Genting Malaysia Bhd is currently taking stock of all the consequences of the recent increase in casino license fees and gambling taxes. This is what the gaming and hospitality company announced in a file at Bursa Malaysia.
A budget plan that will shake up all Malaysian businesses
Malaysia’s Finance Minister Lim Guan Eng presented the 2019 budget plan last Friday. Malaysia will push up a few numbers in this budget plan. Malaysia has encountered serious financial problems and growing budget deficit during this year and the year 2017. Therefore, the Minister of Finance has presented a new budget plan which aims to restore Malaysia’s economy. This budget plan will drive up taxes on gaming machines and casinos. Taxes on operations will also increase. The economy is currently in difficulty and its recovery is imperative according to the minister.
This new budget plan therefore explains that casino operators will now pay a tax of MYR 150 million against MYR 120 million previously. This amount relates to the annual license fees. Apart from that, from the 1 stJanuary 2019, land-based casinos will be taxed at 35% on their gross annual income. Precisely, it should be noted that this new budget plan will enter into force from that date. The increase in taxes was mainly observed in the field of slot machines. The operators of these will indeed be obliged to pay 50,000 MYR instead of 10,000 MYR. This latest reform will certainly have an impact on the business of these operators. All their operations will also experience a 10% increase in taxes. They will be taxed at 30% on the annual gross product against a current rate of 20%. Local operators and gambling establishments would do well to prepare for the arrival of these increases which will certainly have an impact on the revenues of these casinos.
Spending analyzes and projections at Genting Malaysia
Reports claim that Genting Malaysia will assess the consequences of this new budget system on the gambling market. This study will include detailed analysis of marketing spend and cost structure. After an effective study, it will be easier to take action on a particular circumstance in order to synchronize a possible increase with the purchasing behavior of the players. Players should not notice the increase in this sector. The goal is precisely to mitigate the imminent impact of this new tax as much on gaming companies as on customers. The Genting Malaysia Group currently operates the integrated Resorts World Genting complex in the country. The property is well located since it was installed on the top of Mount Ulu Kali. The property is located near the capital: Kuala Lampur. The establishment is considered a casino since it is made up of several slot machines. The company had a hot reaction once it learned of the new budget plan. It saw a slight increase with a market capitalization of MYR 20.579 billion or approximately USD 4.9 billion.
The first reports on the potential consequences of this new budget plan were revealed in October following studies by two analysis companies. These analysts asserted that Genting Malaysia will not experience any major negative impact vis-à-vis this increase in the area of taxation. While it is too early to estimate what this change will cause for this great casino, both analytics companies say the casinos will continue to operate. Nomura International and Maybank Kim Eng Research had studied that this giant of the games and the local hotel industry will not experience any difficulty in the face of this reform. Analysts from the two companies mentioned above have pointed out that the opening of the new attractions on the property will help the establishment to prevent any financial problems. The establishment plans to install new attractions in 2019. New Skytropolis and 20th Century Fox World amusement parks with 1,500 hotel rooms and numerous restaurants will be set up. Infrastructures which plan to welcome nearly 30 million visitors in 2020.