Request for Concepts
for
Integrated Resorts

February 2015

Overview of Requests for Concepts

1. Background & Purpose

○ Propelled by the number of foreign tourists visiting Korea, which surpassed the 10 million mark in 2012 and increased to over 14 million in 2014, the Korean government set a policy goal of attracting 20 million inbound visitors by the year 2017. 

○ To prepare for an era of 20 million inbound tourists and to increase the demand for domestic tourism, the Korean government intends to create world-class tourist attractions, enticing tourism contents and improved infrastructure by developing integrated resorts (IR) with a comprehensive range of amenities including hotels, convention facilities, themed attractions, foreigner-exclusive casinos, shopping malls and other entertainment facilities. 

○ Furthermore, the Korean government aims to make direct and indirect contributions to economic invigoration and cultural enrichment; economic invigoration by attracting tourism investment of at least one trillion won per integrated resort and creating jobs, cultural enrichment by developing integrated resorts equipped with a competitive edge based on features unique to Korea and strategies that differentiate it from its competitors. 

○ For the successful development of integrated resorts, the Korean government has launched this Request for Concepts (hereinafter referred to as RFC) to gain an understanding of prospective investors' intention to participate in the IR development and to obtain concepts that could be incorporated in future developments. 

○ The development concepts from the RFC submissions will be used to set the standards for the Korean government's Request for Proposals (hereinafter referred to RFP) in order to make the final selection for the integrated resort. 

2. Governance Structure & Ethics

○ The Ministry of Culture, Sports and Tourism, acting for and on behalf of the Korean government, will oversee the overall process. All interactions with interested global investors in regard to the integrated resort project will be conducted according to Korean law and the rules and regulations for the period until the RFP is launched. 

○ All respondents to the RFC must abide by all anticorruption regulations and laws of the Republic of Korea, the anticorruption stipulations of international law and the anticorruption laws of the country in which the respondent conducts business. 

○ All parties that express interest in the IR project through and by the RFC process must prepare and submit required documents in good faith, and any falsity or violations associated with the proposals will not be tolerated. Respondents must comply with the government's provisions, respect the culture and cooperate accordingly. 

3. Information & Communication

○ All documents and information on the IR development opportunity will be posted in both English and Korean on the officially designated website (http://www.IRkorea.or.kr). Inquiries related to the integrated resort development will also be received via the official website. 

○ To the extent permitted by law, the government will release information related to the RFC. 

4. Evaluation

○ The submitted concepts will be evaluated within 60 days from the submission deadline. Based on the evaluation of the concepts, a detailed RFP will be made. During the evaluation process, a proposer's suggestions and ideas may be incorporated into the RFP. However, the disclosure of the proposer's participation in the project will be determined by the decision of the proposer. 

5. Submission Deadline & Privileges

○ Concepts must be hand delivered to the Tourism Promotion Team of the Ministry of Culture, Sports and Tourism by the Proposer or the official representative (written proof of power of attorney must be submitted) by 6 pm (GMT +9) on June 30, 2015. 

○ The integrated resort will be limited to the area stated in the Request for Concepts and areas not suggested in the RFC will not be considered.

○ All respondents to the RFC will be provided with certain privileges in the selection process for their contribution to the government policy. 
Request for Concepts

1. Objective

○ To identify interested and serious investors who are keen to take part in the development of around two integrated resorts in Korea. 

○ To ascertain the development concepts and size of potential investment as well as the investor's ideas on the standards for the facilities to allow the Korean government to make an informed decision.

○ To understand the investment intent of the prospective investors to determine the appropriate land sites for the location of the integrated resorts for the RFP. 

○ To give prospective investors an opportunity to provide considered views on the Korean system and oversight structure for casinos in relation to integrated resort development. 

2. Desired Outcomes

○ In order to strengthen the competitiveness of Korean tourism, an integrated resort must be developed under a strategy that will differentiate it from its competitors and reflect the distinctive characteristics of Korean culture. It should also be developed in a way that enhances the tourism infrastructure (accommodations, MICE, etc.) and allows it to function as a representative landmark of Korea. 

