This article first appeared in The Edge Financial Daily, on February 25, 2016.

KUALA LUMPUR: Vietnam offers a thinner profit margin, but it is a more sizable market compared with Malaysia for Berjaya Group to tap into it, said Berjaya Corp Bhd’s controlling shareholder and founder Tan Sri Vincent Tan.

“The margin (in Vietnam) may not be as high as here (Malaysia), but the market is much bigger there, and the government is quite [relaxed about] distribution, so we hope to distribute our products to the whole country in one and a half years by starting off in Ho Chi Minh City,” he added.

“It (the Vietnam lottery business) should be good, considering that it is a country with a 90 million population, [with us as] the exclusive operator,” Tan told the media after the launch of the Gawad Kalinga movement in Malaysia yesterday.

Nevertheless, Tan noted that the earnings feasibility for the business is not available at this juncture, and that the tax rate has not been finalised either.

To recap, in late January, Berjaya Corp announced that the Vietnamese government had issued an investment registration certificate (IRC) to the group and Vietnam Computerized Lottery One Member LLC (Vietlott). The IRC grants the two companies an exclusive 18-year contract to invest and operate the nationwide computerised lottery in Vietnam. Vietlott is a wholly-owned subsidiary of Vietnam’s finance ministry.

Under the IRC, Berjaya Gia Thinh Investment Technology Joint Stock Company (Berjaya GTI) will be the entity to undertake the computerised number forecast operator business. Berjaya Corp’s 80%-owned subsidiary Berjaya Lottery Vietnam Ltd (BLV) holds a 51% stake in Berjaya GTI, while Vietlott has the remaining 49%. Berjaya Sports Toto Bhd holds a 20% equity interest in BLV.

According to Tan, Berjaya GTI expects to roll out its lottery games in Ho Chi Minh City, and nationwide by the second half of 2017.

The estimated cost of the project for the whole duration is US$210.58 million (about RM890.75 million).

According to data compiled by Vietlott, Vietnam’s lottery sales in 2014 amounted to VND63,000 billion (RM11.66 billion at the current rate), of which 95.5% comprised traditional lottery products, 3.48% Lotto, 0.7% instant lottery and 0.35% computerised lottery.

In the announcement last month, Berjaya Corp said the products to be launched include Lotto Games, Digit Games and Fast Draw Games, which will be distributed through various channels, such as computerised terminals, telephones and mobile phones, and the Internet.

On Berjaya Group’s Gawad Kalinga movement, Tan said that Berjaya Group is collaborating with Philippines-based Gawad Kalinga Community Development Foundation Inc to establish a foundation in Malaysia under the proposed name of “Gerakan Keharmonian Masyarakat”.

The new foundation is established for the purpose of addressing poverty issues in Malaysia through community development, and is mulling to start a pilot project in Sabah.