Inside Asian Gaming

Dec 2007 | INSIDE ASIAN GAMING 33 splendour or the Mekong River rather than to gamble. The growth in the size of the visitor market and the improvement in its demographic beyond the more adventur- ous backpacking fraternity will, however, undoubtedly help to support the gaming sector, even if it’s only via a coach trip to visit NagaWorld’s mass market hall. Tourism boom Revenue from tourism has certainly been one of Cambodia’s economic success stories. Cambodia’s Ministry of Tourism says in the third quarter of 2007, the country re- ceived 1,407,164 international visitors—an 18.9% increase compared to the same pe- riod of 2006. Siem Reap/Angkor recorded 803,788 visitors—a market share of 57.3% and a 38.1% increase on the same period in 2006. Phnom Penh and other destinations brought in a total of 599,876 visitors and a share of 42.7%. According to the ministry, in just six years annual gross revenues from tourism have risen 301%. In 2001, the annual take was US$349 million per annum but annual revenue at the end of 2006 had swelled to US$1.4 billion. Tourism spending was pro- jected to reach more than US$2 billion in 2007 as Cambodia continued to consoli- date its place on the mainstream holiday map, though it is still less than a third of the US$7.81 billion revenues produced by gam- ing and tourism in Macau in 2006. Thumbs up The IMF report notes in the executive summary: “Strong macroeconomic policies have enabled Cambodia to achieve impres- sive growth and make inroads into poverty. Supported by prudent fiscal and monetary policies that have strengthened the econo- my’s resilience to shocks, growth has aver- aged over 9% since 2000 and was 10.75% in 2006. Anchored in part by extraordinarily high dollarization, inflation has remained low and confidence increased.” The report adds:“Growth has been driv- en by the garment and tourism sectors, with agriculture only recently making a sustained contribution. As a consequence, poverty re- mains high in rural areas and progress will have to be accelerated if Cambodia is to meet its Millennium Development Goals.” One to watch David Green, Director of Pricewater- houseCoopers’s Macau Gaming Practice, says: “Cambodia’s economy is growing very quickly. I think Naga’s an interesting one to watch and see how it develops because it’s somewhere between a border-type casino and a full resort-type property. “Cambodia is also committed to raising its game on the regulatory side. They now have a proper gaming tax regime. They’ve gone to a product based tax that imposes a monthly levy on tables and machines.” Old habits There are hints though of the old Cam- bodia in that the tax rate isn’t fixed and it arguably also lacks transparency because it isn’t revenue based. This patchy regulatory framework sums up the continuing short- comings of Cambodia as an FDI destination for foreign casino operators. As far as money laundering–the great shibboleth of gaming regulators and west- ern governments—is concerned, Cambo- dia’s laws are still not compliant with interna- tional standards, says the Asia/Pacific Group (APG) which advises the region’s emerging economies on ways of combating financial fraud. The fact that the HKSEC was able to sign off NagaCorp’s listing in Hong Kong is due to the fact the company gave specific assurances regarding internal audit controls of its cash flow that go beyond the current requirements of Cambodian national law. Whether such corporate extra-nation- al assurances would satisfy a regulatory body such as the Nevada Gaming Com- mission were a US casino company to seek investment in Cambodia is an inter- esting question. Legal reform This summer, the APG conducted its first assessment of the country’s safeguards, known as an APG Mutual Evaluation. While the checks are designed to encourage im- The future Marina Bay Sands, Singapore Genting’s planned Resorts World at Sentosa, Singapore