○ Therefore, the following must be considered in the development of an integrated resort. It will need

- To develop a distinctive world-class tourism resource and expand the tourism infrastructure with appealing content that can provide diverse travel experiences to foreign tourists and domestic tourists. 
- To contribute in revitalizing the economy by creating jobs and promoting investment in tourism.
- To increase tourism receipts in Korea by attracting more tourists to Northeast Asia, which is growing into the world's largest tourism market, and increasing lengths of stay and visitor spending.

3. Prospective Sites for RFC Submission

○ Prospective integrated resort sites, including foreigner-exclusive casinos, for RFC submission cover all areas of South Korea except Jeju Island, where the Jeju Province Governor has the casino licensing authority under Article 171 of the Enforcement Decree of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City.

○ The sites must be those permitted for integrated resort development under the environmental, development and construction laws of Korea. 

○ If the proposer has made any preliminary agreement with the land owner regarding land use of the proposed site, related documents may be submitted.

4. Law and Order

A. Law

○ All activities and operations related to the casinos in the integrated resort must be in accordance with regulations and orders under the Tourism Promotion Act. 

○ Casino-related regulations may be changed in the future according to government policy. Such changes in the system will be similar to those imposed in leading global gaming jurisdictions. 

○ Regarding casino-related cash flows, utmost transparency will be required, and a set of strict international regulatory standards against any illegal activities as well as screening of operators and employees will be imposed. 

B. Fair and Transparent Casino Operation

○ The casino operations must be fair and transparent. The casino operations and accounting must abide by Notification No. 2012-13: Casino Operation Standards of the Ministry of Culture, Sports and Tourism.

○ Only the following games are allowed in the casino and the payout ratio of the machine games must exceed 75%. 
1. Roulette
2. Blackjack
3. Dice, Craps
4. Poker
5. Baccarat
6. Tai Sai
7. Keno
8. Big Wheel
9. Pai Cow
10. Fan Tan	11. Joker Seven
12. Round Craps
13. Trent Et Quarante
14. French Boule
15. Chuck - A - Luck
16. Slot Machine
17. Video Game
18. Bingo
19. Mahjong
20. Casino War	
○ The maximum amount of allowable casino gaming space for the integrated resort is limited to 5% of the total floor area of the integrated resort. 

C. Social Safeguards Related to Casino Gaming

○ In a casino located in the integrated resort, stringent social safeguards under the current law will be imposed. 

○ The following are strictly prohibited in casino operation
(Article 28-1 of the Tourism Promotion Act);

① Install or use any casino machine that contravenes any relevant statute
② Alter any casino machine or facility or use any altered casino machine or facility in violation of any relevant statute
③ Conduct the business outside a permitted exclusive business facility
④ Admit any Korean national (excluding emigrants under Article 2 of the Emigration Act) into the casino
⑤ Conduct an advertisement or public relations activity that has a possibility of instigating a speculative spirit excessively or undermining good public morals
⑥ Engage in any business that does not fall under any category of business under Article 26 (1) nor carry on a business without filing a report on the business method, dividends, etc.
⑦ Reduce the amount due to the Tourism Promotion and Development Fund under Article 30 (1) by omitting a certain amount from total sales
⑧ Admit any person under nineteen years of age into the casino
⑨ Shut down the business for 60 days or longer without justifiable grounds during the corresponding year.

○ The casino must actively take part in prevention and treatment of problem gambling not only for casino gaming patrons but casino workers as well.

○ Casinos in integrated resorts are open only to foreigners and the admission of Korean citizens will be strictly prohibited. 

5. Scope and Content of RFC Submission

○ This RFC is for the integrated resort project with the precondition of a foreigner-exclusive casino and minimum investment of one trillion won (excluding the land acquisition cost).

○ In developing their RFC submissions, it is expected that the proposers will cover the following areas; the indicators listed in the [Appendix] may be used as reference. 

○ The respondent to the RFC may submit items and propositions in addition to the following list if the respondent considers it to be beneficial to the successful development of the integrated resort. 

A. Target Customers and Profile

○ Classify the visitors to the integrated resort by nationality and class to set a target market and provide for their anticipated tour and spending activities as well as facility usage. 

○ The activities related to the target market should be broken down by gaming and non-gaming components and a focus should be on the key amenities.

○ In particular, describe in detail how to attract foreign tourists. 

B. Programming Concept 

○ A full conceptual plan and details of the underlying theme for the IR, including the development model appropriate to capture the projected target market, should be included as well as the composition and facilities. 

