Wednesday, August 17, 2022

Could Sihanoukville be Asia's next gambling hub?


In a promotional video more akin to a trailer for a Hollywood blockbuster movie than the launch of a new development project, Malaysia-based SV International revealed plans to transform the sleepy coastal town of Sihanoukville, Cambodia, into the “Macau of Southeast Asia.” In the video, SV International said it would be “bulk acquiring every potential development lot” in the town’s port area, and was “purchasing existing hotels for renovation and equipping them with gaming licenses.”

The firm, which was only incorporated last December and awarded a gaming license by the Council of Ministers in March, also plans to operate online gaming platforms, nightclubs, karaoke bars, massage parlors and dog racing. The grand design, according to the video, is for SV International to expand its presence across Sihanoukville and build a casino city based on the Macau model. And while the plans, and indeed the video, are impressive and eye-catching in equal measure, they have been greeted with cynicism.    

“The plans are certainly ambitious,” says Lorien Pilling, director of Global Betting and Gaming Consultants. “But grand casino plans have been submitted for various jurisdictions in recent years and come to nothing. It’s probably a case of believe it when we see it. The title of “new Macau” that everywhere claims is hard to win,” he adds.

Shrouded in mystery

Adding fuel to the cynics’ fire is that SV International is a company shrouded in mystery. According to its website, the group was founded by Dato’ Alan Lim, who is company president. Dato’ Mynus Lee is group vice president, while Willie Chay is global marketing director. The group has six subsidiaries including GD World (online gaming and live casino) SV Mall (online auction platform) and SV Club (financial and investment management) and is based in Malaysia with its local office in Phnom Penh, where it operates under the name Salient Ventures, still under construction. The company didn’t respond to AGB’s requests for comment.

That, however, has not stopped SV International putting its Sihanoukville plans into action. The firm has already joined forces with a number of local hotels and casinos, including the Majestic Hotel and Casino, Golden Royal Hotel and Casino, and the Queenco Hotel and Casino. Under the partnerships, SV International has promised to drive hordes of visitors from Malaysia and Singapore to Sihanoukville. By working together with SV International, says Queenco general manager Aharon Gini, the town’s tourism industry has the potential to grow.   

“We understand that in order to revert and convert a city like Sihanoukville into a future gold mine the private sector must work and collaborate together, and make all the effort in order to push the business platform to the stage that external and future investors will be interested to come. The more investors that share our vision, development will be faster and more attractive,” he adds.

Just how much SV International plans to invest in Sihanoukville remains unclear, but the general consensus is that the firm is good for the money.  “SV have enough capital and power to attract big investments into their project, so long as the Cambodian government will give them the green light to enact their plans,” Gini adds. “So it’s actually like most multi-million dollar businesses, they (SV International) bring some of the capital and the rest will arrive from investors.”

An attractive proposition

On the face of it, Sihanoukville offers operators and investors like SV International a very attractive proposition. Indeed, Queenco’s parent company – Queenco Leisure Int – has spent more than $40 million building its hotel and casino, and acquiring premium plots of land for further development. The Chinese have also invested heavily, pumping millions of dollars into hotels and casinos. This, in turn, has seen the number of licensed casino operators double from seven to 15 in the past 12 months, with five licenses still pending.  

The boom has led to the number of passengers traveling through Sihanoukville Airport almost doubling in the past year, helped by Lucky Air launching year-round direct flights from Kunming, China. Other airlines offer regular routes from South Korea, Singapore and Cambodian temple town Siem Reap and Phnom Penh. And while the influx of tourists and gamblers has been a welcome boon for operators, Gini says there are growing concerns about the the town’s infrastructure and ability to handle increasing visitor numbers.

“Due to the low infrastructure and lack of collaboration and vision from the government, Sihanoukville has no capacity to give a satisfactory activity or traffic to all of the hotels and casinos in town. Casinos are always popular, but you need the surrounding infrastructure in order to attract the customer,” he adds.

The government, however, says that it is not reluctant to invest in infrastructure, but does welcome investment from the private sector. “Under the leadership of founder and group chairman Dato' Alan Lim and his team of top management members, SV International has set up a business strategy by building up a solid and diversified business development under the concept of resource integration and capital operations,” says Ros Phirun, spokesman for the Ministry of Economy and Finance. “We not only welcome investment from SV International, but every investor,” he adds.

Cause for concern

Other concerns are bubbling away under the surface, too. Many of the Sihanoukville casinos offer online gambling platforms that cater to Chinese punters looking to skirt the mainland’s ban on gambling. The websites are predominantly run by third parties out of hotel bedrooms during the off season – under Cambodian gambling law the sites have to use a bricks-and-mortar casino’s license. Last October, however, 168 Chinese nationals were arrested on suspicion of using an internet-based telephone system to extort money from victims back in China.

The result? Chinese investors, workers and tourists fled, taking their money with them and putting a major dent in the town’s gambling industry. Queenco was hit particularly hard, with existing and future business deals collapsing, causing the operator to shut down its casino after losing hundreds of thousands of dollars. And while a small number of Chinese workers, tourists and investors are slowly returning to Sihanoukville, the majority remain spooked and reluctant to part with any more money until laws and regulations have been tightened-up.

Gini says the law surrounding online gambling simply isn’t clear, but expects the government to clarify regulations and allow online operators to legally register their businesses in the future. In the meantime, however, where the Chinese see uncertainty, SV International and other casino operators in Sihanoukville see untapped potential. And when it comes to the mysterious Malaysian firm, SV International seems to be putting its money where its mouth is –for the time being at least.

But Gini remains far from convinced that this alone will be enough to transform Sihanoukville into a global gambling mecca. “Government support and assistance will be essential for the success of this project. Without a strong international airport, first-class infrastructure of roads and architectural masterplan for the city, combined with strong security and police presence, and of course high quality services and general hygiene, this plan (from SV International) will have no future.”

So while the ambitious goal of turning Sihanoukville into the Macau of Southeast Asia is certainly within the realms of possibility, the industry is right to remain cynical as to whether SV International is able to pull it off.

 

 

   

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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