Rosy future for PH gaming sector - Fitch Ratings

by Miguel R. Camus, BusinessMirror

Posted at Jan 18 2013 08:45 AM | Updated as of Jan 18 2013 10:14 PM

MANILA, Philippines - The gaming sectors of the Philippines and Vietnam are expected to “ramp up materially” in the next few years as Fitch Ratings reiterated its rosy outlook on the Asia-Pacific gaming sector amid possibly new competition from countries in North Asia.

In a January 16 commentary, Fitch Ratings said Japan and other developed Asian economies would likely come up with gaming liberalization measures although Southeast Asia will still follow a growth pattern akin to casinos in the US over the last 20 to 25 years.

“Gaming expansion tends to be contagious, albeit lumpy, in its trajectory. Passage of gaming initiatives is fueled by multiple years of political backing, competition from nearby markets that results in potential tax dollars being siphoned to other jurisdictions and increased social acceptance,” it added.

“Additionally, we expect the Philippines and Vietnam gaming markets to ramp up materially over the next few years, and South Korea and Taiwan have also been considering gaming liberalization measures,” Fitch Ratings said.

The Philippines is banking on the 120-hectare Entertainment City complex in the Manila Bay reclamation area to draw more overseas gamers, including the coveted and lucrative high-roller or VIP market.

The state-run Philippine Amusement and Gaming Corp. (Pagcor) issued in 2008 four private gaming licenses to three local groups and a Japanese company to build casinos in Entertainment City. The first to open is the Solaire project of Bloomberry Resorts Corp., which is led by Enrique Razon Jr. and is targeted to start commercial operations by March this year.

Opening by licensees of their casinos in Entertainment City will run through 2016. This is seen to help the government meet its goal of hitting 10 million tourist arrivals by 2016 from about 3.5 million in 2011.

Fitch Ratings did not provide any projection for Philippine gaming revenues but CLSA Asia Pacific Markets earlier estimated that revenues would hit $3 billion by 2015, from about $1.3 billion in 2011. Pagcor Chairman Cristino Naguiat said this could rise further to $10 billion in 2016 or 2017 once Entertainment City is operating at full capacity.

Gamblers in the region supposedly would also be attracted to relatively competitive tax rates in the Philippines for VIP players, helping it draw market share away from gaming hubs like Singapore and Macau, which booked $6.3 billion and $33.5 billion in gaming revenues in 2011.

In its recent 2013 outlook report released in December, Fitch Ratings noted that challenges remain for the government in attracting visitors, such as the lack of infrastructure and the regulatory environment.

“Significant investment in airports, ports and roads, which is required to handle the influx of visitor arrivals following completion of the gaming and hotel facilities around Manila Bay, is a pre-requisite for the Philippines to become a major gaming hub,” Fitch Ratings said.

Other players in Entertainment City—a joint venture between Henry Sy’s Belle Corp. and Macau-based Melco Crown Entertainment Ltd.—are Travellers International Hotel Group (a joint venture between Alliance Global Group Inc. and Malaysia’s Genting Group) and Japan’s Universal Entertainment, which has partnered with Robinsons Land Corp.