progress on a draft regulatory measure comes at a time when a number of Asian jurisdictions with existing legal casino sectors are looking to expand them and in some cases reform the rules by which they are controlled. Some investment analysts have said likely motivations include a desire to increase tax income and earnings from foreign tourists – especially ones from mainland China.
Analysts have also mentioned the possibility of pre-emptive moves by Asian jurisdictions to capture a bigger share of the existing Asian casino gambling market, ahead of any attempt by Japan to legalise and regulate a casino industry of its own. Brokerage CLSA Ltd has said it expects Japan’s entry to the sector could lead both to real terms expansion in casino industry revenue, and a likely capturing of some of the existing market due to an expectation that Japan will offer a high quality product.
Cambodia’s NagaCorp on Wednesday said in a filing on its unaudited first quarter results that gross revenue from the VIP segment doubled, to US$65.5 million, from nearly US$32.6 million in the equivalent period in 2014.
Although the firm did not give a commentary as to the reasons, the casino’s management has stated it has been courting Chinese high roller gamblers in the wake of the crackdown on corruption in China that has seen rich Chinese players stay away from Macau.
Total Macau GGR fell 39.4 percent year-on-year in March, according to the Macau government.
Investment analysts at CIMB Securities Ltd said in a note on March 30 that – based on unofficial industry returns for March up to March 29 – they estimated Macau VIP gross revenue fell 51 percent year-on-year during the month.
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