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No casinos, only mixed development projects

2013 Dec 19

By Sulochana Ramiah Mohan


 
We are not talking about casinos anymore, it’s going to be only mixed development projects for the next four years, Investment Promotion Minister Lakshman Yapa Abeywardene emphasized in an interview with Ceylon Today.
 
Excerpts of the interview:
 
 
Q:
  This interview is mainly to find out the truth behind  casinos in Sri Lanka.
A: Forget about casinos. We are not going to work on any casinos in Sri Lanka.  We are only going to have mixed development projects. At the moment we will not talk about casinos.
 
 
Q:
 Why is that?
A: It’s not the time to talk about casinos, but only mixed development projects.
 
 
Q:
 So, James packer, the casino king from Australia, is not going to have his casinos here?
A: Yes. We are going to have only a mixed development project and not casinos at the moment. We have submitted the Cabinet Paper only for a mixed development project without including any entertainment or other things.
 
 
 Q
: Again, why is that?
A: We only will have mixed development projects and let the constructions go on. After four years (for completion) we will talk about casinos. Till then, it’s just mixed development projects only.
 
 
Q:
 Can you explain what this mixed development project you are talking about is?
A: It’s the hotel, apartments, super dining rooms and all the other main facilities.
 
 
Q:
 But James Packer is vying Sri Lanka for casinos and not just hotels. Am I right?
A: Packer agreed to the mixed development project first. After that, in the future let’s see. Now he is ready to spend his investment on the mixed development project only.
 
 
Q:
 Have you told him so? Did he agree not to have casinos?
A: Yes. We told him about our stance on casinos. We said first we shall have the hotels completed and later on talk about casinos.
 
 
Q:
 There is a rumour that Packer wants to take his US $400 million casino to Myanmar and has given one month as an ultimatum, due to the delay in securing the needed approval. What is the real story?
A: We don’t know. I also read that in the newspapers.
 
 
Q:
 Did not Packer tell you about his frustration and about taking the business elsewhere?
A: No, he told us nothing. He did not discuss anything on that with us.
 
 
Q:
 So, you mean, Packer is completely comfortable that he is not going for casinos in Sri Lanka at the moment?
A: Not yet, I don’t know what the government will say in the near future.
 
 
Q:
 Packer at the Commonwealth summit said he was very confident about his casino empire stretching its wings to Sri Lanka and he has long term plans too. How did he settle with your ‘no’ for casinos at this moment?
A: First step is that Packer agreed to the mix development project. What we are saying is that you invest on the mix development project, and afterwards, we can discuss about how we can develop other activities.  We did not say we are not approving the casino licence or anything of that sort.
 
 
Q:
 When is the mixed development project going to commence?
A: First let the Cabinet Paper be tabled. Then we need 60 days for the public to read it. Then the second Cabinet Paper will come out.
 
 
Q:
 So, can you guess how long it would take to see Packer’s two development projects getting underway?
A: Let the time tell.
 
 
Q:
 There is mounting pressure on the government about having casinos. How is the government dealing with the pressure exerted by the public, mainly the Buddhist monks?
A: There is a major misunderstanding.  
 
 
Q:
 Is your government for casinos?
A: Yes, we are for casinos, but we are not going to issue any new licences. First we have to impose regulations. We passed on the Bill to the Finance Ministry in 2010.  Now the regulations for the casino Bill are being processed by the Finance Ministry. After that we would know the next step.
 
 
Q:
 Lately, we hear there is a casino village coming up in Katana – The Katana City or the Katana casino village. What is that?
A: We have only signed the MoU for the feasibility report.  But the word casino is not mentioned. The project embraces town planning, hotels and entertainments and mixed development projects and so forth. All has been included in the feasibility report and we have only signed the MoU for that.
 
 
Q:
 Doesn’t the feasibility report mention the word ‘casinos’?
A: No.
 
 
Q:
 The government says there are three casino licences and working only with those three licences that are in the possession of big time businessman. Can you explain how these licences will be used ?
A: Sorry, there are four casino licences.
 
 
Q:
 So, is one being given to James Packer?
A: No. Packer is not buying any of these licences.  Businessman Ravi Wijeratne is not going to sell his licence but is leasing it. The leasing should be shifted to the agreement plan. While shifting the licence, he has to comply with the new regulation under which they have to buy a new licence. After the regulations are imposed he will have to buy a new licence. So we are not giving the licence in Packer’s name.
 
 
Q:
 We have been talking about Packer and the casinos, but there is a major delay in the process. Why is the delay?
A: Till the Cabinet Paper is out we cannot start.  We told to forget about the casinos and approve the mixed development projects first.
 
 
Q:
 After four years what will be the plan?
A: Then we will think about casinos and other entertainments.
 
 
Q:
 Will all these mixed development projects come under your ministry? Which ministry will handle the casinos?
A: All come under strategic development and it will come under Strategic Development Act. The investment is more than US$ 200 million. It should come under Strategic Development Act. All normal approvals are granted under Sections 16 and 17 of the Act.
 
 
Q:
 Although Sri Lanka has immense  resources, the number of tourists coming to Sri Lanka is not very striking.  Why can’t we attract tourists in big numbers to Sri Lanka?
A: Last November the Maldives saw 1.1 million tourists. We have had 1.2 million. So we have surpassed them. Spending by the tourists stood at US$ 91 per day last year. But now it has gone up to US$ 107 per day. The revenue has also increased. Due to the war, tourists went to the Maldives but now it’s not the case.
 
