Thursday, 19 December 2013 01:09
Government’s separate gazette on three Integrated Super Luxury Tourist Resorts excludes casinos/gaming but refers to “associated facilities” and luring high spending tourists
Officials say when new gaming licensing regime is in place casinos will be operative
Analysts say without gaming integrated resort,biz model isn’t viable
All three enjoy 10-year income tax holiday; partial exemption period reduced to 12 years for Packer-Ravi Wijeratne’s Crown Colombo/Lake Leisure Holdings; JKH’s Waterfront and Dhammika Perera’s Queensbury get three more years
VAT relief limited to project implementation period only
Confusion and chaos was the order yesterday within the leisure and entertainment industry as well as the Parliament following the gazetting of three integrated resorts involving two of Sri Lanka’s famous corporate names as well as a world famous gaming mogul.
As exclusively reported by the Daily FT, the Government on Tuesday released three separate gazettes approving three multi-billion rupee Integrated Super Luxury Tourist Resorts (IRs) – Waterfront Properties Ltd., with a total investment of $ 650 million, Queensbury Leisure Ltd., by business leader Dhammika Perera with an investment of $ 300 million and Lake Leisure Holdings Ltd., by world gaming mogul James Packer’s Crown Resorts and local partner Ravi Wijeratne, with an investment of $ 350 million.
The gazette figures partly differ from original announcements made by the Government as well as individual firms whilst there was an explicit omission of casinos or gaming activity as well.
The approval sans omission of wording casinos or gaming prompted the Opposition to cry foul yesterday in Parliament. Whilst Deputy Investment Promotion Minister Faizer Musthafa told Reuters that these integrated resorts won’t have casinos, the vocal UNP MP Dr. Harsha de Silva charged in Parliament asking Government MPs why the State was misleading the country and taking people as fools.
Government campaigner for IRs, Investment Promotion Minister Lakshman Yapa Abeywardena who issued the gazette notification, didn’t respond.
The blistering attack from the UNP as well as stiff opposition from the clergy however is on the premise that IRs so approved do include gaming/casinos though the Government didn’t have the backbone to say so.
Industry analysts expect greater clarity on this contentious issue because they are of the view that without gaming the proposed IRs business model doesn’t become viable at all. This position has caused concern within the business and investment community as well as leisure and entertainment industry which have welcomed the promotion of gaming.
All approved Integrated Resorts (IRs) referred to will have star class rooms, high-end shopping malls, residencies office/service spaces with “associated facilities”. The latter prompted some analysts to speculate just an implication of the inclusion of gaming or casinos but this couldn’t be confirmed.
“The applications are for mixed development projects, which include convention centre, shopping malls, and five-star hotels,” Mustapha told Reuters.
“This gazette notification has no mention about a casino anywhere. So it doesn’t deal with running a casino, operating a casino, or approving a casino.”
However, he said there was a separate mechanism for operating a casino in Sri Lanka and government policy was not to issue any new casino licences, but to allow existing approvals to operate under regulations passed in 2010.
The three IRs have been proposed for Strategic Development Project Act status given the fact that they attract strategic importance in view of the substantial contribution. The key emphasis is promoting tourism which attracts a high priority in economic development as per the development strategy of the Government.
The three IRs combined entail a direct overall investment of $ 1.4 billion including $ 850 million in foreign direct investment as well as generating over 8,000 jobs and bringing in substantial foreign exchange earnings.
Crown/Lake Leisure has been given four years from the date of agreement signed between the BOI and the project company to bring in the FDI whilst JKH’s duration is five years, and three years for Dhammika Perera.
JKH has already raised Rs. 13 billion via a Rights Issue to part finance the project. Its share price yesterday gained by Rs. 1.40 (+0.6%) and on the strength of the gazette notification will continue to work on the project. All three IRs await Parliament approval, which is expected to be in early 2014.
Given strategic importance, a slew of concessions have been approved (see table) for all three IRs including a 10-year corporate income tax holiday whilst partial tax exemptions thereafter have been reduced to 12 years for Crown, whereas JKH and Dhammika will enjoy three years more. VAT relief will be confined to goods and services of project related during the project implementation period only.
JKH’s Integrated Super Luxury Tourist Resort will include high-end shopping malls and high quality residencies and office spaces/service spaces with associated facilities at Glennie Street/Justice Akbar Mawatha, Colombo 2.
Dhammika’s Integrated Super Luxury Tourist Resort will consist of 500 rooms including high-end shopping malls, high quality residencies and office spaces/service spaces with associated facilities at D.R. Wijewardena Mawatha, Colombo 10.
Packer/Ravi Wijeratne’s Crown Colombo Integrated Super Luxury Tourist Resort consists of 400 rooms including high-end shopping malls, high quality residencies and office spaces/service spaces with associated facilities at D. R. Wijewardena Mawatha, Colombo 10.
Packer said in a speech at a Commonwealth forum last month said he believed the Indian Ocean island nation could be turned into a leading tourist hotspot for the rising middle classes of India, China and the rest of Asia.
Government officials have told Reuters that two Sri Lankan entrepreneurs have five casino approvals among them. Packer’s Sri Lankan partner Ravi Wijeratne owns two and Dhammika Perera owns three, they have said.