THREE MAJOR business groups on Tuesday said they supported the total closure of Philippine Offshore Gaming Operators (POGOs), citing the spike in crime and money laundering risks associated with the sector.

The Foundation for Economic Freedom (FEF), Makati Business Club (MBC), and the Management Association of the Philippines (MAP) in a joint statement said the “social and reputational costs of government sponsorship of operations that are globally frowned upon far outweigh any economic benefits.”

“Since the COVID-19 pandemic, the POGO industry has significantly declined by 50% to 70%. This suggests that now is the best time to terminate their operations. The total ban will only result in temporary economic strains, as opposed to the enduring socioeconomic consequences and heavier disruption if we do not act now,” the business groups said.

A recent spike in crimes involving POGOs have sparked a debate on whether the sector’s economic benefits outweigh the social costs.

Finance Secretary Benjamin E. Diokno last month said he is in favor of the discontinuation of POGOs, citing the reputational cost since these offshore gaming operations are already banned in China and Vietnam.

Also, the FEF, MBC and MAP noted the lack of effective regulation of POGOs in the previous years, which resulted in taxation and monitoring issues with the Philippine Amusement and Gaming Corp. (PAGCOR). PAGCOR issues the licenses to offshore gaming operators.

“Conflicting mandates and the lure of corruption have rendered it and other involved government agencies incapable of effectively regulating POGOs. Crimes like money laundering, kidnaping, bribery, prostitution, human and drug trafficking — all associated with the gambling industry — impact on our record of law and order, and our reputation,” the business groups said.

The business groups noted the “taint of money laundering” erodes confidence in the banking system, and “puts legitimate financial flows, including from overseas Filipino workers (OFWs), at risk from sanctions of international oversight bodies.”

In an Oct. 21 report, the Financial Action Task Force (FATF) kept the Philippines on its “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks. The Philippines has been on the list since June 2021.

The Department of Finance (DoF) earlier estimated the shutdown of the POGO sector would mean losses of P64.61 billion in direct economic contributions or about 0.3% of the gross domestic product (GDP).

The biggest toll would be on income from housing space rentals at P25.17 billion, followed by office space rentals at P16.63 billion. Negative impact would also be felt in tax collections, PAGCOR revenues, personal consumption of POGO workers, transportation, and insurance.

Finance Undersecretary Maria Cielo D. Magno has said taxes collected from registered POGOs plunged 45% to P3.91 billion in 2021, from P7.18 billion in 2020. Taxes from POGOs have reached P3.9 billion from January to July.

PAGCOR collections dropped 34% to P3.47 billion in 2021, from P5.28 billion in 2020. From January to July this year, collections stood at P1.7 billion.   

Earlier this month, the Association of Service Providers and POGOs (ASPAP) warned the closure of POGOs will lead to the loss of jobs of around 23,000 Filipinos.

ASPAP is composed of 16 PAGCOR-licensed POGOs and 68 service providers. — Luisa Maria Jacinta C. Jocson