From December 1 this year Vietnamese who can show a minimum income of VND10 million (US$440) a month can gamble in casinos.
Circular No 102/2017, issued by the Ministry of Finance in early August to guide Decree No 03/2017 on casino businesses, lifts the ban on Vietnamese entering casinos that is in place now. Only foreigners are currently allowed into the country’s casinos.
Once the ban is lifted, to enter people must also prove they are over 21 years old.
As for the income, they have to show it is taxable at level 3 or higher or have certified copies of a lease agreement showing they receive rent of at least VND10 million a month or a bank statement showing interest income of that sum.
Since 1992 the Government has been acknowledging that casinos would help attract tourists and bring revenues.
This resulted in the first casino appearing in 1994 in the beach resort of Do Son in Hai Phong.
Now there are eight casinos and more than 50 electronic gambling facilities nation-wide.
The new circular is expected to encourage the opening of casinos around the country, especially in special administrative-economic zones like Van Don in Quang Ninh Province, Bac Van Phong in Khanh Hoa and Phu Quoc in Kien Giang.
In Van Don, the province people’s committee has licensed real estate developer Sun Group to build a US$2 billion luxury resort-amusement complex with a casino on 2,500 hectares in the special economic zone.
Both Quang Ninh and Kien Giang provinces want the Government to choose casinos in their locality to trial entry for Vietnamese.
Other provinces, including those without special economic zones, also want a piece of the action.
The Thua Thien-Hue Province People’s Committee has sought permission to increase the charter capital of the Lang Co Laguna Project from US$874 million to US$2 billion and open a casino.
The new circular has attracted some public criticism, with people saying the regulations limiting entry based on income cannot be enforced since it is difficult to prove income.
To gain entry, a person has to be paying income tax at level 3 or higher, but in Vietnam 70% of payers are assessed at level 1.
Others said the daily maximum gambling limit of VND1 million is too low to attract high income earners and help the Government achieve its revenue target.
Meanwhile, the existing casinos are operating at just a third of their capacity and claim to be losing money.
The Hoang Gia International Construction Investment Joint Stock Company said its casino business made a gross loss of VND35.8 billion last year and a net loss of VND101 billion in the first nine months of this year.
Analysts blame this on the rapidly growing competition, with more and more casinos fighting for fewer gamblers from overseas, most of them from China and Taiwan.
Vietnamese gamblers usually cross the border into Cambodia, where many casinos target them.
The Government’s decision to lift the ban is expected could not have come sooner for the casinos.
Exporters fret as foreign currency loans set to dry up
The circular that allows the extension of foreign currency lending to enterprises involved in export activities will expire in a month.
Economists are concerned this could affect borrowers.
Last November the State Bank of Vietnam (SBV) issued a circular amending and supplementing some articles in an earlier circular guiding lending in foreign currencies.
This allowed enterprises with short-term foreign currency requirements for their production and export activities to continue borrowing in foreign currencies until the end of 2017.
Interest rates for foreign currency loans are only around half the on dong loans.
They are currently at 2.8%-6%.
Interest rates for non-priority đồng lending stand at 6.8%-9% for short-term loans and 9.3%-11% for long- and medium-term loans.
Exporters are understandably worried they would lose this big advantage from next month.
Analysts fear there will be a double whammy for exporters. Firstly, their costs will shoot up, hitting their bottom line. Secondly, demand for dong loans will go up sharply, pushing up loan interest rates even higher, particularly at banks that have liquidity issues.
The situation is predicted to become quite dire since growth in foreign currency lending is on an upward trend.
In the first nine months of this year credit growth was 12.9% compared to 5.4% a year earlier.
Export enterprises pointed out that if they have to borrow in dong to finance their operation costs would rise significantly, affecting the competitiveness of their goods.
They wanted the central bank not to have a one-size-fits-all policy since export enterprises’ business strategies are very different from those of other businesses.
But economists justified the SBV’s policy saying the increasing demand for credit means dollarisation of the economy is a real threat and could undermine the Government’s anti-dollarisation efforts.
To preclude this, it is necessary to switch completely from lending and borrowing the greenback to buying and selling it.
Others said, however, that to do this there should be flexibility in exchange rates and businesses must be allowed to freely buy foreign exchange when they require.
Moody’s upgrades VN banking outlook
Moody’s Investors Service has upgraded the outlook for Vietnam’s banking system to “positive” for the next 12-18 months from “stable”.
According to a statement from the credit rating agency, the Vietnamese banking system’s positive outlook reflects strong economic prospects, with the banks’ operating environment benefiting from robust economic growth, based on ongoing improvements to infrastructure, favourable demographics and the Government’s continued focus on reform to support foreign direct investment.
But it also warned Vietnam of rising asset risks as the nation boosts credit growth to drive the economy.
Rapid credit growth will continue to erode capital buffers and capitalisation will deteriorate as the banks struggle to replenish capital against rapid loan growth, it warned further.