SOUTH EAST ASIA 20
MYANMAR
Myanmar eyes IRs to boost tourism Myanmar looks set to be the next Asian jurisdiction to open its doors to IRs as the government seeks to attract much needed tourism dollars, with experts in the region predicting strong interest from potential investors.
T
he Gambling Bill 2018 has been passed by the Lower House of the Parliament and is now with the Upper House for revisions and will allow foreigner-only casinos to operate in the south-east Asian country, formerly known as Burma. Currently, gambling businesses are banned under the Gambling Law of 1986, although several small casinos operate on the coast of Tanintharyi and along the borders with China and Thailand, to which the government turns a blind eye. “Significant changes are being proposed in relation to gambling in Myanmar. The country has seen a paradigm shift in the last few years with more liberalised policies being pursued,” says William Greenlee, partner and managing director of the Myanmar unit of DFDL, a specialist law firm. “Once the proposed amendments enter into force, the landscape is set to change radically.” It is not a coincidence the casino liberalisation comes at a time when Myanmar’s currency is plummeting - the kyat has lost 12 percent of its value against the US dollar since June - and encouraging foreigners to spend will help draw important foreign reserves into the country. The government will also benefit from income on casino licenses and additional taxes on casino operations which will help offset the massive budget deficit, expected to hit K4.9 trillion ($3.1 billion) this year. The measures are also expected to attract more tourists, with some figures indicating only around 270,000 tourists visit the country annually. Political unrest and insurgent uprisings have hit visitor arrivals. Two legitimate casinos currently operate at island resorts Tha Htay Island and Yadana Island, near Kawthaung in the far south of Myanmar,
Asia Gaming Briefings | Februay 2019
which were set up under a pilot scheme by the military junta in the 1990s. “As a case in point, the casino operating in Grand Andaman Resort Hotel on Tha Htay Island has been functional for 20 years now, with over $12 million in tax receipts paid to the regional government,” Greenlee says. The new law envisages a situation where casinos operate alongside a hotel and are open to foreign nationals only. “Foreign casino investors have displayed notable enthusiasm and fervour over the past few years to invest in casino activities in Myanmar,” says Greenlee. “What the Government is perhaps looking towards is the development of Integrated Resorts or similar in Rangoon and potentially investment into its tourism centres along the coast and inland.” Casinos in border areas would easily attract clients from neighbouring Thailand and China, where gambling is illegal. The government has also said it is planning to upgrade Kawthaung airport to handle international flights to allow more tourists to visit the beautiful Myeik archipelago and Tanintharyi region in the south. “As far as locations are concerned, obviously, Rangoon would be the preferred location, and you can imagine a group trying to negotiate a NagaWorld-style monopoly in the commercial capital of Myanmar,” says Tim Shepherd, Director of Fortuna Investments, referring to the monopoly enjoyed by NagaCorp’s property in a 200km radius of the Cambodian capital Phnom Penh. “After that would come the resort towns both inland and coastal. Also Myanmar’s relations with China will be important to growth, anyone who has visited Sihanoukville (Cambodia) in the last 12 months knows the vast scape of the investment coming from China into
the resort and casino business supported by flights every day from Chinese cities.” Some 30 casinos operate in Sihanoukville and 70 more are under construction. The new legislation is not expected to affect the existing small, border hotel casinos, predominantly clustered near the Thai and Chinese borders, notably in towns such as Mong La and Muse in Shan State and Myawaddy in Kayin. These are operated on licenses granted at a local level by provincial government and security forces to operators from across Asia usually Thai and Chinese investors, and local businessmen. “A significant development in the amended law proposes that casinos may only be open to foreign nationals and not Myanmar citizens. It remains to be seen if this will hold true upon enactment of the law, and what kinds of implications this categorization may bring to bear on wider Myanmar society,” adds Greenlee.
