Published in: Latest Intelligence
Manila’s Entertainment City casino zone has only just opened, but the project already appears to be inspiring other Asian capitals. Authorities in Colombo are now preparing their own new gambling and entertainment district, with Australia’s Crown Ltd. positioned to be the first of an expected four new entrants.
Crown appears to be eyeing a site in the Sri Lankan capital now used as a public car park and owned by local businessman Ravi Wijeratne, himself owner of the Star Dust Casino, in the city’s Fort area, close to luxury hotels like the Hilton, and at one end of DR Wijewardene Mawatha, a street earmarked to be developed as a gaming and entertainment area.
Surrounded by old government warehouses bordering a lake on one side and a railway yard on the other, the leafy street currently houses one casino and the authorities have begun to knock down some of the old warehouses, creating prime waterfront real estate.
Crown is said to plan be planning a 36-story casino hotel, with the $350 million project set to open by 2016. While those numbers may not be firm, chairman James Packer has visited Sri Lanka three times in recent weeks and had meetings with cabinet ministers.
Punchi Banda Jayasundera, the powerful treasury secretary, said Packer showed interest in “integrated tourism” projects, apparently along the lines of the “integrated resorts” in Singapore that feature hotels, casinos and other entertainment. “We proposed to Mr. Packer’s team to look at investing in a large city hotel in Colombo,” said Lakshman Yapa Abeywardene, minister of investment promotion. “They can also look at Trincomalee for possible investment opportunities.” He added, “Nothing was finalised.”
The company told AGB: “Crown looks at numerous overseas opportunities as part of our international resort and entertainment operations.” Wijeratne declined to comment on Crown.
Crown, through its joint venture with Macau’s Melco International Development Ltd., is also part of one of the four groups developing a casino hotel in Manila’s Entertainment City. The Melco-Crown joint venture was set up to target projects in a territory stretching from Japan to Thailand, with Sri Lanka beyond its declared bounds.
Both the Philippines and Sri Lanka look on Macau’s success at reinvigorating its previously stagnant casino industry and drawing in millions of new visitors by inviting in foreign casino companies willing to invest billions of dollars in new projects.
“We need to consider the wealth gained from such activities,” Sarath Amunugama, Sri Lanka’s deputy finance minister and minister for international monetary cooperation, told legislators this month. “Certain amendments are necessary to bring in foreigners to Sri Lanka.”
Sri Lanka is already succeeding at reviving its tourism industry, four years after the end of the government’s long bloody war with Tamil Tiger separatists. The country welcomed 1 million tourists last year, a record and more than double the arrivals in 2009, with India and the UK the largest sources.
Officials aim to raise the annual count to 2.5 million by 2016, with incentives for casino investments as one tool. The country has had legal casinos since 1979, with nine now in operation, some bearing international brand names such as Ballys, Bellagio and MGM but unrelated to their namesake groups. A bar on local entry to the casinos was unofficially relaxed during the civil war and has yet to be strictly enforced again, but the casinos have put their focus on Indian and Chinese bettors.
The bills passed by parliament this month will cap the tax on casino turnover at 5 percent as against the 28 percent rate paid in other sectors and exempt the industry from a range of other taxes such as the VAT that can raise effective business tax rates in the country to 40 percent, in part by bringing the industry under the Strategic Development Act, which was intended for projects that promote social and economic welfare. The government collected 300 million rupees from casino taxes and fees last year.
Amid the parliamentary debate, Abeywardana told AGB: “The new regime has no plans to launch casino projects in the country. We are inviting only hotel projects. The earlier regime had given approvals for casinos in three to four locations.” Abeywardana quickly ended the interview and did not explain what “earlier regime” he meant. Amunugama meanwhile told legislators, “There are casinos in the country, but we have no plans of expanding them further.”
Though by local standards the debate on the investment incentives was perfunctory and the insistence on no new casinos discounted, ministers faced some challenges on the measures. “There is something fishy,” said Harsha de Silva, an economist and lawmaker. “All these casinos are making money in abundance and still they are [to be] subjected to 5 percent tax.” Others spoke out against the bills from a religious standpoint as wrongly encouraging gambling in this predominantly Buddhist country.
Another international operator expected to join a new round of casino construction is India’s Delta Corp. which has already targeted a site near the Colombo airport and approached a cabinet minister about a joint venture. Representatives of another cabinet minister also say they are considering talks with foreign operators about a casino in the new capital district.
Sun International Ltd., the South African gaming resort company, was said by South African and Sri Lankan officials last year to be moving forward with a $800 million resort in Katana, just north of Colombo, but little has been said since.
Another potential player in the sector is local conglomerate John Keells Holdings, already the island’s biggest hotel operator. Analysts say it has considered adding a casino to a large mixed-use project under development in the capital, but unconfirmed at this time.