SANTA ANA, Cagayan”•The Duterte administration’s new gaming policy will reduce the Cagayan Economic Zone Authority’s income by up to 85 percent, officials said Monday.
Ceza hosts multiple online gaming firms in the special economic zone and freeport here, but officials admitted the government-owned corporation may not be able to contribute as much to the national coffers as in the past owing to President Rodrigo Duterte’s issuance of a new gaming policy in his Executive Order No. 13.
Duterte signed EO 13 on Feb. 2, which clarifies that any gaming operator desiring to operate outside the jurisdiction of the government authority that issued its existing license shall apply for a separate license with the appropriate authority.
Affected by the new gaming policy are licensing authorities such as the Philippine Amusement and Gaming Corp. and the freeport zones such as Ceza, the Aurora Pacific Economic Zone and Free Port Authority, and Authority of the Freeport Area of Bataan.
Secretary Raul Lambino, the new Ceza administrator and chief executive officer, said the new gaming policy also stops all licensed gaming companies from conducting their activities outside the jurisdiction of the licensing authority.
Ceza’s jurisdiction is limited to its 54,000-hectare freeport zone in this town.
As a result of the policy, Lambino said Ceza will not expect much money flowing in, starting in 2017.
“I was presented the projected financial status of Ceza and for 2017 it will have a net loss negative. We do not know how many hundreds of millions, and the same is true for 2018, 2019 and 2020 unless we can come up with some innovative ideas for our short term and medium term operations here,” he said.
In 2015, being the pioneer in regulated e-casino gaming jurisdictions in Asia, Ceza cornered $1.64 billion, or roughly 55 percent, of the $3-billion Asian and Middle East online gaming offshore market, according to H2 Gambling Capital, the gaming industry’s leading market data provider.
The remaining $1.36 billion or 45 percent was shared by Cambodia, Vietnam, Malta, Isle of Man, Latin America and other areas, the H2 report added.
“This is a big challenge for us at Ceza, because the report is that 80 tto 85 percent of our income was derived from those offshore gaming operations outside the ecozone’s jurisdiction,” Lambino said.
He said this is the sad note “on my part as the new manager” because Ceza’s new management had a predecessor who was able to report a positive net income for the organization, “but the successor will start not even on the ground level but from the bottom of the pit.”
Under the tenure of Jose Mari Ponce, CEZA contributed more than P1.42 billion to the government coffers from 2005 to 2016.
CEZA remitted P816.18 million to the Bureau of Internal Revenue as corporate income tax, while P611.67 million went the National Treasury as dividends share. This is on top of the hundreds of millions of taxes paid by locators, and of the additional income generated by other government agencies.
Lambino said CEZA can still continue to issue licenses for gaming operations, casinos and the like pursuant to its charter, but it will be only for those who will conduct their activities within CEZA’s jurisdiction.
He said that under EO 13, all CEZA locators, licensees who may be undertaking gaming operations in Makati City, Clark, Manila, Mandaluyong or elsewhere in the country, whatever form of gaming operation, have to come to CEZA to put up their infrastructure here.
“Otherwise, they are all considered illegally operating unless they have already secured their license from proper authorities or from PAGCOR,” Lambino said.
He said the President does not want ecozone-licensed gaming companies operating outside the zone’s jurisdiction because that is not actually the intention of putting up an economic zone.
“For how can you develop the area economically when you will not put up the much needed infrastructure in that area but you put your infrastructure somewhere else. That is not right and contrary to the spirit of putting up an economic zone like CEZA,” Lambino said.
He said has issued a directive to check on this “so we can send the necessary notices to all our licensees and that we will be deciding soonest whether to renew or cancel their license if they are still operating outside of CEZA jurisdiction.”
“The directive of the President is very clear that gaming operations outside CEZA is prohibited. If they want to operate outside of CEZA or elsewhere then they have to get the POGO [Philippine Offshore Gaming Operations approval] from the PAGCOR,” Lambino said.
CEZA has already asked their licensees with dispatch to transfer immediately to Santa Ana if they would like to continue operating as an offshore gaming operators.
On a positive note, Lambino said, there are many other companies that have not yet located in CEZA, some are also engaged in gaming operations that showed interest to come to CEZA.
“We have several lofty ideas that needed to be concretized. We cannot do that by ourselves and we need the cooperation and support first and foremost of our people here in Cagayan particularly in Santa Ana and Aparri,” Lambino said.
According to the administrator, the current CEZA 2017-2022 Medium Term Development Plan will be expanded by infusing bigger infrastructure projects and investments under the “Build, Build, Build” program of the government through an investment and marketing campaign.