Red Tape Could Stall Developer Who Wants to Build Casinos in Vietnam
Posted on: September 24, 2013, 05:30h.
Last updated on: September 21, 2013, 09:41h.
For some reason, in Asian and Russian countries, they like to zone off their casinos. Everything has to be in a designated “economic zone,” perhaps indicating that most things in these countries are not meant to make a lot of money, at least not if they’re legal.
New Casinos on the Runway
Vietnam fits this mold, and legal casinos are still a fairly new concept there, not to mention almost exclusively aimed at a foreign market, as locals are mostly barred from casino gambling. Now a high-profile Vietnamese businessman – Dao Hong Tuyen, listed as a CEO to watch by the Japan Times – wants to build a new casino project via his Tuan Chau Group and its US partners in the Van Don Administrative Economic Zone in Quang Ninh province in the northeast region of Vietnam. He also wants to get a gambling house going in Ha Long City on nearby Tuan Chau island, adjacent to a new marina that will be opening up there.
If he can get ‘er done, Tuyen would be one of only a handful of developers to crack the bureaucracy grid that has long kept Vietnam lagging behind its Asian brethren in this arena. A huge sticking point for most casino investors has been the somewhat odd dictum by the Vietnamese government that a minimum of US$4 billion be committed to any projected resort-casino plan; a number that is pretty daunting for even well-funded builders in the gaming industry these days. Casino magnates have pretty solid algorithms for projections on how long it will take to get out of building debt once a casino opens, and the numbers have to make sense, unless you are Caesars Entertainment, in which case you can apparently do whatever you want. (Hey, we have to amuse ourselves sometimes, what can we say?)
Only One Casino So Far
Anyhoo, because these minimums have driven off all but the most gung-ho investors, only one casino – The Grand on the Ho Tram Strip – has made it from drawing board to reality, and that’s not been without plenty of problems, including MGM Resorts International walking out as partner and taking its worldwide visibility branding with it, and all kinds of financing issues along the way.
Tuyen has mostly overcome the investment minimums already, with $4 billion committed for his Van Don project and another $3.5 billion for his Tuan Chau property. But there’s still plenty of red tape to cut through, which is where the ISC Group – Tuyen’s US gaming partner, with Jack Maher as CEO – steps in to work with the Quang Ninh authorities to make sure everything’s kosher and rubber stamped before a shovel hits the dirt. Quang Ninh party secretary Pham Minh Chinh says it’s looking like a green light anytime for the casino slated for that region.
Not everyone is shuffling their card decks just yet though. Vietnam’s former deputy minister of planning and investment, Prof. Dr. Nguyen Mai, says he’s doubtful that investors will get necessary foreign lenders to pony up the dough for these projects.
“When you spend $7.5 billion, you need to have at least $10 billion in pocket. If you borrow money from banks, you need to have the mortgaged assets worth triple [the $7.5 billion].”
Whether Tuyen has that kind of collateral remains to be seen.
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