OPINION
Advocates Philippines
POGO Operations: The Economic Impact
File photo
Talks about shutting down Philippine Offshore Gaming Operators (POGOs) have reached the Senate floor, and lawmakers have asked about its impact on the country's economy and whether its “social cost” is worth it.
During a Senate hearing held on October 3, Leechiu Property Consultants explained how much the Philippine economy could lose if the remaining POGOs, which provide online gambling services to foreigners, leave the country.
"Our estimates are somewhere around ₱170 to ₱200 billion and that's comprised of different parts. A big chunk of it is the real estate market, both in the office being rented and residential condos (condominiums) being rented. And a big chunk in the service sector because the informal economy is significantly employed by this sector also," David Leechiu,
chief executive officer (CEO) of Leechiu Property Consultants explained.
According to Leechiu, the real estate sector will lose an estimated amount of P47.5 billion, or P18.9 billion in annual office rental revenues and P28.6 billion in annual housing rental.
He said the POGO exit likewise will forego the Philippine Amusement and Gaming Corp.'s (PAGCOR) annual revenue in regulatory fees worth P5.25 billion, while the Bureau of Internal Revenue (BIR) will have a P5.8 billion estimated loss in annual taxes.
Leechiu added that the BIR could no longer collect around P54.3 billion to P57.1 billion in income taxes from foreign FTEs or full-time employees.
He said there will also be losses of P11.4 billion in annual expenditure on commissary meals, P52.5 billion in fit-out costs, and P952 million in daily spending.
He also explained that shutting down POGOs will also affect local employment as about 347,000 Filipino jobs rely on the sector.
"In my humble opinion, to kind of shut down the POGO sector is a very big segment of the economy today in the context of what is
happening globally, and how the global events will impact the Philippines negatively. We will become more vulnerable without the POGO sector than it being with us. And the social impact of that could also be quite
damaging," Leechiu said.
"And I do think if we shut down this sector immediately and abruptly, the hundreds of thousands of Filipinos that will depend on it directly or indirectly will lose their jobs or lose significant revenues that are already significantly impacted by COVID in the last 30 months," he added.
Department of Finance (DoF) Secretary Benjamin Diokno stressed that while POGO revenues contribute to the government coffers, these come at a significant cost to the economy.
"It is time to pursue investments that will create value and high-quality jobs for our people, in line with our vision of an inclusive and sustainable economic development," he added.
Meanwhile, the Federation of Filipino Chinese Chamber of Commerce and Industry Inc. (FFCCCII) called for the closure of illegal and unregistered POGOs during the said Senate hearing.
The statement of FFCCCII read by spokesperson Wilson Flores stated that the organization is "against illegal or unregistered POGOs, the presence of their employees who are in the country without valid government permits and visas."
"All POGOs and their employees, whether Filipinos or foreign citizens, must follow the laws of the Philippines, regulations; obtain all
the necessary permits; pay correct taxes and fees. Illegal POGOs must be closed and their alien employees deported,” FFCCCII said.
FFCCCII also cited the pros and cons of the POGO firms.
"It cannot be denied that the POGO industry has brought some economic benefits to the country like revenues to coffers of government through fees, taxes, some employments, increase in demand of commercial and residential real estate, plus consuming goods and services which cater to them," it said.
"However, on the other hand, it is really deplorable that crimes and illegal activities related to POGOs are increasing and these have come to adversely affect not only those involved in that industry, whether Chinese or foreigners working there, but also many Filipinos. There had been reported incidents of abductions, force labor, prostitutions,” FFCCCII added.
Demand for POGOs in the country reached climax in 2016, as former President Rodrigo Duterte pursued closer trade and investment ties with China during his first year of presidency.
The DOF also pointed out that "The POGO sector, on the average, accounts for 0.03% of our Gross Domestic Product (GDP) from 2021 until August 2022, equivalent to P4.20 billion in monetary terms."
During a Senate hearing held on October 3, Leechiu Property Consultants explained how much the Philippine economy could lose if the remaining POGOs, which provide online gambling services to foreigners, leave the country.
"Our estimates are somewhere around ₱170 to ₱200 billion and that's comprised of different parts. A big chunk of it is the real estate market, both in the office being rented and residential condos (condominiums) being rented. And a big chunk in the service sector because the informal economy is significantly employed by this sector also," David Leechiu,
chief executive officer (CEO) of Leechiu Property Consultants explained.
According to Leechiu, the real estate sector will lose an estimated amount of P47.5 billion, or P18.9 billion in annual office rental revenues and P28.6 billion in annual housing rental.
He said the POGO exit likewise will forego the Philippine Amusement and Gaming Corp.'s (PAGCOR) annual revenue in regulatory fees worth P5.25 billion, while the Bureau of Internal Revenue (BIR) will have a P5.8 billion estimated loss in annual taxes.
Leechiu added that the BIR could no longer collect around P54.3 billion to P57.1 billion in income taxes from foreign FTEs or full-time employees.
He said there will also be losses of P11.4 billion in annual expenditure on commissary meals, P52.5 billion in fit-out costs, and P952 million in daily spending.
He also explained that shutting down POGOs will also affect local employment as about 347,000 Filipino jobs rely on the sector.
"In my humble opinion, to kind of shut down the POGO sector is a very big segment of the economy today in the context of what is
happening globally, and how the global events will impact the Philippines negatively. We will become more vulnerable without the POGO sector than it being with us. And the social impact of that could also be quite
damaging," Leechiu said.
"And I do think if we shut down this sector immediately and abruptly, the hundreds of thousands of Filipinos that will depend on it directly or indirectly will lose their jobs or lose significant revenues that are already significantly impacted by COVID in the last 30 months," he added.
Department of Finance (DoF) Secretary Benjamin Diokno stressed that while POGO revenues contribute to the government coffers, these come at a significant cost to the economy.
"It is time to pursue investments that will create value and high-quality jobs for our people, in line with our vision of an inclusive and sustainable economic development," he added.
Meanwhile, the Federation of Filipino Chinese Chamber of Commerce and Industry Inc. (FFCCCII) called for the closure of illegal and unregistered POGOs during the said Senate hearing.
The statement of FFCCCII read by spokesperson Wilson Flores stated that the organization is "against illegal or unregistered POGOs, the presence of their employees who are in the country without valid government permits and visas."
"All POGOs and their employees, whether Filipinos or foreign citizens, must follow the laws of the Philippines, regulations; obtain all
the necessary permits; pay correct taxes and fees. Illegal POGOs must be closed and their alien employees deported,” FFCCCII said.
FFCCCII also cited the pros and cons of the POGO firms.
"It cannot be denied that the POGO industry has brought some economic benefits to the country like revenues to coffers of government through fees, taxes, some employments, increase in demand of commercial and residential real estate, plus consuming goods and services which cater to them," it said.
"However, on the other hand, it is really deplorable that crimes and illegal activities related to POGOs are increasing and these have come to adversely affect not only those involved in that industry, whether Chinese or foreigners working there, but also many Filipinos. There had been reported incidents of abductions, force labor, prostitutions,” FFCCCII added.
Demand for POGOs in the country reached climax in 2016, as former President Rodrigo Duterte pursued closer trade and investment ties with China during his first year of presidency.
The DOF also pointed out that "The POGO sector, on the average, accounts for 0.03% of our Gross Domestic Product (GDP) from 2021 until August 2022, equivalent to P4.20 billion in monetary terms."
Oct 11, 2022