 
Q:
 But compared to the Maldives where the hotel rate is about US$ 400 per day, we are too far below with room rates at some US$ 120 per day?
A: That is a real problem. People go there because it’s an isolated paradise. Honeymoon couples go there for that reason and they stay for more than one week. The other reason is that we had the terrorist issue. Now we can gradually look into rates of hotels.  Also there is no entertainment in Sri Lanka for tourists. If you go to Dambulla, after six o’ clock there is no happening. But if you go to Thailand or Malaysia life begins after 6 p.m. Malaysians are more conscious about religion and race, however, they don’t have issues pertaining to tourism and never use the religion for it and they are flourishing with entertainments.
 
 
Q:
 So what should we do?
A: We must have entertainments to attract tourists. There are issues when we talk about entertainments.
 
 
Q:
 Who is to be blamed?
A: It’s the ignorant public backed by the politicians and Non Government Organizations (NGO).
 
 
Q:
 Why do you blame the NGOs?
A: They are hell bent on giving the wrong impression on Sri Lanka.
 
 
Q:
 Why can’t the government curtail such attributions by others?
A: As an investment promotion minister, all what I can do with my capacity, I will do. But there are other ministries who should also work on that.
 
 
Q:
 You say political parties are opposing casinos. Can you explain?
 A: The UNP has been opposing casinos but they are the ones who passed the 1988 Casino Act. President Mahinda Rajapaksa wanted to regularize it without giving new licences.  Even in front of a temple there is a casino, there is also one in front of a school and there is one on the Galle Road. We want to shift all those to an identified area. We are going to do that. There are four casinos in the city and they would be shifted to one place at D. R. Wijewardane Mawtaha. Is that wrong?
 
 
Q:
 Without casinos will we be bankrupt or will we lose big time revenue?
A: A high-end tourist coming in jets… they go to Singapore and Macau.   If a big man comes from another country the local man signs a deal and they run the place. However, that cannot be done here. If you go on like this, investors will not build confidence with us. We should not say one thing today and say another thing tomorrow to an investor. The government cannot do it alone. Even the opposition and the common masses should brave to support us. If you run with an unesy mind then Sri Lanka will not be able to do anything.
 
 
Q:
 Don’t you think casinos will also promote prostitution and other illicit activities in the country?
A: Take Singapore. Do they have such thinking or concepts? Do they have issues with prostitution? They run with fine rules and regulations. They have set margins for the locals and for the foreigners.
 
 
Q:
 Also the huge cry over casinos is that you have relaxed the tax for casinos. Casinos can bring in big revenue whereas you have deals where the rich and the mighty don’t have to pay any tax if they run a casino here. Singapore and Las Vegas generate huge revenue running casinos.
A: We have given tax concessions for mixed development projects and not for casinos. The 450 apartments, super dining rooms and other non gaming facilities will bring in VAT and service charges, and the area for casinos will be in the premises. We have to do that.
 
 
Q:
 Do you sense difficulties in bringing foreign investments to Sri Lanka?
A: There are no difficulties. There was a 41% increase in foreign investment last year. By last November we had US $ 670 million in investments. By November 2013, it has gone up to US $ 880million and by end of this year 41% will increase to5.5% growth in investment. If Packer had come as he planned our target would have been US$ 2billion. We missed that due to the protest and other technicalities behind Packer’s casino deal.
 
 
Q:
 What is in store for us in terms of investment for 2014?
A: With the Commonwealth summit we have signed for US $ 1.3 million – a project called Colombo City Harbour.  We have signed a deal worth US $ 500 million with an Australian. All that amounts to nearly US $ 2.5 billion and that was our target.
 
 
Q:
 What is happening with the Shangri-La hotel chain project? We see billboards saying Shangri-La is coming up by 2015, but there is no sign of a construction?
A: They have the action plan and will commence the project in 2014.
 
 
Q:
 What’s the reason for the delay?
A: They said they are starting in 2014 and the hotel will be completed within 1 ½ years.
 
 
Q:
 What about the Hambantota Shangri La hotel?
A: The work has commenced there.
 
 
Q:
 There were many issues pertaining to the Shangri-La land and the pipeline issues in the Colombo land? Has all that been sorted out?
A: Our ministry has given the green light. But the action plan, they said, will be given to us in January 2014.
 
 
Q:
 What is this action plan?
A: It explains the plan of how to finish the hotel in 1 ½ years beginning in 2014. We are waiting for the action plan.
 
 
Q:
 Why didn’t they give it to you all these while? There is a delay of about two years or more in the project?
A: We got the land near the Army Headquarters close to the Galle Face green for them. Matters regarding electricity, water supply and all that were sorted out for them.
 
 
Q:
 So it took all that while to clear the above issues. I ask so because investors don’t like to be kept waiting?
A: Partly yes, and partly because, they will give us the action plan, to start work only in January 2014. The project time frame is till 2015 and it is for them to deliver it somehow by 2015. So they are at it. We have obtained FDI US$ 128 million and the balance US$ 350 million is remaining and they have to show us that amount too.
 
 
Q:
 Can you elaborate on the mega Krrish project that was to begin work some time ago?
A: They have paid 84% for the value of the land.
 
 
Q:
 Why is the delay in commencing the mega condominium project?
A: They have an internal dispute, I hear. They have to still pay the balance 16% and due the delay of settling the 16% balance, a 12 % interest has been calculated for them beginning from last year. It’s a big amount. From last year they are entitled to pay the interest and it is amounting to a big sum.
They have to settle 600 million Sri Lankan rupees and due to the delay they are now entitled to pay us 12% interest.
 
 
Q:
 What if they cannot continue paying the interest?
A: We will not lose a penny. They have paid for the land. If they don’t finish by 2015, we would retrieve our land. Thereafter, we would negotiate if they want to continue with the deal. We will hold discussion if we would like to give it to Krrish or not and that is in our hands.

 

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