China is back in the business of banning tour groups to South Korea. Only three weeks after the ban had been relaxed, it was apparent that it had been reinstated.
According to GGRAsia, at least five companies had their requests for tourist visas rejected. The new ban comes just a week after South Korean President Moon Jae-in visited Beijing, when some analysts expected relations to warm. A spokesman for the Chinese Ministry of Foreign Affairs said he was unaware of any resumption of the ban.
“The Chinese side holds an open and positive attitude towards the exchanges and cooperation conducted by China and the Republic of Korea in various areas,” he said.
Analysts say the original ban was in response to South Korean installing U.S.-built Terminal High Altitude Area Defense (THAAD) anti-missile system near Chinese territory to counter to North Korean missile tests.
Even the South Korean government seemed to be uncomfortable with gaming. Kangwon Land Inc., which operates the only casino in South Korea open to Koreans, could see gross gaming revenues shrink as the government limits expansion of all forms of locals gambling. That’s according to a note from JP Morgan Securities Ltd., which also noted the casino about 100 miles from the capital city of Seoul posted a 10 percent decline in revenue for the third quarter.
GGRAsia reports that JP Morgan released its note after the release of the South Korean government’s Gambling Industry Reform Plan.
“The plan includes four major initiatives, one of which effectively targets Kangwon Land by redesigning the revenue cap policy with heavier penalties and stricter legal enforcement,” wrote analysts DS Kim and Sean Zhuang. That cap was first introduced in 2008 by South Korea’s National Gambling Control Commission as a way to control the growth of locals gambling.
Since 2014 the revenues from locals gaming has been held at 0.54 percent of the gross domestic product, with the allowed increase being “allocated” across seven different industries by the NGCC.
“Interestingly, Kangwon Land is the only industry among the seven that had violated the revenue cap in recent years,” wrote the JP Morgan team.
In 2016, for example, Kangwon Land’s revenue cap was KRW1.44 trillion (US$1.32 billion), but actual revenues came to nearly KRW1.63 trillion.
The government’s industry reform plan “clearly points to further regulatory tightening and increasing oversight on local gambling, and we believe Kangwon Land has no choice but to keep curbing its revenues to avoid further scrutiny,” said the analysts’ note. “Even in a bull-case scenario of the plan failing to pass the National Assembly, we believe Kangwon Land would still try to lay low and curb revenue to avoid further regulatory reaction, basically repeating what it’s done this year.”
JP Morgan added, “Either way, we think Kangwon Land won’t allow its business to grow faster than GDP, which can be seen as a politically acceptable level of growth for gambling; we foresee its growth to be effectively capped at approximately 3 percent per annum at best, possibly throughout this current administration.”
Earlier this month it was revealed that a former Kangwon Land CEO had been formally arrested on charges of influence peddling. Choi Heung-jip, who reportedly led the state-run enterprise between mid-2011 and early 2014, was accused of favoring job candidates with ties to politicians, regardless of their experience or other qualifications.
