A law to regulate Cambodia’s casino industry – that an official says could be passed this year – is part of a strategy by the Southeast Asia country to attract more gaming investment and more tourists – especially tourists from China.
“When the law is enacted, we will not only be able to double revenue from the [casino] industry but also open the market to direct investment from major investors,” said Ros Phearun, of the Ministry of Economy and Finance, as quoted by the Khmer Times on Wednesday.
According to the report, Mr Phearun mentioned the possibility of interest from Macau and Las Vegas investors – but the Khmer Times did not quote the official directly on the topic.
“We had planned to get approval [for the bill] from the National Assembly in the first half of the year, but we have seen a bit of a delay, so now I hope it will be approved by the end of the year and the tax rate will stay the same as what we impose now,” Mr Phearun was quoted saying.
Tim McNally, chairman of NagaCorp Ltd, which already operates NagaWorld, Cambodia’s biggest casino resort based in the capital Phnom Penh, was quoted recently by Chinese-language newspaper the Hong Kong Economic Journal as saying the proposed law might introduce a 5 percent to 7 percent “gambling tax”. That was understood to be a reference to a tax on casino gross gaming revenue (GGR).
Mr McNally has previously told GGRAsia that his firm currently pays a flat rate tax “based on everything from the number of gaming machines to the tables that you operate” with the amount adjusted annually depending on business performance.
In May 2014 Mr McNally said NagaCorp’s effective tax rate was 3 percent. The Economic Journal quoted Mr McNally saying the tax burden was 2 percent for 2015.
Mr Phearun, deputy director general of the ministry’s finance industry department, told the Khmer Times that the 75 casinos registered as operating in Cambodia during 2015 generated in total US$34.7 million in taxes, up a third from 2014.
Tourist numbers rising
For the country’s tourism market as a whole in the January to November 2015 period – the most recent data, published in late January – arrivals increased by five percent year-on-year, to just over 4.2 million.
Arrivals from mainland China rose 24.0 percent year-on-year, representing 15 percent of the total.
But Mr McNally told Bloomberg Television in a recent interview that NagaCorp in particular was not purely a China play for investors.
“We are Southeast Asian centred; much of our customer base comes from that part of the world. We have increasing numbers from China and North Asia, but by the same token we are not totally dependent on that growth,” he stated.
NagaCorp said in a February 1 filing that it posted a net profit of US$172.6 million for 2015, up by 26.8 percent from the previous year. Revenue for the period increased by 24.6 percent year-on-year to US$503.7 million.
Rather than being a standalone measure, the Cambodian government’s casino bill is part of a strategy – outlined in what it termed a white paper released at the end of January – that includes a five-year plan to increase the number of tourists from mainland China, so that they make up as much as one-third of all the 7.5 million tourists annually that Cambodia says its expects to welcome by 2020.
Operators in the local tourism industry are already gearing up for more Chinese visitors.
NagaCorp said in a filing to the Hong Kong Stock Exchange in May that China Duty Free Group Co Ltd – a mainland China state enterprise – is to manage a retail operation at NagaCity Walk, a shopping complex NagaCorp is constructing next to NagaWorld.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China