Foreigners trying to invest in casinos against law of the land
KATHMANDU, MAy 01:
Following the shut down of all casinos in the country from April 20, sources say that foreign investors are in the capital to persuade the authorities to let them run the gaming business though law prohibits any foreign investment.
Confidential sources say they are either misguided by the new Casino Rules 2013 or trying to illegally invest in business by using Nepali citizens.
Though the rule has opened the door for foreign investors but the Foreign Investment and Technology Transfer Act and Industrial Enterprise Act clearly says casino is not recognized as an industry, which entails that no foreign investment will be permitted in a non- industry.
“The law has no provision of issuing investment license to the foreigners,” Chief of Foreign Investment Section at Department of Industry Bipin Rajbhandari said. “But some interest groups have been pestering us not bar foreign investment in casinos.” However he would not disclose the identity of such groups.
“Some agents of foreign investors are trying to pressurize the officials,” sources at the department said.
Some domestic casino operators, meanwhile, say that they smell rats behind the new casino rules as they were prepared without even consulting them.
Owners of illegal-declared casinos cite a provision in the new rules that allows foreign investment in the sector, though the provision clearly contradicts the other laws governing investment.
Talking to this daily, Ranjan Krishna Aryal, joint-secretary at the Ministry of Tourism and Civil Aviation (MoTCA) said that irrespective of the new rules, only the Department of Industry can permit foreign investment. He looks after the legal department of the MoTCA.
Last week, Tourism Minister Bhim Acharya had told Republica that the government brushes aside ruckus about the new rules since even the casinos which have been shut down were owned by foreigners directly or indirectly.
He added that though the Nepalis were investors in the paper, the real investors were foreigners.
Meanwhile, sources have confirmed that Y Tech Company, a Malaysian firm that operated Casino Shangrila in joint venture with Nepali company Star Management, a Nepali company, has again shown interest to invest in the casino.
However, it is not yet clear how the Malaysian company came to invest in joint venture with Nepal Recreation Centre (NRC) owned by Rakesh Wadhwa, an Indian citizen, back in 2008.
Later in 2010, the company formed a joint venture under a new management after the permission of NRC was scrapped by the government.
Pravin Pandey, promoter of Shangrila Hotel, claimed that the Malaysian company had taken permission from the DoI and MoTCA.
The Malaysian company had walked out after new regulations got endorsed in July last year, citing a provision in the law that doubled the annual royalty, besides labor problem.
Pandey said that the Malaysian company left the business finding no business sense after the new law was enforced. The annual royalty was increased to Rs 40 million from Rs 20 million.
Casino business was introduced by R D Tuttle, an American citizen in 1960s and was later taken over by Wadhwa until 2010. Wadhwa fled to India in 2010 after the Nepal Police issued arrest warrant for evading taxes.
Thereafter some Nepalis, mostly the employees of the casinos, accepted the accumulated taxes and started to run the businesses themselves.
Kishor Silwal, president of the Casino Association of Nepal, said that they had to argue with the official of MoTCA as to why the Nepalis cannot own and run the casinos after the turmoil in the casino business after the owner fled.
Casino business was started back 47 years, for the royal family and by the decree of royal family. But there was no separate law to govern the business until last years´ casino rules.
Source: Republica
