Cambodia GGR tax likely at mid single digits: analyst

Feb 10, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck  

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The tax regime for gaming establishments in Cambodia is likely to be “more competitive” than in other jurisdictions in the Asia Pacific region, said a note from analyst Grant Govertsen of brokerage Union Gaming Securities Asia Ltd.

Mr Govertsen attended a press conference on Thursday of Cambodia casino operator NagaCorp Ltd. According to his note, several high-level officials from the government of Cambodia attended the conference, including officials from the Ministry of Economy and Finance (tasked with drafting the tax bill), the Ministry of Tourism and the Ministry of Interior.

According to Union Gaming’s note, the Cambodian officials hinted that the tax rate in the country “would be more competitive than the current lowest GGR [gross gaming revenue] tax rate in the region, Singapore, which is at a 10-percent blended rate between VIP and mass”.

“This makes sense in order to attract further investment into Cambodia,” said Mr Govertsen.

He added: “In a separate follow-up we came away with a high level of confidence that the blended GGR tax rate in Cambodia will ultimately be in the mid single digits.”

A bill to regulate the management of the casino industry in Cambodia is expected to be ready this year, a government official had said in December. The Cambodian government has been in the process of amending its gaming laws since at least since 2014, in a bid to draw major casino operators to that country.

“The timing of the finalisation of the regulatory and tax bill remains unclear although we believe the government is striving for completion in the first half of 2017,” said Union Gaming’s Mr Govertsen.

According to the Khmer Times newspaper, there are currently 65 casinos in operation in Cambodia. Many are in areas bordering neighbouring countries that bar casino gaming. One of the places with a concentration of border casinos is Poipet in the northwest of the country, near the frontier with Thailand.

The most high-profile casino property in Cambodia is NagaWorld (pictured), in Phnom Penh, operated by Hong Kong-listed NagaCorp.

NagaCorp on Wednesday reported a net profit of US$184.2 million for 2016, up by 7 percent from the previous year. Revenue for the full year increased by 5.5 percent year-on-year to US$531.6 million, said the casino firm.

Chinese market

Hong Kong-listed NagaCorp on Wednesday announced that its subsidiary – Naga Travel Ltd – has a partnership with the Ministry of Tourism of Cambodia to promote the country as a tourism destination to the Chinese market.

The Ministry of Tourism is launching the Cambodian Overseas Tourism Promotion Board, with the main purpose of attracting tourists to Cambodia. Cambodia received approximately 5.01 million visitors in 2016, according to official data. The new tourism board aims to increase the number of visitor arrivals to 7.0 million per year by 2020.

Data from the Ministry of Tourism showed that about 830,000 tourists from China visited Cambodia last year. The target is to reach 2 million visitors annually from China by 2020, according to the tourism board.

Tim McNally, NagaCorp’s chairman, was quoted by the Nikkei Asian Review as saying at the press conference: “Simply by the sheer magnitude of the Chinese travelling market, we think we will get our fair share. Cambodia still remains a relatively low-cost destination and we think fairly attractive for the traveller.”

NagaCorp is currently working on a hotel and gaming space extension to NagaWorld, named Naga2 and likely to be ready this year.

Union Gaming said in Thursday’s note that the opening of Naga2 “now appears likely to be a September event”.

“We remain confident that high-quality supply is exactly what’s needed to attract higher quality customers, which the company is on pace to accomplish via increased airlift from China in conjunction with a newly announced partnership with Cambodia’s Ministry of Tourism,” said Mr Govertsen.

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