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Philippine institutional ire toward foreign-facing online gambling operators (POGOs) continues to grow, with the nation’s top economic development agency now backing a ban on the sector as finance officials clamour for prohibition.
The National Economic and Development Authority (NEDA) told a House of Representatives committee hearing on Tuesday (December 5) that damage from a Chinese government tourism blacklisting of the Philippines over POGO activity would easily outstrip POGO revenue.
Sarah Lynne Daway-Ducanes, NEDA assistant secretary for policy and planning, told the Games and Amusements Committee that the Philippines stands to lose two to three times the current contribution of POGOs in gross domestic product if Beijing carries out its blacklist threat.
“We are banking on tourism as one of the main drivers of growth in the medium term,” the economics professor said.
“If POGOs continue operating and China blacklists the country, our economy stands to lose as much as 0.8 percent to 1 percent of GDP annually”, against a 0.3 percent contribution of POGOs, Daway-Ducanes said.
“If we bump this up against the estimated economic benefits that I mentioned earlier, we are looking at a net negative impact of POGOs in our country.”
NEDA, an independent Cabinet-level agency, is the latest government ministry to back sustained calls by prominent senators for a complete ban on POGOs, and potentially puts pressure on President Ferdinand Marcos Jr. to reconsider his support for the industry.
PAGCOR, the national gambling regulator, has been a steadfast supporter of POGOs, in part because of the regulator’s need for tax revenue.
But PAGCOR’s credibility has been heavily undermined by a string of raids on POGO-linked companies, which forced thousands of Filipinos and foreign nationals to operate a mix of online gambling service and cyber scams.
Hundreds of the rescued workers were from China, adding to Beijing’s list of complaints against the industry and possibly fuelling an angry exchange between Chinese diplomats in Manila and the Philippine justice minister in October.
Corrupting impacts of the industry on police work and immigration, labour and health bureaucrats have made national headlines in recent years, with perhaps the most infamous incident seeing the entire immigration team at Ninoy Aquino International Airport sacked and probed for receiving bribes to allow Chinese labour into the gaming market.
Renfred Tan, a senior manager with PAGCOR’s POGO licensing division, told the committee that a better response to years of POGO-linked crime and human trafficking is “proper regulation”.
“Through proper regulation, intensive monitoring and better inter-agency coordination and data-sharing, illegal offshore gaming operations can be eliminated, along with the social ills related with it, resulting in a viable and sustainable industry,” he said.
POGOs provide a “substantial revenue scheme that the country needs for its nation-building programs and socio-civic projects”, he said.
The Department of Finance (DOF), whose Bureau of Internal Revenue has been locked in legal disputes with PAGCOR over POGO fees for years, reiterated its fear of “high reputational risks” from the sector and resulting damage to foreign investment.
“We maintain our position on the discontinuation of POGO operations in the country,” DOF divisional director Maria Karla Espinosa told the committee.
“It is our belief that we cannot afford to lose the needed productive investments and their accompanying revenues from more legitimate industries, which we believe can be gained from positive business perception, especially at this time, when the country is gearing towards full economic recovery,” she said.
The Chinese government has suggested for some time that the Philippines could be punitively targeted as a tourism destination because of its support for an online gambling segment that relies heavily on customers based in China.
However, despite alleged informal threats by Chinese diplomatic staff, no formal announcement has been made in Beijing on which markets it is targeting, if any, or how.
