Economic managers like to find out if Philippine offshore gaming operators are beneficial or not to the economy.
The Bangko Sentral ng Pilipinas is interested to see the benefits the industry brings to the country, aside from taxes collected from Chinese workers that should reach P24 billion annually.
BSP Governor Benjamin Diokno said in a recent economic forum hosted by the Economic Journalists Association of the Philippines that monetary officials were studying the economic impact of the rapidly-growing offshore gaming operations including the possible financial stability risks that could emanate from the industry.
“I don’t know but we are studying to find out what good it is going to bring for the country. One of the BSP’s mandates is financial stability, so we want to see the financial risks [associated with it] and study the POGO issue,” Diokno said.
“What if they leave? What will be the impact to the property sector,” he said, referring to earlier reports that POGO operations have been causing the increasing take-up of property spaces especially in the Bay Area.
“You know the GFC [global financial crisis] started in the real estate sector, not from banks itself,” he said, pertaining to the crisis that rocked the global financial markets 11 years ago.
The financial crisis of 2007–2008 is considered by many economists as the most serious global economic crisis since the Great Depression of the 1930s.
Diokno said the Bangko Sentral might also require banks to provide pertinent information regarding their lending to POGOs.
Economic Planning Secretary Ernesto Pernia said the National Economic and Development Authority had not yet quantified the value-added impact of POGO operations in the country.
“We have not yet studied that,” he said. Pernia said he preferred that POGOs go to the regions and not congregate in Metro Manila.
“There are too many buildings in Manila. They should locate in the regions so that there would be improvements in the regions,” Pernia said. “They must also be regulated on where they should operate.”
China’s position
The Chinese embassy in Manila earlier urged the Philippine government to crack down on the POGO operations in the country, saying several Chinese citizens were illegally recruited and hired in offshore gaming operations in the Philippines.
State-run Philippine Amusement and Gaming Corp. said it stopped accepting new applications for offshore online gaming licenses in August after Beijing called on Manila to crack down on gambling operations targeting its citizens.
Pagcor chairman Andrea Domingo said the agency would “stop first and look at other concerns that we have not met comfortably.”
The regulating body will also weigh the social costs and benefits from POGOs. Domingo said there were 58 licensed offshore gaming operators in the country and three more applications were pending.
The Chinese embassy told the government to pay more attention to its position and concerns and take concrete and effective measures to prevent and punish local casinos, POGOs and other forms of gambling entities for their illegal employment of Chinese citizens and crack down related crimes that hurt Chinese citizens.
The embassy said most of these illegally recruited Chinese workers had their passports taken away from them.
It said that the Chinese are confined to live and work in certain designated places and some of them were subjected to extortion, physical abuse, torture, and other ill-treatment.
At the same time, the embassy said dozens of kidnappings and torture cases of Chinese citizens who gamble or work illegally were reported in the Philippines. It said some Chinese citizens were physically tortured, injured or even murdered.
The embassy said that crimes and social problems in China had increased due to a large number of Chinese citizens “lured” into illegal gambling.
The Finance Department and the Bureau of Internal Revenue expect to collect at least P2 billion in personal income taxes per month from foreign workers. So far, the government initially collected P200 million from the sector in July 2019.
Domingo said POGO hubs were being constructed in Luzon but said these facilities would not limit the freedom of the workers. Instead, they would offer convenience and protection to foreign workers who are mostly Chinese, she said.
Earlier, the Labor Department said foreign nationals working for POGOs were estimated at 138,000.
In a report to Dominguez recently, the Labor Department and the Bureau of Immigration came up with a reconciled list of 138,001 workers, of which 54,241 were issued alien employment permits and another 83,760 were granted special working permits.
Dominguez said assuming that each foreign national was earning an average of $1,500 a month and taxed at 25 percent of his or her gross income, the government could raise P32 billion a year in income taxes from these workers.
Industry sources say regular workers manning call center operations and chat rooms are paid average monthly salaries of P40,000 to P50,000; supervisors up to P75,000; and managers up to P100,000.
Chinese espionage?
Lawmakers, however, raised concerns over the influx of Chinese nationals in the country, saying they could be used by China to spy on the activities of different government agencies particularly those concerning national security.
They particularly mentioned the proximity of POGO operations to vital police and military camps in the metropolis which could pose possible threats to national security.
