‘All told, POGOs will most likely stay in the country given the huge economic loss that their demise will entail.’
EVERY time sensational crimes are committed by foreigners who are identified with the Philippine offshore gaming operations (POGOs), the public, the media and our legislators are prodded enough into seriously rejecting this gambling activity that has extensive influence — good and bad — in our daily lives.
These recent crimes include the kidnapping incident in the Skyway leading to the South Luzon Expressway, which involved Chinese POGO operators and customers. There were also incidents of kidnapping-for-ransom and serious detention, and other offenses committed in Pampanga, which our authorities uncovered, with the victims saved, and the perpetrators arrested. With the way POGO operations are contributing to the peace and order expenses of the government, one would think that it is really a good idea that these firms are permanently closed.
An important sector of the business community, however, looks at the problem differently. They said a total ban on POGOs may trigger another crisis in the real estate industry and spill over to the economy as it could translate to annual losses of nearly P200 billion.
A complete ban on POGOs is also expected to translate to an additional office space vacancy of 1.05 million square meters — the space currently occupied by the remaining POGOs. This, in turn, could swell losses from the POGO exodus to roughly P190 billion.
Experts said the estimated annual losses are broken down as follows: P54.3 billion to P57.1 billion in income tax from foreign FTEs (full-time equivalent); P52.5 billion in fit-out cost or the cost of providing furniture, fixtures and technology; P28.6 billion in housing rent across 2.4 million sq.m of residential space; P18.9 billion in office rent; P11.4 billion expenditure on commissary meals; P9.5 billion in electricity cost; P5.8 billion in taxes; P5.25 billion in revenue for the Philippine Amusement and Gaming Corp.; and P952 million in daily spending.
As if these were not enough, the empty offices could also lead to closures of medium-sized and smaller property players and push rental rates back to their levels as far back as two decades ago. With POGO offices closed, there would be an oversupply in the office sector, cutting rental rates deeply to the detriment of property players.
These numbers must be in the mind of former President Rodrigo Duterte when, directly requested by President Xi Jinping to stop the operations of POGO in the Philippines, he said he could not promise that he would. In contrast, when the same request was made to Prime Minister Hun Sen, the Cambodian leader vowed that China’s request would be accommodated.
All told, POGOs will most likely stay in the country given the huge economic loss that their demise will entail. To balance the solution, the government will have to launch a crackdown on illegal POGOs and tighten regulation over the legitimate operators.
