Islands Gambling, Round 2,

Cutting leaves to wrap betel nut in Dashan, Miaoli.

Since President Ma assumed the Dragon Wyvern Throne in 2008, the KMT has been pushing for casinos on one of the islands under its jurisdiction. Ma himself is often said to personally favor this policy. However, since being surprisingly spanked in a referendum on the gambling in the Penghu in 2009 despite using the usual tactics, the Ma Administration has been quiet on the issue of gambling.

As a commentary in today's Taipei Times by Green Party spokesman Pan Han-shen observes, we are right now in a similar run up to a referendum July 7 on gambling on Matsu, an island off the coast of China. Matsu is a reliably pro-KMT district and residents can be expected to vote for gambling. The KMT made this easier, as the TT noted in 2009 just prior to the Penghu vote, by amending the referendum law specifically for offshore island gambling referendums:

TN goes on to observe that the KMT built an impossibly high barrier to the passage of the referendum with the infamous "double majority" law that requires that the vote consist of a majority with at least 50% of voters having voted. What they did was cheat: in January the KMT rammed through a clause in the offshore gambling statute deleting the requirement that 50% of voters must vote in the referendum for it be valid. An article on it in Gambling Compliance describes:

But the amended law only requires that more than half of the voter turnout vote yea for the referendum to pass - a much lower threshold than that stipulated in Taiwan's Referendum Act. That law requires that at least half of all eligible voters participate in a plebiscite, with more than half of that turnout voting yea for it to pass.

As someone commented in the Taipei Times piece, the KMT's streamlining of the referendum law means that if 3 people vote and 2 favor it, it will pass. This time the KMT has moved the gambling initiative to the even more reliably pro-KMT island of Matsu to ensure passage. Why Matsu? AmCham hosted a one-sided article on the gambling issue last year that explains. Of the two islands off of China, Kinmen and Matsu, the latter was seen as more welcoming...

Enactment of the law would set the stage for another round of local referendums in the two jurisdictions considered to be main candidates for casino development: Kinmen and Matsu. Approval of the referendum in Matsu is thought to be a shoo-in, as the island group, home to only a few thousand residents, is “desperate” for casino gambling, says Anita Chen of Park Strategies. Matsu reportedly wanted to hold its referendum as soon as possible to get a foot in the door, but was widely seen as responding to KMT pressure to hold off until after the presidential election in January.

Park Strategies is a US lobbying firm close to the Ma Administration. The AmCham article notes that infrastructure on Matsu is primitive and bad weather often shuts down transportation, making it the less preferable of the two islands. It seems intuitively obvious that a referendum for Kinmen is in the cards at some point.

The AmCham article makes the claim that casinos can be kept free of money-laundering and gangsters. No doubt this is because it's so common for vice-related businesses in Taiwan to be free of such activities that I am sure they will have no trouble. In related news, this weekend I am leading a hunting expedition looking for flying pigs.

Pan writes that....

In 2009, President Ma Ying-jeou (馬英九) and the Chinese Nationalist Party (KMT) promoted a referendum on gambling in Penghu on the condition that gambling would not be legalized on Taiwan proper under Ma’s watch. [Taichung mayor] Hu, however, thinks that “we should not look upon ‘gaming’ as some kind of ‘compensation’ and only allow the establishment of special zones in more slowly developing areas,” and is thus promoting the establishment of a special gambling district in Greater Taichung. The intent behind the text which would allow gambling in the Offshore Islands Development Act (離島建設條例) is finally revealed.

There are no real islands off of Taichung, but no doubt one could easily be made out of reclaimed land, or simply magicked into existence by creative definition ("for the purposes of the law, an island is defined as an area bounded by land on four sides but selected by Mayor Hu"). The Offshore Islands Development Act "encourages" development on islands by relieving businesses there of the burden of tax....

2. Goods sold, delivered and used locally on offshore islands, or services provided locally on offshore islands by business entities to which the Act applies, are exempt from business tax starting from the date the Act is implemented, except for business entities in Lyudao, Lanyu, Liouciou, which are exempt from business tax as of 25th January, 2009.

That means that -- you guessed it -- all those casino businesses will have taxpayer-funded roads, water, police, fire, and other services -- without paying any tax themselves. They will return nothing to the society, while putting tremendous strain on local resources. The Matsu page of the National Tax Administration confirms that businesses there pay no taxes. Pan adds that DPP Mayor Chen Chu of Kaohsiung supports gambling; Kaohsiung hosts right offshore the already popular tourist destination of Cijin Island, famed for its seafood. One wonders if it will fall under the Offshore Islands Act.

The casino drive is using the same kind of ZOMG we're missing out! shock-doctrine tactics common to KMT-approved construction-industrial state projects and China-related policies:

Anita Chen of Park Strategies says that casino-resorts could represent the next big wave of infrastructure development in Taiwan – but only if Taiwan acts quickly. She notes that Japan, Vietnam, and the Philippines are considering their own plans for casino development, so that long delays might cause investors to look elsewhere. “We’re not only competing for Chinese customers,” she notes. “We’re competing for investors.”

Fortunately, casino proponents are handicapped by a lack of coordination. So stay tuned -- what might fly in Matsu might sink in Kinmen. I think at that point the Administration will start looking for a site on the main island of Taiwan.

If we are going to have useless, parasitical casinos -- and I see no reason that sooner or later we won't, given who backs the Ma Administration and why -- then they really ought to be heavily taxed and a clause inserted in the law to make sure that they source their machines and personnel locally. Taiwan has a large, and largely unknown, gaming machine industry, which could certainly use a boost onto the world stage. But we both know, dear reader, that pigs will fly.....
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Daily Links:

• The second letter in Today's Letters to the TT is hilarious.
• Capital gains tax condensed into only five proposals. Haha.
• Articles like this one on how Taiwan ag tech might benefit Philippines is a reminder of the massive potential of exporting Taiwan's technological skills as a key and underutilized form of soft power. 
• Legal Warfare: China's strategy to win without fighting

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