○ All common facilities (hotels, convention facilities, themed attractions, a foreigner-exclusive casino, shopping) must be included in the proposal. At least two optional facilities (high-end food & beverage outlets, entertainment, art and culture, leisure sports, health and medical facilities) including art and cultural facilities must be included. Proposers may propose a variation of the scope and content of the individual facility but must comply with the minimum amount of investment (one trillion won). 

○ In any case, the foreigner-exclusive casino must not exceed 5% of the total floor area. 
Criteria	Business type	Recreational Type	
	Common Facility	Adjust to specific traits of each type	
	Accommodations	More than 1,000 rooms (5-star hotel)	
	Conference Facility	Specialized conference facility	Conference facility	
	Themed Attractions	More than 20 billion KRW	More than 70 billion KRW	
	Casino (foreigners only)	under 5% of the total floor area	
	Shopping	more than 20,000㎡ 	
Optional Facility
(high-end F&B, entertainment, culture·art, leisure sports, health·medical etc.)	Develop at least two or more kinds including the culture and art facility	
Table: Integrated Resort Key Facilities (provisional)
○ All facilities must be constructed in consideration of the target market and in accordance with the government's integrated resort development plan. Proposers should justify their concepts by explaining the principles behind the composition of such facilities. 

○ Propose a landmark facility that represents the integrated resort and describe the scope of each facility along with the implementation plan and development capacity of the proposer. 

C. Site Layout and Architectural Design

○ Explain the proposed development plan including the design intent, philosophy, etc.

○ Provide a conceptual plan for the proposed site including a parcellation plan and detailed breakdown of proposed uses.

- The master plan should also include design concept, development density, building heights, and the correlation of the buildings, etc.
- In particular, detailed descriptions of themed attractions should be included.

○ 3D renderings should be included to illustrate the spatial quality of all the proposed developments and plans for the site layout and architectural design.

D. Casino Games To Be Offered

○ The types of casino games together with the number of table games and machine games that the proposer intends to offer should be provided. If the proposer has a mid- to long-term plan to expand the games, it should also be included. 

E. Project Implementation Schedule

○ An anticipated schedule should be included, which should include a schedule for the construction of each facility and for the proposed development of the overall project. 

○ The implementation plan from submission of the concept to the design, master planning, permissions and licenses and completion of the project should be included. 

F. Investment Plan and Financing Methods

○ The anticipated development cost and total business spending should be broken down for each facility. The business spending should be calculated pursuant to Article 2-2 of the Enforcement Decree of the Act on Public-Private Partnerships in Infrastructure. 

○ According to the proposed implementation plan, a yearly investment plan should be drawn up and broken down by capital source. 

○ How the project will be financed should be explained in a format befitting the integrated resort development project. Describe the means of funding equity capital and borrowed capital separately by year. For equity capital, include input rate and investment capacity. For borrowed capital, describe in detail whether it will be a loan, fund, etc. 

○ Propose a capital reinvestment plan for the revenue generated from the integrated resort development.

G. Project Feasibility Analysis

○ A cash flow forecast for each component of the project should be provided, including detailed items with documentation guidelines and grounds for the forecasting, referring to business accounting standards. 

○ A financial feasibility analysis should be made of the development proposals based on a pro forma financial statement with detailed computation of the Benefit Cost Ratio (B/C ratio), Net Present Value (NPV) and Internal Rate of Return (IRR), etc.

H. Impacts of Integrated Resort Development

○ Based on the market analysis and demand forecast, illustrate how the proposed project will have a positive effect on attracting foreign tourists and increasing tourism revenue. 

○ Describe the anticipated effect and influence that the project would make on enhancing Korean tourism infrastructure and on increasing its international attractiveness. 

○ The anticipated impacts from the proposed project such as job creation, tax revenue increases, and so on should be shown. 

○ An analysis and demonstration of the potential economic impacts of the proposed project such as production inducement and value-added inducement effects and job creation should be made.

I. Company Profile and Information

a. General Information

○ If the proposer is a single entity, the general status of the proposer should be provided.

○ For consortiums and joint ventures (hereafter referred to as consortium), general information of each investor together with the investment composition, equity plan and description of the role of each investor should be provided. 

b. Experience of the Proposer in Development and Operation

○ The experience and track record of each proposer in the development and/or operation of each component of the concept proposed in its RFC submission should be detailed. 

