Genting's rim hints at more cost savings on Malaysia tax breaks

The announcement of amendments to casino tariffs and casino license fees applied to the resort's World Genting casino complex under the Malaysian government's 2019 budget "will affect Genting Malaysia's revenue after FY2019."

So Lim Kok Thai, chairman of parent group Genting Bhd, said in his 2018 annual report to Bursa Malaysia on Tuesday.

"In light of the severity of the announced casino tariff increase, Genting Malaysia will continue to review and manage its cost structure," the chairman added in a statement

This included "reducing or delaying" capital expenditures and implementing "various cost rationalization initiatives such as workforce optimization."

According to a recent note from Maybank Investment Bhd, the offer to buy a famous luxury yacht, embroiled in Malaysia's sovereign wealth fund scandal, from the Malaysian government for US$126 million will help Genting Malaysia "coordinate" with the country's finance ministry on several issues.

This included controversy over tax incentives for the Genting Integrated Tourism Initiative (GITP). The GITP is a multi-step initiative launched by Genting Malaysia for the Resorts World Genting Complex. The initiative includes a 10 billion MYR ($2.4 billion) master plan over 10 years.

Lim also made some comments about the outdoor theme park, which is stopped in the accommodation.

"Genting Malaysia is still committed to creating an outdoor theme park at Resorts World Genting as a growth initiative in Malaysia," he said.

However, the annual report noted that due to the litigation against the theme park and the "uncertainty" of its results, Genting Malaysia "conducted an impairment assessment of the possibility of recovering tangible assets on the theme park assets" as a precautionary measure.

In the chairman's statement, Im also reiterated the group's previous statement that Resort World Las Vegas, a new casino property under construction in Las Vegas, Nevada, should open in 2020. Last year, an analyst suggested there could be delays.

Lim said, "Construction of Resort World Las Vegas is progressing well with concrete completion through the 57th floor of the West Tower and the 54th floor of the East Tower. The hotel tower will reach its maximum height (68 floors) in the third quarter of 2019."

He added: "The total cost of development and land incurred by Dec. 31, 2018, was approximately $1 billion. The first phase is estimated to cost approximately $4 billion and will be open by the end of 2020."

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