Malaysia, Dubai eyed as potential igaming hosts

Dubai
Malaysia and Dubai are both being viewed as potential bases for online gambling operations, as an alternative to the Philippines, where the cost of doing business has risen to a level considered as unacceptable by many operators.

Speaking on an Asia Gaming Brief’s “Life After POGOs” webinar, Cherry Interactive General Manager Danny Too said both jurisdictions had emerged as potential hosts.

“You can set up finance, operations, and can even do online marketing out of the Malaysian office, but the key thing is that you get the permission of the federal government,” he told the webinar. “You can get a place to work and a license from one of the states but you need to go through the central government to go ahead. From the government point of view it’s just a BPO and as long as the games are not being offered in Malaysia, the government is happy to bring in these operators.”

The federal government in Malaysia has been prompted to act in an effort to stamp out rampant online gambling and to collect “billions of U.S. dollars,” in lost revenue to illegal sources, he said. The economic hit from the Covid-19 pandemic has given further impetus to the process.

“Malaysia is a very, very interesting proposition,” he said. “Authorities have been talking about it, but during the pandemic they have upped the ante and want to get companies in. I have been speaking with 5 to 6 operators who are interested.”

However, the government wants to ensure that the companies are legitimate and not scammers and will be able to pay both their taxes and employees. They will also be banned from offering services to Malaysia’s Muslim population, Too said, adding that actual regulation is still some way off. 

Live dealer, which is one of the fastest-growing online verticals, will not be permitted in the country, he added.

Regulation as an alternative to crackdowns

Malaysia has frequently announced high-profile crackdowns on illegal online gambling, with a campaign launched in 2017 touted to be the biggest ever. However, the action has met with little success and Deputy Minister of Communications and Multimedia, Datuk Zahidi Zainal Abidin recently told local media that online gambling had surged under Covid-19.

He publicly aired the idea that it may be better to regulate and collect revenue.

The government hopes to appoint an official government body to monitor, regulate, and tax the appropriate parties, he told national television channel TV3.

Malaysia also rates favourably to its Asian peers when it comes to the cost of doing business.

He stressed that Muslim Malays would not be permitted to gamble, but acknowledged the country has a diverse population, with a large number of ethnic Chinese who like to gamble. 

Business incentives

The Philippine Amusement and Gaming Corp (PAGCOR) in July informed the government that Malaysia was offering incentives to its Philippine Offshore Gaming Operator licensees to relocate there.

Too says the country is well-prepared to host online gaming companies. It has a well-educated, multilingual population, with many speaking both Chinese and Indian languages.

Malaysia also rates favourably to its Asian peers when it comes to the cost of doing business. A recent KPMG survey placed it at number four in the region when it comes to competitiveness. The country outperformed when it comes to hourly compensation costs, real estate costs and corporate tax rates.

In August, the government announced an RM21 billion ($5.1 billion) action plan to upgrade its telecommunications infrastructure to ease the rollout of 5G. Under the first phase of the so-called JENDELA plan as many as 7.5 million premises will be enabled with gigabit speed fixed-line broadband; expanding 4G mobile coverage from 91.8 percent to 96.8 percent in populated areas. It will also upgrade mobile broadband speed from 25Mbps to 35Mbps and retirem of 3G networks by the end of 2021.

Potential locations in the country include a giant urban development known as Johor Medini.

Medini is a 2,300 acres urban township development planned for a population of 450,000 by 2030. It’s the country’s largest single urban development and is expected to be a smart business hub. 

Base for targeting India

Dubai is also taking a similar approach to Malaysia when it comes to hosting online gambling operators and has a significant advantage in its proximity to India, one of the largest potential markets in the region. 

Too said some major Chinese operators, who are keen to diversify their portfolio away from China are actively looking at the market.

The city is home to a large expatriate workforce, in particular from India, providing a potential workforce with strong cultural affiliations with the target market. 

Too said that to date, Dubai has taken the same stance as Malaysia when it comes to live dealer operations, not permitting any physical presence of table set ups on its soil. However, it has not been as emphatic as Malaysia and may reconsider its stance in the future.

Aside from its workforce, another major advantage of Dubai is its connectivity. It’s an advanced city and a global aviation hub linking east and west. 

The city, part of the United Arab Emirates, has been hit by the pandemic due to the loss of travel and tourism, which accounts for about 12 percent of its gross domestic product. 

Dubai

Ratings agency, S&P Global doesn’t expect Dubai to recover to pre-Covid 19 levels until 2023 suggesting it may be open to new business opportunities.

Although not a cheap destination, Covid-19 has reportedly brung costs down and a poll by Resonance Consultancy ranked Dubai as the sixth-best city globally to live. The rankings consider 22 factors, such as culinary experiences, museums, and sights and landmarks each city offers, to the number of Global 500 corporations, direct flight connections and mentions each city has on Instagram.

Longer-term potential?

On the webinar, Too also highlighted Myanmar as a key destination for many of the companies that fled Cambodia after the ban on online gambling there and as a home for some of the existing POGOs.

The country is already home to some new-town mega projects, backed by Chinese money, that are home to multiple gambling operations. These are in border states, falling largely outside of the control of the central government and run by local armies, which hand out online gambling licenses.

Recently, the government itself passed a bill legalising casinos in the country in the hope of attracting investment to boost its tourism industry. 

“Watch out for Myanmar, it’s going to be an interesting place to be,” he said.

Interview with Danny Too