Ban on POGO removes ‘repetitional risks’ but losses feared

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The ban on the Philippine offshore gaming operations (POGOs) will send strong, positive signal to the global investment community on the country’s good governance policies.

Finance Secretary Ralph Recto said while there will be losses tied to the ban on POGOs in terms of revenues, the ban will remove the “reputational risks tied to these gaming entities.

“I believe it’s the right decision. POGOs come with reputational risks, not to mention the numerous negative impacts on our society,” said  Recto in an interview after President Ferdinand Marcos Jr.’s State of the Nation Address (SONA) yesterday.

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“We see and discuss these issues almost every day. They also cause significant distractions for our government, particularly the PNP (Philippine National Police), due to the illegal POGOs in our country,”  Recto said.

When asked if the ban will adversely impact the government’s financial situation, Recto said  the losses are greater than the gains.

“In reality, we lose more from POGOs than we gain. Although they pay taxes, the expenses, such as those incurred by the PNP due to crime, are substantial,” Recto said.

Citing a report from the Bureau of Internal Revenue, Senator Joel Villanueva earlier said that only P10.321 billion was collected from POGOs in 2023, which is only less than half of the P24 billion revenue projection of the Philippine Amusement and Gaming Corp. (Pagcor)
Sergio Ortiz-Luis Jr., president of the Employers Confederation of the Philippines and of the Exporters Confederation of the Philippines Inc.  said it is now up to the Pagcor which regulates gaming in the country to do its job of cleansing the ranks of POGOs, starting off with the illegal ones.

Ortiz-Luis expressed concern over the job  and business losses in industries that serve the legal POGOs.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. , said the President’s decision to  stop POGO operations is “somewhat expected” given the recent clamor  of local business groups and China’s  appeal to ban them the past five years.

Ricafort said the ban sends a positive signal to investors on the Philippines’ good governance.

“Global investors patronize countries that comply with ESG (environmental, social, governance) standards …compliance on ESG signals good business for the country. I do not have precise estimates but compliance on ESG standards would encourage more foreign and local investments,” he said.

But Ricafort warned of the adverse impact of the move on the economy.

“Supplies or any other businesses/industries in the supply chain of POGOs could be adversely affected such as rental/lease income, employment agencies, and other related/allied products and services needed by POGOs from the locals. Transport and logistics servicing POGOs could also be adversely affected in terms of reduced/lost business,” he said.

Business and civic society groups welcomed the President’s emphasis on prices of rice and agriculture in general, energy and infrastructure.

The Power for People Coalition (P4P) concurred with the President on the review of the Electric Power Industry Reform Act  to implement much needed  changes that will address energy security.

“Filipinos have experienced widespread red and yellow alerts every year since the start of his administration. Surely, our perennial power issues deserve more time and clearer plans during the one time every year he addresses the nation on our state of affairs,” said Gerry Arances, P4P convenor, in a statement.

P4P also said the  President must remain firm with the government’s planned shift to use more renewable energy.

The National Grid Corporation of the Philippines (NGCP) for its part said it will continue to work towards the development of a reliable power transmission system.

NGCP said with the President mentioning the company’s projects  in his SONA is  “a clear sign that our hard work is recognized as having made a positive impact and is fully aligned with his vision for a strong economy.”

“As we are all working towards ensuring the reliability of the country’s transmission network for a more resilient power industry, we reiterate our call for a more coordinated, resource adequacy based and holistic approach to energy planning, that considers the three main links to the energy supply chain: supply, bulk transmission, and retail distribution,” NGCP said, in a statement.

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The company added it is “ready to serve,” adding that attention must also now be “properly trained at ensuring enough investments in the generation sector to meet increasing demand.”

On agriculture, the Samahang Industriya ng Agrikultura (Sinag) said  the President has given importance to the plight of local food producers.

“This is the marching order of the President even with his first SONA, this should also be what must be followed by our country’s economic managers,” said Jayson Cainglet, Sinag executive director, in a statement.

Cainglet reiterated that  Executive Order  EO 62 – which lowered tariffs on rice as espoused by the economic managers –  is not the solution to lower local prices of rice.

“We should  leave the goal (of) P20 per kg of rice (behind) as it is not attainable (now) that prices of fuel (have) doubled and production costs have increased worldwide. There is no shortcut; rice prices will only go down alongside other primary goods if the local production will be strengthened,” Cainglet said.

He added  the  economic managers should henceforth shun policies on unlimited importation of goods and on lowering of tariffs which negatively affect local producers.

Luis Limlingan, managing director at Regina Capital and Development Corp.,  said he found  President Marcos’ pronouncement on energization projects as noteworthy as these will address power supply issues.

“Energy sharing throughout the archipelago will allow for excess power to be distributed to regions with excess demand,” he said.

Limlingan also observed Marcos’ highlighted infrastructure projects such as Panguil Bay Bridge, the longest sea bridge in Mindanao, New Clark City access road, North-South Railway project, and PNR Bicol Line, as well as the airport upgrades.

“There were priorities such as agriculture, healthcare, anti illegal drugs, but as an investor I found the above mentioned as of particular interest,” he said. (Angela Celis, Ruelle Castro, Jed Macapagal and Irma Isip)

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