On the back foot?
Editorial-October 26, 2013, 6:08 pm
The government is clearly on the back foot regarding the controversial casino issue and the decision to review the ill-fated gazette notifications which it had expected to steamroll through parliament last week is clearly the result of three members of the ruling coalition taking a hard line against making this country a casino hub. Neither the JHU, the Sri Lanka Muslim Congress nor Minister Wimal Weerawansa’s National Freedom Front have the numbers to rock the government boat in parliament. No political punditry is required to say that their numbers in the legislature would have been much fewer than now if they had run on their own steam rather than under the UPFA umbrella. Yet it is obvious that the president does not wish to have a confrontation with his allies, however small they may be, at this point of time. Therefore a way out is obviously being looked for.
As we said in this space last week, if big time casino operators are being welcomed to Sri Lanka, the country must tax them properly and not offer sweetheart deals. Dr. Harsha de Silva, the UNP National List MP, who has done yeoman service exposing many details of the casino deal that would have remained submerged but for his efforts, has said that the intended taxes are much lower than in other countries in the region. We do not know whether he is right or wrong but Investment Promotion Minister Lakshman Yapa Abeywardene is on record saying that foreign investors are not crazy to come here without incentives. True, we are not the only girl on the beach. Countries like Singapore which had earlier shied away from the gaming industry have now changed their minds and are earning a pretty penny from tightly regulated casinos. Our track record of regulation is weak at best and whether we will do better this time round is moot.
Backpedaling can prove costly in the matter of attracting the foreign direct investment we badly need. James Packer would not have gone as public as he has on what he proposes to do in Colombo unless he had firm assurances of the deal he was getting. The signs are that this will change, though to what extent we do not know. But Packer has not actually put money on the ground and the physical construction of the `mixed development’ of which casinos will be part had not yet begun. So he will not lose much if he pulls out because the deal is lesser than what was originally offered. Not so John Keells Holdings which has begun demolition work on the properties on which the company’s Waterfront Development Project will stand. The conglomerate had vacated its corporate headquarters at Glennie Street and its people are camping out in offices scattered around the city. The last day for payment on the JKH rights issue, raising a substantial cash tranche to pay for the project was Friday. By all accounts the issue was fully subscribed. Investors, no doubt, factored the casino/casinos this project will host into their calculations on the potential earnings from the Waterfront Development; if there is any radical change of plan such calculations can go awry.
This where the government can or indeed must be faulted. Policy must be clear cut and agreements must both be transparent and honored. There should be no room for changing gears midstream for whatever reason. The arguments that are now being raised against admitting big casino operators are not new. The relatively small casinos that have been around for some years are taxpayers, we are told, although the actual laws under which they operate are a grey area. We have heard it said that entry into these establishments is for foreigners only but the authorities, if they are worth their salt, would well know that locals too patronize these casinos. The various ladies of Chinese and East European descent seen around these places late in the nights and the wee hours of the mornings are perceived to be part of the service they offer in addition to free food and drinks on the house. So nobody should be taken by surprise about the vices that such gaming establishments are likely to spawn. There is now talk that the casinos will be for foreigners only and, according to one report, Minister Weerawansa is comfortable with this arrangement.
There is no doubt that activities like gaming, if easily accessible to locals, will have wide ranging social implications. But gambling is very much a part of the national scene with bookies present in every nook and corner of the country. We banned horse racing in the country decades ago but many of our people back horses and greyhounds in England. Bookmaking is obviously profitable given the number of ``turf accountants’’ we see around our towns and one of them is a government Member of Parliament. Booruwa and asking hitting plus not so surreptitious drinking is common in poor funeral houses. As we pointed out last week, the existing two casino license-holders, one of whom is the Secretary to the Transport Ministry, hold a valuable concession given the president’s declaration that no new licenses will be issued. How the ongoing drama will play out is anybody’s guess. We tilt in the direction that while some cosmetic changes will be made, there will be no radical changes in the decisions already taken. Some of the opposition parties are smelling blood but how potent they will be given the dismal track record of particularly the UNP remains to be seen.
Hypocrisy is an ever-present part of human nature and there is an overabundance of that quality in this island of ours. Despite Mathata Thitha we are among the bigger boozers in the world with an illicit liquor industry going great guns competing with tax paying manufacturers contributing a major slice of government revenue. Liquor is certainly not banned in official entertainment going up to the highest levels and the taxpayer pays for most of it. The UNP whose record on casinos (remember Joe Sim who was sent away after a change of heart?) now sees evil it was blind to in the past. We are building a great many hotels and plan to make tourism a lead industry, if not the lead industry, in the country. All these rooms have to be filled and practical measures, however morally repugnant to some, will have to be taken to ensure the great leap forward. Though not inclined to betting, we’d place our money on the proposition that whatever the changes that will be made to the original plan will be merely cosmetic.