No less than Defense Secretary Delfin Lorenzana said POGO hubs put up near military camps could easily be turned into facilities for spying by the Chinese government.
Lorenzana particularly cited POGO hubs at Araneta Center and Eastwood City in Quezon City, both near Camp Aguinaldo and Camp Crame, the headquarters of the Armed Forces of the Philippines and the Philippine National Police, respectively.
Other POGO hubs are located near the base of Philippine Air Force in Pasay City and the Philippine Army in Taguig City. The POGO hub being constructed in Kawit, Cavite—located at the Island Cove or Covelandia—is more or less two kilometers from the Philippine Navy headquarters in Sangley Point in Cavite City.
Reports said residents in Las Piñas City were concerned about the presence of what they described as “military-looking” Chinese workers in a POGO facility in the city.
Rep. Eric Pineda of 1Pacman party-list, who chairs the House committee on labor, said residents saw some Chinese workers there whose haircuts and body build “resemble” those of soldiers.
Bayan Muna party-list Reps. Carlos Zarate, Ferdinand Gaite and Eufemia Cullamat filed Resolution 221 urging lawmakers to conduct an investigation into the validity of POGO facilities in the country.
But President Rodrigo Duterte shrugged off the concerns of the lawmakers on the presence of POGOs near key military facilities.
Presidential spokesman Salvador Panelo, quoting the president, said in a statement that China does not need to be near a military facility because it can spy on the Philippines even from afar.
“Because considering the high technology, even if you are 1,000 miles away, they can spy on us if they want,” Panelo quoted the president as saying.
Chinese Ambassador to the Philippines Zhao Jianhua said that if this was the state of mind of Filipinos about the Chinese working in POGOs, then “China could also suspect overseas Filipino workers of being engaged in surveillance activities in China”.
In response, Panelo said OFWs in China were there simply to work to provide for their families in the Philippines.
Philippine National Police chief Oscar Albayalde clarified that POGOs do not pose threats to national security.
Real estate driver
Leechiu Propery Consultants Inc. said the Philippine property market would likely post double-digit growth this year, with POGOS considered a vital contributor for the expansion.
LPC chief executive David Leechiu said in a news briefing the information technology-business process management and Philippine offshore gaming operations continued to be the significant demand drivers for office space.
He said the IT-BPM continued the upward trend since 2017 and took up 102,000 square meters in the first three months of 2019.
Leechiu said the POGO industry was the notable driver in the residential segment that generates an annual housing rental income of $501 million. He said there was an increase in transaction values in condominium prices in Metro Manila driven by demand primarily from buyers from mainland China. Residential sales were no longer dominated by OFW buyers but by the Chinese, he said.
Latest data from the Bangko Sentral ng Pilipinas for the first quarter of 2019 showed that residential real estate prices increased by 3.1 percent from a year ago, driven by the uptick in the prices of condominium units and townhouses.
“In NCR, the rise in the average residential property prices was largely due to the increase in the prices of condominium units,” the BSP said in its quarterly report on Residential Real Estate Price Index released in July 2019.
Filipino employees
Offshore gaming operators earlier revealed their plan to form an organization to police their own ranks and teach locals how to speak Chinese Mandarin so that they can be employed in the industry.
Kevin Wong, general manager of Oriental Group, the holding firm that owns Oriental Game Ltd., did not give a timeline for the formation of the association during an interview at the sidelines of the recent Philippine-Asian Gaming Expo at the SMX Convention Center in Mall of Asia, Pasay City.
Observers earlier expressed apprehension over the influx of Chinese nationals working in POGOs, saying they were getting the jobs that should be made available to Filipinos. But operators were saying that the language barrier was a big issue in this business.
Initial estimates show that on the average, Filipinos account for just 20 percent of workers in a POGO company.
“We are trying to find ways on how to increase the number of Pinoys in POGO operations,” Wong said, adding Pinoy programmers were at par with global standards.
Wong served as the chairman of the gaming exposition that brought to Manila last July around 30,000 gaming entrepreneurs and 200 exhibitors from 15 countries.
Wong said currently, around 250 companies were legally operating in the country while 30 to 50 were unregistered and conducting their business illegally.
On the government’s efforts to check on the foreign workers and tax them according to law, Wong said, “we always follow. If this is the regulation, then we will follow. We have always been very ‘legal.’ So if that’s the direction to be legal, then we will go that way.”