Sri Lanka Targets Wealth In Singapore-Style Casino Push
09 October 2013
Posted by: Author: Anusha Ondaatjie
Author: Anusha Ondaatjie (Bloomberg)
Louise Fernandez has visited Sri Lanka about five times in the past decade, drawn by its white sandy beaches, tea plantations and historic temples. The South Asian island is about to give her more reasons to return.
Sri Lanka’s parliament is due to approve in coming weeks a tax amnesty for the island’s first foreign casino venture, a $350 million investment backed by Australian James Packer’s Crown Ltd. (CWN) The 400-room waterfront project will join a growing lineup of luxury Colombo hotels, including a $400 million beachfront Shangri-La, the Taj group’s upgraded five-star Samudra Colombo, and a John Keells Holdings Plc. gaming resort.
"I’ve been coming back to Sri Lanka for its beaches and cultural heritage sites,” Fernandez, a 42-year-old Mumbai resident, said while shopping with her daughter and husband at Odel, a department store in a wealthy Colombo enclave recommended by the Lonely Planet as a place to shop with the glamorous. "Casinos will be another reason.”
For decades a destination for backpackers, religious pilgrims and beach lovers, Sri Lanka is building high-end hotels and casinos to woo wealthier tourists from India and China as it seeks to emulate the success of Singapore and Macau. The push is part of a drive to spur an economic revival after the government ended a 26-year civil war against the separatist Tamil Tigers in 2009, and takes aim at the growing affluence of Asian travelers.
Sri Lanka’s lawmakers will debate and pass an order to give a 10-year tax exemption to the Crown venture in the D.R. Wijewardena Mawatha waterfront area close to the capital’s financial district, according to the parliament office, which had earlier said the decision was due today. A gazette on the project was submitted to the legislature yesterday and a date for the debate will be set later, said Anil Hewawasam, principal officer of the parliament’s table office.
Australian billionaire Packer’s gaming resort, which will also include fine dining restaurants, could almost double Sri Lanka’s tourism revenue to $1.7 billion a year, according to Capital Alliance Ltd.
"This is what Sri Lanka tourism needs: mega projects bringing in a new brand of tourists,” said Sanjeewa Fernando, an analyst at CT Smith Stockbrokers Pvt. in Colombo. "Tourism revenues will be driven up and it’ll bring in relatively richer tourists. Just like with the casinos in Singapore, the Crown project will b
There is a growing market. Wealth among Asia-Pacific millionaires may top North America’s as soon as next year, according to a report published last month by Cap Gemini SA (CAP) and Royal Bank of Canada. Asians with at least $1 million in investable assets are set to see their riches climb to $15.9 trillion by 2015, the 2013 Asia-Pacific Wealth Report says. ring Sri Lanka tourism to a new phase.”
There is a growing market. Wealth among Asia-Pacific millionaires may top North America’s as soon as next year, according to a report published last month by Cap Gemini SA (CAP) and Royal Bank of Canada. Asians with at least $1 million in investable assets are set to see their riches climb to $15.9 trillion by 2015, the 2013 Asia-Pacific Wealth Report says.
Hong Kong-based Shangri-La Asia Ltd. is building an upmarket resort on Colombo’s main "Galle Face” beach front. Taj Hotels Resorts and Palaces is spending $21 million to upgrade the Samudra Colombo to be on par with its luxury brand of hotels, according to Sujit Samant, director of sales in Sri Lanka.
The government in July offered tax concessions for a more-than $650 million integrated resort by John Keells, Sri Lanka’s biggest diversified company. Located across the Beira Lake from the Crown project, it will include a luxury hotel as well a shopping mall and gaming and entertainment facilities, according to a government gazette. The tax breaks are also due for parliamentary approval in the coming weeks.
"Sri Lanka (SNGPYOY) was, on account of its problems, off the radar, and now it is on the radar,” Vikram Madhok, managing directorof luxury travel company Abercrombie & Kent India Ltd., said in New Delhi. The company has entered a joint venture in Sri Lanka.
Sri Lanka is a latecomer compared with other Asian destinations, after years of conflict put off risk averse visitors and hampered infrastructure development.
Macau, which is half the size of Manhattan, earned $38 billion in casino revenue last year, six times more than the Las Vegas Strip. The city is the only place in China where casino gambling is legal and it gets two-thirds of its gaming revenue from high-rollers.
In Singapore, Las Vegas Sands Corp. (LVS) and Genting Singapore Plc (GENS) poured more than $10 billion into the two gaming resorts that opened in 2010 after the country lifted a casino ban. The nation’s economic growth surged to a record of almost 15 percent that year.
Sri Lanka isn’t alone in planning to follow Macau and Singapore. A Japanese lawmakers group plans to submit a bill with the aim to legalize casinos.
The South Asian nation risks falling behind if its tourism projects are delayed, said Bimanee Meepagala, a Colombo-based analyst at NDB Aviva Wealth Management Ltd.
"Sri Lanka is facing tough competition in this spectrum,”she said. "We’ve got to get the product out fast, as our economy can’t afford delays.”
The government is pushing ahead even as local newspapers reported criticism for the Crown-backed project from the main opposition party, which is cited as being against tax breaks for gaming operations.
Services accounted for about 59 percent of Sri Lanka’s gross domestic product in the second quarter. The nation’s $59 billion economy is forecast by the government to grow 7.5 percent this year.
Elsewhere, Australian consumer confidence slipped in October, a private report showed today. Industrial production inthe U.K. fell from a month earlier in August. In the U.S., President Barack Obama will nominate Federal Reserve Vice Chairman Janet Yellen to head the central bank, a White House official said in an e-mailed statement.
Integrated resorts like Singapore’s can help Sri Lanka attract more tourists, according to Purasisi Jinadasa, an analyst at Capital Alliance in Colombo. The Crown project could help the island attract a targeted 2.5 million visitors by 2016, he said.
A market is close at hand in India, where laws limiting gambling make Sri Lanka an attractive venue for tourists like Fernandez.
Tourist arrivals in Sri Lanka, one of Conde Nast Traveller’s destinations to watch in 2012, rose 17.5 percent to a record 1 million last year. Arrivals climbed 14 percent to 711,449 in the eight months through August from a year earlier, according to the tourist board. Visitors from India, Sri Lanka’s biggest market, increased 29 percent in August from a year earlier, and those from China jumped 74 percent.
Jetwing Travels, a unit of the island’s biggest resort operator, started employing Chinese nationals as tourists from the East Asian nation surged, said manager Tharindu Punchihewa. Some of these visitors are arriving on private jets, he said.
"We have seen a development in the individual travel segment, with families that don’t want to join groups, but are willing to spend more for better hotels and comforts,”Punchihewa said. "With branded hotels and the casino project, Sri Lanka can tap the high-end traffic.”
To contact the reporter on this story: Anusha Ondaatjie in Colombo at firstname.lastname@example.org
This article first appeared in bloomberg.com.