Foreigners may be encouraged to open casinos
By Park Si-soo
The government is considering legal changes to make it easier for overseas investors to open foreigner-only casinos in the country’s free economic zones.
While officials at the Ministry of Knowledge Economy claim the move could hike foreign investment, critics claimed this would unduly favor foreign capital and called for deregulation for domestic investors as well.
There are 17 casinos but Kangwon Land in Jeongseon, Gangwon Province, is the only one that allows entry to Koreans.
Current laws require foreign investors to make an investment of at least $300 million up front to build a hotel or convention center in a free economic zone before seeking permission to open a casino.
The ministry is considering rewriting the rules to allow foreign investors to apply for casino approval after paying a deposit of $50 million to the Ministry of Culture, Sports and Tourism. The ministry will have 60 days to decide whether to license the investor or not. A licensed candidate will be required to make an additional investment worth $250 million to secure permanent approval.
Approval could be withheld should the foreign casino operator break the mandatory commitment of making an additional investment worth $500 million during the first two years of operation, according to an official at the knowledge economy ministry.
“Basically this is to boost inbound investment,” he said. “The existing law has drawn a flurry of complaints from overseas investors, particularly those who know about the potential of the country’s casino business.”
The moves for deregulation gained momentum after President Lee Myung-bak blasted Cabinet members during a marathon meeting at the presidential office earlier this month, accusing them of passiveness in introducing new policies to boost foreign investment.
Lee described casinos as an effective means to lure foreign investors to free economic zones. Officials said Lee believes they will serve as tourist attractions and create new ways to earn foreign currency.
Only two days after the meeting, the knowledge economy ministry and other relevant state bodies unveiled a draft for the revision. But it was about foreigner-only casinos.
Casino gaming is still a taboo in Korea ㅡ local laws prohibit Koreans from entering most casinos. There are enough reasons for the restriction. Policymakers and activist groups are voicing concerns about the negative side effects of casinos, such as compulsive gambling, money laundering and loan sharks. Opponents cite Kangwon Land as a good example.
Opening a casino for the local population has become a “hot potato” here after several operators of integrated resorts, including those who have already invested in Macau and Singapore, have indicated their willingness to invest in Korea. They claim that Kangwon Land failed because it lacks nearby non-casino facilities.