A prominent Vietnamese businessman says he’s lined up financing to build not one, but two casinos in the northern part of the country. Dao Hong Tuyen (pictured right), whom the Japan Times cited as one of their Top 100 Next-Era CEOs in Asia 2013, says his Tuan Chau Group and its US partners hope to build a casino in the Van Don Administrative Economic Zone in Quang Ninh province in the country’s northeast. The partnership is also hoping to put a casino in the new marina opening next month in Ha Long City on nearby Tuan Chau island.
Vietnam’s casino sector has lagged many of its regional competitors, in part because of the government’s insistence that any would-be resort-casino developer must commit a minimum of US $4b to the project. Many such projects have been proposed over the past five years, but only one – Asian Coast Development (Canada) Ltd.’s The Grand on the Ho Tram Strip – has actually been built, and only after some serious hiccups involving financing and the loss of its MGM Resorts partner.
Tuyen aka the ‘Island King’ said he has financing in place to cover the estimated $4b cost of the Van Don casino, with another $3.5b earmarked for the Tuan Chau gaming hall. Jack Maher, chairman of Tuyen’s US partners the ISC Group, said the partners had been working with Quang Ninh officials to conduct research and draw up plans. Quang Ninh party secretary Pham Minh Chinh expects the imminent signing of a long-term cooperation agreement between the partners and the province.
But others aren’t so sure there’s any fire to go with this smoke. Prof. Dr. Nguyen Mai, the country’s former deputy minister of planning and investment, told VietnamNet he was skeptical as to whether any local investor would be able to convince a foreign bank to put up that kind of cash. “When you spend $7.5b, you need to have at least $10b in pockets. If you borrow money from banks, you need to have the mortgaged assets worth triple [the $7.5b].”
DOES VIETNAM NEED TO RETHINK ITS CASINO STANCE?
If Vietnam is serious about getting its casino sector moving, it may have to consider lowering the financial bar for investors. Consider that this week saw Cambodian casino operator NagaCorp announce plans for a $350m project in Russia’s Primorye Territory, joining the $700m three-phase project being constructed by the joint venture of Melco International Development chairman Lawrence Ho, Taiwanese gaming device maker Firich Enterprises Co and local businessman Oleg Drozdov.
Vietnam may also have to reconsider its longstanding prohibition on allowing its citizens to patronize the country’s casinos, an issue that helped scare off international operators like Genting and Las Vegas Sands. The Van Don Economic Zone was recently proposed as the site of a pilot project that would have allowed locals to enter a single casino, but the government has yet to officially approve the plan.
Tuyen suggested the government would be wise to relax the restriction on locals, as scads of Vietnamese gamblers routinely visit casinos just over the Cambodian border, which Tuyen believes is creating a drain of capital out of the country. Speaking to BBC News last month, Tuyen offered this advice to Vietnam’s government: “Break free from the beaten tracks in your mindset to find a new path for the nation which is more intelligent, more creative and more international.”