Vietnam-based FLC suggests move into casino sector

Vietnam-based FLC suggests move into casino sector

Thursday, September 21, 2017 Posted by Craig Davies
Analysts have greeted the plans with scepticism

Real estate developer FLC Group, based in Ho Chih Minh City, has unveiled plans to expand into the casino and aviation industries.

In a bid to capitalise on Vietnam’s burgeoning tourism industry, Nikkei Asian Review has reported that FLC is expanding its business after years spent focussing on tourist resorts.

Chairman Trinh Van Quyet, in Tokyo pitching to investors, outlined the vision which would see a casino resort developed in Quang Ninh Province.  An area of Northern Vietnam where a 20 square kilometre site has already been acquired and is also home to UNESCO World Heritage listed Ha Long Bay, the appeal of which Quyet outlined by saying:  “Thanks to its long coast line, Vietnam's tourism industry has huge potential."

Explaining the group’s strategy of going after less developed areas, Quyet added:  "Since our group is a latecomer to the real estate market, we chose areas [that were] remote from big cities.

"Especially, we have focused on areas that could lure tourists but were untapped.”

An issue addressed by FLC’s expansion into the aviation industry with Bamboo Airlines:  "We want to have direct flights from overseas to areas where we have resort facilities," Trinh commented.

Operations for the airline venture are slated to begin in 2022, and talks with Boeing and Airbus over aircraft purchases have already taken place.  FLC will also consider renting commercial planes before that year.

Behind the plans is a desire to capitalise on an increasing influx of foreign visitors to the country, with government statistics showing a 30% increase to 8.47 million for the first eight months of this year compared to last.  A figure added to by the World Tourism and Travel Council, who state Vietnam’s gross product will grow almost 90% to $34.6 billion in 2027 from $18.6 billion last year.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said.  "It is not surprising that FLC is stepping into the two new sectors as the group has defined itself as a multi sector enterprise. Investing in casinos and airlines is in line with FLC's business."

However he also pointed out that the young group "will face difficulties in finding sources of financing as the required capital investment will be very large."

Totally Gaming says: Analysts and market observers are issuing caution on the plans, pointing to the group’s relative lack of experience in managing a multi sector group. This is a point Bach An Vien, head of market strategy and finance at KIS Vietnam Securities, highlighted:  "The expansion plan of FLC is rather ambitious because casino and aviation are relatively new fields for Vietnamese enterprises. They require large initial capital investment as well as experience of running new projects."

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