Penghu in Lead to Open Taiwan's First Casino

UNCLAS AIT TAIPEI 000717

INFO CHINA POSTS COLLECTIVE
AMEMBASSY BANGKOK 4505
AMEMBASSY CANBERRA 5142
AMEMBASSY HANOI 3716
AMEMBASSY JAKARTA 4418
AMEMBASSY KUALA LUMPUR 4061
AMEMBASSY MANILA 0709
AMEMBASSY PHNOM PENH 0722
AMEMBASSY RANGOON 0541
AMEMBASSY SEOUL 9981
AMEMBASSY SINGAPORE 7562
AMEMBASSY TOKYO 0475
AMEMBASSY VIENTIANE 0187
AMEMBASSY WELLINGTON 2344
AMCONSUL CHIANG MAI 0612
AMCONSUL HO CHI MINH CITY 0469
AMCONSUL SURABAYA 0062
DEPT OF COMMERCE WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC

STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN
TREASURY FOR OASIA/MPISA AND CWINSHIP

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD PGOV TW
SUBJECT: Penghu in Lead to Open Taiwan's First Casino

Reference: Taipei 44


1. (SBU) Summary: Penghu County recently submitted an application to
the Executive Yuan (EY) to establish a casino on the island, and
will hold a legally-required referendum on the issue in August. The
Ministry of Transportation and Communication (MOTC) will soon
establish an interagency casino committee that will, in August,
begin drafting casino-related laws and implementing regulations. End
summary.

Background
--------------


2. (SBU) On 12 January, the Legislative Yuan (LY) passed amendments
to Taiwan's Offshore Islands Development Act to allow casinos on
islands such as Penghu, Kinmen, Matsu, or Orchid Island (reftel).
The amended Act requires casinos to be located within international
resorts, which also must include an international hotel and other
tourism and conference facilities. In order to open a casino, the
county or city in which the casino would be located must first hold
a referendum, and over fifty percent of participating voters must
approve the referendum. To avoid a monopoly, the authorities will
likely issue two casino licenses, both of which will probably be
located on the same offshore island.


3. (SBU) On May 29, the Penghu County Magistrate's office submitted
an application to the EY to establish a casino on the island.
Penghu Tourism Bureau Director Hong Dong-lin recently told AIT/K

Chief that Penghu plans to hold the required referendum on the issue
in August.

Recent Developments
--------------


4. (SBU) On June 15, Wang Chih-hui, Chief of Sectoral Planning at
the Council for Economic Planning and Development (CEPD),told
econoff the EY has assigned the Ministry of Transportation and
Communication (MOTC) with drafting implementing regulations and
statutes related to casino operation. The implementing regulations,
which will govern the size, location, and other aspects of possible
casinos, will not need legislative approval. The statutes, however,
which regulate casino operations and management, will need LY
approval.


5. (SBU) According to Wang, the MOTC plans to quickly establish a
Casino Consultative Committee (CCC) comprising experts from the
MOTC, the Ministry of the Interior (MOI),the Ministry of Economic
Affairs (MOEA),the Financial Services Committee (FSC) and the
Council of Labor Affairs (COLA). Wang said that in late June, MOTC
will hire an international consulting firm to produce a report on
Taiwan's "integrated resort" market. The CCC will then use this
report as a basis for drafting the casino-related regulations and
statutes.

Comment
--------------


6. (SBU) According to our sources at CEPD and MOTC, the Taiwan
authorities would like to issue two casino licenses, preferably on
one offshore island, in order to avoid having one casino monopolize
the Taiwan gambling market. Although media polling suggests 70
percent of Kinmen's residents support establishing a casino on
Kinmen, the Kinmen authorities have no plans to hold a referendum on
the issue. Therefore, at this point Penghu looks like the likeliest
site of Taiwan's first--and second--casino. End comment.

YOUNG