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COVID hits Naga Corp shares dropping 50% in six months, labor groups push back against mass layoffs

Hong Kong exchange-listed Naga Corp (SHKE: 3918) the company behind Phnom Penh’s exclusive casino operator Naga World’s share price has fallen from HKD 10.96 in February to HKD 5.51 in daily trade (-49%). In response, the company has made redundant over 1,300 staff as COVID travel restrictions severely impact operations.

According to the Naga Corps latest Annual Report, from 2019 to 2020 revenue fell from $1.75 billion to $878 million (-49%) and net profit from $521.3 million to 102.3 million (-80%). In response the casino operator is laying off 1,329 of its more than 8,000-strong workforce, citing economic difficulties amid COVID 19.

Naga Corp investor relations has not responded publicly on the mass layoffs accounting for approximately 16% of its workforce or the accusations from labor groups that it has unfairly targeted union members.

Khun Tharo, Program Manager at labor rights group CENTRAL told Cambodia Investment Review that he understands the need for the company to maintain the business’ viability during the pandemic. However, questioned its timing after last year saw workers pushing for an increase in wages, adding, the company may have thought these unions were becoming too strong.

“We think this is a trend of union-busting using COVID as a cover. If you look at the financial history of NagaWorld there is a strong financial record. The union has tried to open more dialogue with the company such as industrial relations,” Tharo said.

“Nagaworld 3 will require over 4,000 employees, the profits should be there for its shareholders but there should be an independent audit to see if the COVID pandemic really has financially impacted the company,” he added.

Naga Corp stated in its annual report: Since April 2020, to balance the need to maintain the business’ viability and help our employees through this difficult time, we introduced a company-wide pay reduction at all levels in the organization.

It added, including service charge, tips, and allowance, the lowest monthly take-home pay for the Group’s entry-level hotel and casino employees were $320 and $460, respectively. This represented a 19% increase compared with 2019 levels. “We believe that our salary offer is one of the best, if not the highest, in Cambodia”.

The company is progressing with the construction of ‘Nagaworld 3’ a 75-story tower which is expected to be the tallest building in Cambodia upon completion. The $3.5 billion project, which sits on Phnom Penh’s Sangkat Tonle Bassac.

Naga Corp added in its report, that in line with the provisions in the Cambodian Labour Law, its employees are represented by elected Shop Stewards, and all employees are free to join or form a union.

The Labour Law requires that Shop Stewards be consulted on drafting and modifying internal regulations and must also be consulted on any planned measures for lay-offs due to a reduction in business activities or internal reorganization, it added.

As of December 2020, 47.5% of NagaWorld’s employees were members of the Labour Rights Supported Union of Khmer Employees of NagaWorld.

NagaWorld is Phnom Penh’s only integrated hotel and entertainment complex and we enjoy a 70-year casino licence that will run until 2065, as well as exclusive rights to operate casinos within a 200-km radius of Phnom Penh (except the Cambodia-Vietnam border area, Bokor, Kirirom Mountains and Sihanoukville) that expires in 2045.

Chinese Malaysian businessman Chen Lip Keong is the founder and majority shareholder of Naga Corp. He received Cambodian citizenship in October last year.

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