○ This should include a description of all relevant projects undertaken with particular focus on the experience the proposer may consider appropriate to reference. 

c. Financial Information

○ In order to verify the proposer's financial status, the RFC submission must provide detailed information concerning the paid up capital, shareholders' funds, the ownership structure and financial statements. 

- The aforementioned documents may be substituted with business reports (annual reports) pursuant to the Securities Exchange Act of different countries. 

○ Any additional information a proposer may consider material for the assessment of its financial capacity may be submitted.

○ Disclosure of material lawsuits or regulatory breaches currently pending against the RFC respondent (per investor in case of consortium) or executives of the company should be included.

d. Joint Ventures and Consortium Arrangement

○ Should two or more parties combine to form a joint venture or consortium arrangement, the RFC submission must include a notarized joint venture agreement to ascertain their respective roles. 

6. Supplementary Proposal (Optional)

○ In principle, only one proposal will be accepted from any one firm or corporation; however, a proposer may submit a maximum of two proposals with different development concepts. 

7. Non-disclosure by the Korean Government 

○ The Korean government will undertake to keep all RFC submissions from proposers strictly confidential, and it will respect any intellectual property contained therein. 

○ In case disclosure of any or all content of the concept proposal is requested, the content specified by the RFC respondent will be made public only with the advance written approval of the RFC respondent. 

○ However, the government reserves the right to use information provided by proposers in an aggregated form for the purpose of realizing policy goals. 

8. RFC Cost 

○ All costs incurred in the preparation and presentation of the proposal in response to this RFC shall be borne solely by the respondent.

9. Form of Submission

○ The concept proposal must be written in Korean, and one original and 25 additional hard copies marked separately must be submitted. In addition, digital files of the proposal and supplementary materials in a format that can be opened on the Windows operating platform should be submitted in CD-ROM or USB.

- If there are any discrepancies between the original and the copies of the proposal, the original shall prevail. 
- The proposal and related documents must be submitted in a sealed envelope. 
- The names and addresses of the RFC respondents must be clearly written on the envelope. 

10. Submission Deadline

○ Proposals must be hand delivered by the proposer's official representative or by officially appointed legal counsel no later than 6 pm (GMT +9), on June 30, 2015 to the Tourism Promotion Team of the Ministry of Culture, Sports and Tourism. Late submissions will not be considered. 

▷Submission Office : Tourism Promotion Team, Ministry of Culture, Sports and Tourism
 Sejong Government Office Building 15, 388 Galmae-ro, Sejong City

○ A document acknowledging receipt will be issued by the Ministry of Culture, Sports and Tourism at the time of submission.

Sharing Information
 
○ The proposer wishing to respond to the RFC can make inquiries and request information via the designated official website (http://www.IRkorea.or.kr).

- The questions and answers of interest to all parties responding to the RFC may be openly posted in a Q&A format without revealing the identity of the questioner. 

○ The Korean government reserves the right to make modifications and/or corrections to the RFC document, the process or any other aspects of terms and conditions contained herein. Any changes will be announced on the official website. 

[Appendix]

Reference indicators that may be applied in the concept proposal
	
①The pricing standard is the current unit cost of the submission date of the bill and it will be written in constant prices.
②Exchange rate: The basic exchange rate of the Seoul Money Brokerage Services on the last day of the month prior to the bill submission 
③Weights & Measures: The International System of Units
④Interest rate of loan: The 3-year maturity corporate bonds distribution yield (unsecured AA-) on the last day of the month prior to the bill submission
⑤Deposit interest rate: Time deposit (6 months-1 year) weighted average interest rate announced by the Bank of Korea as of the last day of the month prior to the bill submission
⑥Inflation rate: Consumer price index announced by the National Statistical Office as of the last day of the month prior to the bill submission
⑦Discount rate: Yearly discount rate of 10% or any rate suggested by the proposer (In such case, explain the basis.) 
⑧Baseline year: Closing date for the investment corporation, end of the year for individuals
⑨Depreciation: Straight-line depreciation
⑩Current valuation base date: The bill submission date
⑪Business value analysis period: minimum of 20 years from the initial investment 
⑫Monetary unit: Korean won (if in foreign currency, mark it together with Korean won)
⑬Accounting standard: Korean International Financial Reporting Standards