Wednesday, 1 October 2014

 NagaCorp and Bushy Institute

“Naga…is still experiencing notable growth in revenue and we expect it to continue to do so going forward.”

Grant Govertson, a principal analyst at Union Gaming Research Macau, 24 September 2104, The Cambodia Daily

“If NagaWorld does not comply with the Ministry’s instructions [that it must rebuild the gate to its original form], the Ministry will rethink and decide accordingly.”

Minister for Cult and Religion Min Khin, Letter to NagaWorld, 5 May 2014

“Bringing a horse to exchange for a horse is good policy for the government. At the end, a horse is still a horse. We did not lose anything.”

Premier Hun Sen on building and land swapping metaphor, 9 February 2012

“Besides the work of the Buddhist Institute, the Ministry of Cult and Religion has budgeted for building repairs and renovations, and for a new four or five floor building on the Buddhist Institute location to carry out programs connecting Buddhism to society, to provide halls for training Ajars, offices, which are long term objectives in accordance with the government’s guidelines.”

Ministry of Cult and Religion, Public Announcement, 17 September 2014

NagaCorp shareholders are laughing all the way to the bank. The company that runs its flagship NagaWorld in Phnom Penh rakes in a net profit of 40.6% of revenue in 2013. The shareholders investment has grown 8.4 times since 2009 with an annual average growth rate of 53%.

The jaw-dropping profitability is likely to continue. NagaCorp holds a 70 year licence running through 2065 that includes a 41 year monopoly within a 200 kilometre radius of Phnom Penh. It pays no taxes on income or gaming revenue, besides a fixed fee of $5.1 million in 2013, amounting to a mere 1.5% of total revenue.

So how does NagaCorp manage to secure such a sweet monopoly that will last for so long? It cannot be a questionable mental health of government decision makers. If it were, they would be locked up in an asylum, not running Cambodia for decades.

It must be then that their brain is tainted with financial incentives that are undisclosed. NagaCorp is clever enough not to reveal anywhere what they pay for the numb brains. Or more likely, they could give those decision makers, or their proxies, parcels of shares the value of which will grow in concert with their push for NagaCorp profits.

Nevertheless, NagaCorp proudly lauds its contribution of over $530,000 in 2013 to its claimed long-standing and strong partner Cambodian Red Cross. It doesn’t care that the partner has not publicly recorded the donation anywhere, or what the partner does with it.

What NagaCorp does care about is ensuring on-going fortunes for its shareholders.  It is so confident of business successes that it has begun planning Naga3, though it won’t complete the current $369 million Naga2 until 2016. Naga3 is a further expansion into hotel businesses to be located where the Buddhist Institute (BI) currently sits.

Hence, will the BI be allowed to stand between local NagaCorp shareholders and piles of cash?

NagaCorp has indeed cultivated a straight flush. Minister Min Khin who runs the BI is very accommodating. He permits NagaWorld to flatten the BI’s main gate, as part of Naga2, to construct an underground carpark underneath the BI. And if NagaWorld fails to rebuild the gate to its original conditions, there may be no repercussion.

Min Khin has already leased 3,000 square metres of BI land for Naga2. It is only a logical progression that Naga3 will be allowed to bulldoze the BI out of its present location. The accommodating minister may sell it, or swap it.

For properties swapping, NagaCorp won’t find any decision maker anywhere more understanding than Premier Hun Sen. He has a simplistic view on property values – they are all the same. Therefore, he is likely to accept NagaWorld’s possible offer of a block of bushland somewhere for the prime BI location. And he will be thrilled if NagaWorld throws in a four-or-five-floor building to keep Min Khin excited about his expansion plan for the BI.

Then the NagaCorp straight flush will turn BI into a Bushy Institute.

Ung Bun Ang

Parthian Shot:

Who runs the Cambodian Red Cross, the recipient of NagaCorp’s generosity, and how they manage their financial affairs? Some of the answers are in “The Dark Cross Cambodia Bears”, Pseng-Pseng, 20 May 2014 at

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(Pseng-Pseng is published on the first, tenth, and twentieth day of every month. Previous issues are archived at

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