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Cablegate: Penghu Says No to Casinos

VZCZCXRO6712
PP RUEHCN RUEHGH RUEHVC
DE RUEHIN #1177/01 2720904
ZNR UUUUU ZZH
P 290904Z SEP 09
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 2404
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHBK/AMEMBASSY BANGKOK 4716
RUEHBY/AMEMBASSY CANBERRA 5242
RUEHHI/AMEMBASSY HANOI 0014
RUEHJA/AMEMBASSY JAKARTA 4525
RUEHKL/AMEMBASSY KUALA LUMPUR 4138
RUEHML/AMEMBASSY MANILA 0834
RUEHPF/AMEMBASSY PHNOM PENH 0790
RUEHGO/AMEMBASSY RANGOON 0575
RUEHUL/AMEMBASSY SEOUL 0282
RUEHGP/AMEMBASSY SINGAPORE 7658
RUEHKO/AMEMBASSY TOKYO 0814
RUEHVN/AMEMBASSY VIENTIANE 0227
RUEHWL/AMEMBASSY WELLINGTON 0061
RUEHCHI/AMCONSUL CHIANG MAI 0795
RUEHHM/AMCONSUL HO CHI MINH CITY 0661
RUEHJA/AMCONSUL SURABAYA 0125
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 TAIPEI 001177

SENSITIVE

SIPDIS

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

E.O. 12958: N/A
TAGS: ECON ETRD PGOV TW
SUBJECT: Penghu Says No to Casinos

Reference: A) Taipei 44; B) Taipei 717

TAIPEI 00001177 001.2 OF 002


1. (SBU) Summary: On September 26, Penghu rejected Taiwan's first
local referendum on allowing a casino resort, with 56.4 percent of
the voters casting 'no' votes. Although only 42 percent of Penghu's
registered voters turned out for the vote, the result is binding.
Taiwan officials think the referendum failed in part because Taiwan
does not yet have a gambling law on its books, making Penghu voters
wary of the form casinos and other gambling would take. The 'no'
vote by Penghu has prompted other offshore islands to slow plans to
hold similar referenda. End summary.

Background
----------

2. (U) On January 12, the Legislative Yuan (LY) passed amendments to
Taiwan's Offshore Islands Development Act to allow casinos on
islands such as Penghu, Kinmen, Matsu, and Orchid Island (ref A).
The amended Act requires casinos to be located within international
resorts, which also must include an international hotel and other
tourism and conference facilities.

3. (U) In order to open a casino, however, 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. On May 29, the Penghu County Magistrate's office
submitted an application to the EY to establish a casino on the
island (ref B), and held Taiwan's first binding local referendum on
the issue on September 26.

Penghu Voters Reject Casinos
----------------------------

4. (U) The gambling referendum asked voters: "Should international
resorts with casinos be allowed in Penghu?" Residents cast 17,359
votes against the proposal (56.4 percent of the total valid votes),
and 13,397 votes for it (43.6 percent of the total valid votes).

5. (U) Although only 42 percent of Penghu's registered voters turned
out for the vote, the result is binding. The disapproval will put
off developers' plans until at least 2012, since Taiwan's law does
not allow repeating a referendum on the same topic for three years.


CEPD: Voters Unsure of What Casinos Will Bring
--------------------------------------------- -

6. (SBU) Wang Chih-hui, Chief of Sectoral Planning at the Council
for Economic Planning and Development (CEPD), thinks the referendum
failed because Taiwan does not yet have a gambling law on its books.
On September 29, Wang told us that without the law, most of Penghu's
residents were unsure of what form casinos and other gambling would
take in Taiwan, and therefore decided to vote against opening a
casino in Penghu.

7. (SBU) On September 29, Lai Bing-jong, MOTC Tourism Section Chief,
told AIT that the Ministry planned to complete the Gambling Law
draft in early 2010, and, after a public comment period, submit it
to the Executive Yuan for approval and passage to the LY. According
to CEPD's Wang, the current MOTC draft draws heavily from
Singapore's gambling law, and because Singapore will begin allowing
gambling-related businesses by the end of 2009, Taiwan will be
keeping a close eye on the effect the gaming industry has on the
Singapore economy and society.

8. (SBU) Wang said it was too early to tell if Penghu would hold

TAIPEI 00001177 002.2 OF 002


another gambling referendum after three years, but he told us the
result had prompted other offshore islands to slow plans to hold
similar referenda for fear of sidelining casino development for
three years should the referenda fail as well. Lai said Kinmen is
interested in conducting a casino referendum, but would not move
forward until the EY approves the Gambling Law draft.

Comment
-------

9. (SBU) The defeat of this referendum is a sharp blow to plans for
casino gambling in Taiwan. In the aftermath of the vote, political
leaders from other offshore islands, including Taitung County's
Lanyu and Pingtung County's Liukiu Archipelago, have already said
their citizens do not welcome gambling, and leaders from islands
that may be favorable, such as Green Island and Kinmen, have
indicated they have no plans to hold a referendum on the issue
anytime soon. End comment.

STANTON

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