Published : 2014-03-19 19:41
Updated : 2014-03-19 19:41
The Korean government has taken a cautious first step toward opening the domestic casino market to foreign operators. On Tuesday, it approved for the first time a proposal from a foreign company to operate a casino here.
The government’s decision is welcome as it will give a big boost to the domestic tourism industry. Korea needs to open up its casino market to attract much-needed foreign investment in the tourism sector and expand its tourism infrastructure.
The company given the Korean government’s blessing was LOCZ Korea, a joint venture between Las Vegas-based Caesars Entertainment and Indonesian conglomerate Lippo Group.
LOCZ Korea proposed to invest a total of 2.3 trillion won to build an integrated casino resort on Yeongjongdo Island, part of a free economic zone and the location of Incheon International Airport, by 2023.
In the first phase of the project, it will invest some 750 billion won to build a casino, a hotel, a shopping mall and a convention center by 2018. The Korean government will give the company formal approval to operate the casino after confirming that it has completed the first phase as planned.
If the resort is built as envisioned, it will provide substantial economic benefits to Korea. The first-phase construction alone will create some 8,000 jobs. If the casino goes into operation, it will directly hire 2,100 people. From 2020, tourism revenue from the casino is expected to reach some 890 billion won a year.
Whether the casino resort succeeds or not will depend on its ability to attract wealthy individuals from China. To lure affluent Chinese customers, it needs to compete with other casinos in the region.
In recent years, a growing number of Asian countries, including Malaysia, the Philippines, Vietnam and Japan, have started to see casinos as a tourism development strategy, all inspired by the success of Singapore.
The city state has witnessed a sharp increase in tourist arrivals and tourism revenue following the opening of two luxurious casino resorts, Marina Bay Sands and Resorts World Sentosa, a couple of years ago.
When it comes to attracting Chinese gamblers, Korea enjoys geographical advantages as Incheon International Airport is a two-hour flight from many major Chinese cities.
But Korea needs to make Yeongjongdo Island a regional gambling hub in order to win the intensifying competition to lure Chinese tourists. For this it will have to build more high-class casino resorts around the airport.
In promoting the casino business, the government is highly cautious, given that it is still regarded here as an industry of social evil. Many express worries that opening the casino market may increase addiction to gambling as foreign investors will ultimately demand that Korean citizens be admitted to their casinos.
The government needs to address these concerns before attracting more foreign investment.
Yet while worries about the potential side effects of promoting the casino business are warranted, it is not wise to turn a blind eye to the contribution that it can make to the development of the tourism industry.
If Korea becomes a regional gambling hub, the economic benefits will be enormous. Last year, the aggregate sales turnover of the casinos in Macau hit 47.3 trillion won, seven times that of Las Vegas. Singapore also earns more than $6 billion a year from its two casino resorts.
So the challenge for the government is to make sure that the positive effects of the casino business on the tourism industry are maximized, while its potential negative impacts, such as the inflow of speculative money and gambling addiction, are minimized.