Genting’s Lim hints more cost cuts in Malaysia tax row
The announcement of a revision in casino duties and casino licence fee applicable to the Resorts World Genting casino complex following the Malaysian government’s budget for 2019 “will impact Genting Malaysia’s earnings in financial year 2019 onwards”.
So said Lim Kok Thay, chairman of the parent group Genting Bhd, in the latter’s 2018 annual report filed with Bursa Malaysia on Tuesday.
The chairman added in his statement: “In view of the severity of the announced increases in casino duties, Genting Malaysia will continue to review and manage its cost structure.”
This included “reducing or delaying” capital expenditure and implementing “various cost rationalisation initiatives such as manpower optimisation”.
A recent note from Maybank Investment Bank Bhd said that Genting Malaysia’s offer to buy for US$126 millon from the Malaysian government a high-profile luxury yacht caught up in the country’s sovereign wealth fund scandal might help Genting Malaysia “reconcile with” Malaysia’s Ministry of Finance on several matters.
Those included a row about tax incentives for the Genting Integrated Tourism Plan (GITP). GITP is a multi-phase initiative that Genting Malaysia has undertaken for its Resorts World Genting complex. It involves a 10-year, MYR10-billion (US$2.4 billion) master plan.
Chairman Mr Lim also gave some commentary on the stalled outdoor theme park at the property.
“Genting Malaysia remains committed to having the outdoor theme park at Resorts World Genting as a growth initiative in Malaysia,” he stated.
The annual report mentioned however that due to litigation over the theme park and the “uncertainty” of its outcome, Genting Malaysia had “carried out an impairment assessment on the recoverability of the property, plant and equipment for the theme park assets” as a precautionary exercise.
In the chairman’s statement, Mr Lim also reiterated previous statements of the group that Resorts World Las Vegas, a new casino property under construction in Las Vegas, Nevada in the United States, should open in 2020. Last year an analyst suggested there might be a delay.
Mr Lim wrote: “The construction of Resorts World Las Vegas is progressing well with the concrete works through level 57 of the west tower and level 54 of the east tower completed. The hotel towers are scheduled to reach full height (level 68) in the third quarter of 2019.”
He added: “Total development and land costs incurred up to 31 December 2018 was about US$1 billion. The first phase is estimated to cost about US$4 billion and targeted to open by end 2020.”
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