Think tank’s critique on POGOs
An increase or decrease in POGO collections in any given year corresponds to either higher or lower Bureau of Internal Revenue collections, percentage-wise.
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An increase or decrease in POGO collections in any given year corresponds to either higher or lower Bureau of Internal Revenue collections, percentage-wise.
Without unbundling the rationale behind Senate Resolution 225, 227, and 229, there is an 11-page commentary on the "Net benefits of Philippine Offshore Gaming Operators" issued recently by a state think-tank. A cursory reading reveals interesting observations.
To the point, it raised three critical hurdles for POGOs, simplistically postulated, viz.:
One, unlike foreign direct investment, POGOs do not bring in: a) transfer of technology; b) development of human capital; c) development of institutions;
Two, POGO-related investment is inherently unstable (i.e., abrupt pullout of capital);
Three, the fallout from capital reversal is more painful once the economy becomes reliant on the contributions of the sector.
If the authors reflect the official view of the Philippine Institute for Development Studies, the think tank is inclined to "curtail POGO operations" while it is less costly to do so. Alternatively, so goes its argument, the economy could attract more desirable and durable forms of investment.
Conversely, if POGOs are allowed to continue, fundamental reforms ought to be introduced, namely: Stronger law enforcement or immigration controls; reconcile POGOs and foreign policy; address regulatory loopholes and governance gaps; develop the capacity to regulate the online industry.
Admittedly, the think tank felt the need to precisely quantify the financial benefits and social costs, stressing as it did that the "reported social costs outnumber reported economic gains." It's far less inclined to promote or expand the sector under risk of "abrupt reversal of capital on top of social and governance risks."
Given such vulnerabilities, it argues that these would make investments less attractive to investors, if not even "drive away good businesses that provide better jobs." However, these claims are not sufficiently supported by evidence-based data navigated beyond newspaper sources.
In a six-page Appendix, the article tabulated a two-column "benefit-cost matrix." An increase or decrease in POGO collections in any given year corresponds to either higher or lower Bureau of Internal Revenue collections, percentage-wise.
On benefits, Philippine Amusement and Gaming Corporation revenues from POGOs rather reflect a percentage ranging from 0.12 to 6.9 out of total PAGCOR revenues. Employment-wise, except for the year 2021, there are more foreign than Filipino workers; the combined numbers from 2019 to 2022 have significantly decreased from a high of 144,605 to a low of 34,245, respectively.
Regarding its impact on the local economy, PIDS conveniently "adopted" David Leechiu's estimates published in the Philippine Star, which reflect a total windfall gain or revenue source of about P187 billion. Clearly, a POGO ban would logically result in a real estate crisis, thereby hurting the economy.
In terms of social cost, the say-so spate of kidnappings, human trafficking, immigration issues (i.e., illegal and overstaying foreigners), labor concerns (i.e., working conditions of Chinese and Filipino workers), money laundering, unpaid dues of POGOs, real estate prices, reputational risks — should be ranged against the economic benefits.
Per datasets reflective of the "Costs" if POGOs continue, the social, economic, reputational realities that unfold or even co-exist with the presence of POGOs are not as problematic as they appear to be. It readily showcases the "lack of adequate regulatory structures to prevent abuse and excess," how agencies of government totally failed in their mission.
The Senate cannot solely depend on the position taken by a government think-tank, especially when it somehow failed to show how "social costs" would eclipse "economic benefits" since crime figures presented are way below the tolerance threshold for the social landscape to suffer from harm or the economic landscape from hurt.
If mainstream media does not beat a dead horse on the POGO issue as rabidly as it does, it might crystallize that the overshadowing problem behind this whole shebang is, at bottom, how news accounts on TV and newspapers that project the negative side of what clearly, to a former president, is "clean of illicit activity," not to mention the huge revenue stream that flows straight to PAGCOR, other economic spillovers notwithstanding.
Will reverse-engineering POGOs by "agencifying" them toward "zero social menace" and "full technology transfer" — lock, stock, and barrel — matter?
