BANGKOK - Cambodia is pushing ahead with new legislation in a bid to lure foreign investors to its vibrant casino and gaming industry, promoting the Kingdom as a key gaming center in South East Asia.
The proposed legislation, expected to be passed after general elections this year, has been three years in the making and will oversee an industry currently netting the government almost $50 million in tax revenues.
Cambodian officials said the government was looking to set a tax rate for casino games at between 4 and 5 percent to match regional casinos such as Singapore.
Cambodia's casino business, with its sense of the "Wild West", has grown rapidly since the late 1990s, with 65 licensed casinos and the sector dominated by the Hong Kong listed Naga World Hotel and Entertainment complex in Phnom Penh.
Gambling a booming business
Ben Reichel, executive director of the Sydney-listed Donaco International, says across South East Asia there is significant demand underpinning the potential growth in the gaming industry.
"There's a lot of unsatisfied demand in the region as a whole. If you look at the number of tables compared to somewhere like the USA, it's actually a very low number of gaming tables available - which is why there is so much illegal competition going on," Reichel said.
Cambodia has benefited from restrictions or outright bans on legal casinos — such as in Thailand — or where local gamblers are prevented from entry to existing casinos.
Outside Phnom Penh, where Naga World enjoys a monopoly, other key clusters of casinos are in the border town of Poipet, near Thailand, the seaport of Sihanoukville, and to the east along the border with Vietnam.
But a decision by Vietnam's authorities to allow local gamblers to use Vietnam based casinos was seen as a threat to those casinos near Vietnam's border.
A major driving force in the growth of the casino business generally lies in operators, known as VIP junket agents. These operators' role is to act as facilitators, guaranteeing an amount of revenue, with offers of free accommodation, travel and other benefits to the gamblers.
And the impact of such VIP junket operators is significant. Cambodia's premier casino, NagaWorld, recently reported a 140 per cent growth in VIP rolling turnover to $21.1 billion for 2017 up from $8.71 billion a year earlier, according Naga Corp's Hong Kong stock exchange released financial results of February 28.
NagaWorld revenues amounted to $625.33 million in 2017 up from $225.66 million the previous year. Its net profit rose 39 percent to $255.2 million.
Reeling in Chinese gamblers
The boon to the Cambodian market also came with an easing of visa rules for Chinese visitors. In 2017 arrivals from China rose more than 40 per cent to 1.2 million, surpassing Vietnam to become the largest source of tourists in Cambodia.
"The government has said they want to make China one of their top three -- if not number one source of tourism going forward," said Donaco's Reichel.
In comments emailed to VOA, executives of Macau-based VIP junket operator Suncity Group said; "Chinese gamers will definitely be the main course for the VIP market in Cambodia".
Cambodia also offers Chinese gamblers an alternative to Macau where in recent years VIP junket numbers have fallen against the backdrop of President Xi Jinping's crackdown on corruption.
Another ‘hot’ Cambodian gambling area
Poipet, Cambodia's main border crossing with Thailand, is located between Siem Reap and Battambang. The Cambodian government is looking to further develop the Poipet region as an industrial zone.
Donaco's Reichel, whose company oversees the Star Vegas casino in Poipet, says most costumers are from Thailand, but there is also a presence of gamblers from Indonesia, Malaysia, and expatriates living in Thailand.
"It really is growing rapidly and with the casino industry there you can cross the border [from Thailand] and you don't have to change currency. The whole town operates using Thai baht -- it's like a little piece of Thailand on Cambodian soil," he said.
But some operators are also cautious. Macau-based gaming investor, Amax International, with links to Cambodia, says the VIP market especially can be volatile.
The gaming business, it said, is sensitive to economic downturns, uncertainties, and factors affecting tourism. Amax added that countries, such as China, "may impose or adjust government restrictions on currency conversion or their ability to export currency."