Amid the recent spate of kidnappings and other illegal activities involving Chinese nationals working in the online gaming industry, various quarters urged authorities to close down all Philippine Offshore Gaming Operations. Reports quoted a Department of Justice official saying the government is set to stop the operations of 175 offshore gambling firms and deport about 40,000 Chinese workers. The POGOs targeted for closure had licenses that either expired or were revoked for violations like non-payment of government fees.
The chairman of the House Committee on Ways and Means, however, opposed the proposal to close down all POGOs, saying it will only create an entire underground sector. Albay Rep. Joey Sarte Salceda said: “Of course, we should enforce against illegal gaming operations. That’s the function of law enforcement. But our policy cannot be to give an entire industry up just because there are bad actors. All industries have bad actors. My stand is for the government to wield the full weight of the law.”
Salceda said a blanket ban on a specific sector, when there are laws that exist to prevent abuses in any kind of business, will be seen as arbitrary. The resident economist of the House said this “will hurt our reputation with investors not just in the gaming sector. We will be known as a country that burns down houses just to kill the rat inside.”
The Philippine Amusement and Gaming Corp. earlier defended legitimate POGOs from the foreign nationals reportedly involved in illegal online gaming. “They are not POGOs,” said Pagcor chief Alejandro Tengco, as he clarified that illicit activities of these Chinese and other foreign nationals are not in any way related to legitimate offshore gaming entities.
At the Senate Committee on Ways and Means hearing on POGOs, Sen. Francis Joseph “Chiz” Escudero stressed a similar point. “We have to distinguish between legal and illegal POGO establishments,” he said, adding that a majority of the crimes involving so-called POGOs “apply to the illegal POGO operators.”
Pagcor currently has 34 approved POGO operators, 127 accredited service providers and five special class of business process outsourcing companies, which Tengco said underwent probity check.
PNP Chief General Rodolfo Azurin Jr. said the PNP and local government units are working together to document the status of POGO workers. The plan is to establish a recording and monitoring system that will keep track of the activities of these foreign workers and ensure their compliance with PNP clearance and LGU administrative requirements.
A property analyst said the Philippine economy stands to lose almost P200 billion annually—from office and residential rentals, income taxes, electricity bills, employees’ wages and regulatory revenues, among others—if the remaining legal POGOs are shut down. Leechiu Property Consultants CEO David Leechiu said the complete exit of remaining firms, which currently occupy 1.05 million square meters of office space around the country, will result in P18.9 billion in lost annual office rentals. An additional P28.6 billion worth of rentals for residential space—with many POGO employees currently renting from local landlords—will also be lost. The government will forego P5.8 billion in taxes, while Pagcor stands to lose P5.25 billion in revenues.
Leechiu said P54.3 billion in income taxes will be lost due to the departure of foreign workers, while the local economy will suffer the loss of P52.5 billion in “fit-out” costs for furniture, fixtures and technology for these firms’ worksites. He said POGOs pay about P9.5 billion for electricity, and their workers consume an estimated P11.4 billion annually in meals, all of which will be lost if the industry is shut down. Finally, some 347,000 workers—Filipinos and foreigners—stand to lose their jobs if the remaining legal POGO firms are closed down.
“This is not the time to create a real estate crisis, on top of the other crises that we’re already facing,” Leechiu said, adding that while politicians are pointing to the reduced taxes that the industry has paid in recent years due to the slump in operations, they are ignoring potential losses in other sectors that depend on the industry as well as the thousands of Filipinos employed in online gaming that is just starting to recover.
The expression “a rotten apple spoils the barrel” comes from a 14th-century Latin proverb that says, “The rotten apple injures its neighbors.” There are bad Chinese nationals destroying the image of the POGOs in the country. It would do well for Philippine law enforcers to nab these foreign criminals and deport them. We see the wisdom in Salceda’s position that we should not throw away a billion-peso industry because it has a few bad actors. The challenge is to find these rotten apples and throw them away as fast as possible because it does not make sense to tear down a productive apple orchard because of a few spoiled fruits.