POGOs economy effect in the Philippines

The Philippines has earned P11.9 billion in offshore gaming revenues since 2016, when several online gaming companies opened shop in the country after China banned all electronic casinos from operating in the mainland.

The influx of Mandarin-speaking offshore gaming workers in the country drove rental rates in the Manila Bay area by 80 percent, according to data from real estate consultancy firm Leechiu Property Consultants.

Office and accommodation space is expected to remain strong as long as POGO (or Philippine offshore gaming operations) firms are allowed to operate in the country, said JLL Philippines country head Christophe Vicic.

The sore point for the public, of course, is the glaringly obvious fact that the mysterious call centers that have sprouted across Metro Manila and other economic zones are only “Philippine” in the sense that they are physically located here; their management, staffing, and market is otherwise wholly Chinese. The sudden appearance of thousands of Chinese workers has been unnerving, which might not be the case were it not for the continually well-publicized maritime territory dispute between the two countries; as things stand, however, it has the look and feel of a colonial-style invasion.

According to the DoF, the sector contributes about P2 billion per month in tax revenues at present, following a rather lengthy process of identifying the operations and the individual workers they employ. Officially, there are about 138,000 POGO workers, virtually all of them foreigners; unofficially, Sec. Dominguez estimates that number accounts for no more than half of the actual POGO workforce.

There are 60 licensed POGOs in the country but only 48 are operational, a Philippine Amusement and Gaming Corp. representative said during a House of Representatives hearing on the agency’s 2020 budget.

The Bureau of Internal Revenue started collecting taxes from foreign workers employed by POGOs in early July and ordered the companies to remit withholding taxes from such workers by Aug. 10.

There are already warnings that the crackdown is coming. China within the last week has aired pointed “concerns” over reports that Chinese workers are being exploited in POGO businesses.

Malacañang has handled that topic in completely the wrong way, recommending that any complaints ought to be filed through normal legal channels for labor issues here. This amounts to the administratio n shooting itself in the foot, because what this has done, in effect, is tacitly accept Philippine responsibility for a wholly Chinese problem.

That just makes it easier for China to carry out a crackdown, because it shortcuts the development of the technical problems of regulated online gaming; China can simply pull the plug based on unacceptable working conditions, and blame the Philippines in the process. Now that the issue has come to the forefront of public attention, that ax may even fall before the quarter is out, creating another headache for policymakers trying to get this country’s economic growth back on track.