This article first appeared in Forum, The Edge Malaysia Weekly on May 1, 2023 - May 7, 2023
The Sarawak state government has a shopping list that spells out its strategic investment objectives: It wants a commercial bank and is eyeing the takeover of Bintulu Port. And recently, it broached the subject of getting a licence to build a casino in the state to boost tourism.
The state already has a stake of just below 5% in Affin Bank Bhd and is poised to increase its interest in the financial group to a meaningful shareholding level. The opportunity came about because Affin Bank’s major shareholders have financial troubles.
As for Bintulu Port, Sarawak’s Premier Tan Sri Abang Johari Tun Openg does not hide the fact that he wants to take back Bintulu Port from Petroliam Nasional Bhd (Petronas) and had said that he would negotiate with the federal government on the matter.
With regard to the casino licence, the idea was broached by certain leaders in Sarawak during the long Hari Raya break.
While purchasing a stake in a commercial bank or taking back Bintulu Port are plain vanilla transactions, getting approval for a casino is another ball game altogether.
Such approvals are not based just on commercial terms, but also have social and religious implications.
The current political sentiment is veering towards Islam-centric parties that have the support of the Malay voter base in Peninsular Malaysia. Under such circumstances, it would be hard to fathom why the federal government helmed by Prime Minister Datuk Seri Anwar Ibrahim would give Sarawak the approval to build a casino.
Perikatan Nasional (PN) had a strong showing in the November 2022 general election and Anwar’s Pakatan Harapan (PH)-led government faces elections in six states in the coming months. Out of the six, PH is the incumbent in three state governments.
The prime minister cannot be seen to be overly pliant to the demands of Gabungan Parti Sarawak (GPS), which leads the Sarawak state government. At the same time, he cannot brush off its suggestions, however forward they may seem, because GPS is a formidable partner in the fragile unity government.
With 23 seats in parliament, GPS is a significant bloc of the federal government. After PH and Barisan Nasional (BN), GPS forms the third biggest bloc of members of parliament (MPs) on the government side in the 222-seat parliament.
Anwar needs as many allies as possible because of the potential threat from those wanting to topple his government.
At the next parliamentary session, the issue of Sarawak’s quest for a casino licence could crop up. Nevertheless, Anwar, who is also the finance minister, could easily deflect the question. This is because the matter of a casino has so far only been broached by a state minister.
It has not been touched on by the heavyweights in GPS — Abang Johari and Deputy Prime Minister Datuk Seri Fadillah Yusof.
The idea of a casino was brought up by Sarawak’s Minister of Tourism, Datuk Seri Abdul Karim Rahman Hamzah, last week. Abdul Karim had said that he was open to the idea of setting up a casino in Borneo Highlands, similar to the concept of Genting Highlands in Pahang.
He had said that apart from boosting tourism, the high tax rate that casino operators pay will increase the state’s coffers.
Karim, who is a member of Parti Pesaka Bumiputera Bersatu (PBB) led by Abang Johari, was reported to have had a “casual discussion” with the premier on the matter and even suggested that the state could zone a certain area to set up the casino.
Karim’s statement on Sarawak eyeing a casino was met with opposition from the PAS wing in the state. This was only to be expected but nothing will stop the PAS MPs from bringing up the matter in parliament.
Abdul Karim shot back at his critics, saying that Sarawak belonged to all races and not only Muslims. He also raised the question of why a casino cannot be allowed in the state when gaming outlets were.
Truth be told, if Sarawak were granted a casino licence, it would not guarantee that the state would be reaping millions.
A casino project has to have a viable concept and investors with deep pockets. A standalone casino has very little multiplier effect on the domestic economy. In fact, it can become a social issue.
When Singapore called in bids for the two casinos that have since been built, the winning bidders were prepared to fork out S$6 billion. That is because of Singapore’s draw as a financial hub.
As for Sarawak, not many private groups have the money to splurge on a casino and integrated resort and wait for visitors to flock in before getting the returns — unless the state itself is prepared to finance the development.
Genting group’s casino in Sentosa Island in Singapore was based on a family theme park entertainment-cum-casino concept. The Marina Bay Sands casino, which is located closer to the city centre, is based on a convention and exhibition concept.
The Singapore bids were called in 2007 and cost the winning bidders billions then. The investments have paid off. Today, casinos with an integrated concept to attract families, tourists and businessmen will cost several times more and the gestation period for the payback is much longer.
Moreover, competition is already quite keen. Except for Indonesia and Thailand, every country in the region has issued licences for casinos. Cambodia has a large casino, NagaWorld, which is owned by Malaysian Tan Sri Dr Chen Lip Keong.
In Indonesia and Thailand, there are illegal casinos that attract scores of gamblers. Apart from these illegal casinos, there are cruise ships that offer family entertainment as well casinos for those on board.
In Asia, the gaming hub is in Macao, which attracts the mainland Chinese and those from Hong Kong.
This is not the first time that Sarawak has broached the idea of getting a casino licence. It was brought up in the late 1990s when Tun Dr Mahathir Mohamad was the prime minister. However, it was shot down.
The state can try again. But the federal government under Anwar will be hard-pressed to give in to their demands, if ever a formal proposal is put forward to Putrajaya.
M Shanmugam is a contributing editor at The Edge
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