Goodbye to Pogos: How will PH handle?

Many consultants imagine that the departure of Philippine offshore gaming operators (Pogos) may have minimal impact on the home financial system, with its affect blunted no much less by the resilience of the industries which have benefited from the multibillion-peso sector up to now few years.

These embody the true property and banking industries, which contributed an estimated P1.7 trillion, or about 7 %, to the Philippines’ P24.3-trillion financial system based mostly on 2023 information.

From the viewpoint of property funding and administration firm Colliers, the upcoming exit of Pogos following a blanket ban issued by President Marcos will solely imply a fractional loss for workplace area landlords in Metro Manila.

It says Pogos presently occupy 3.5 % of workplace inventory within the metropolis, a share that has gone down from a excessive of 10 % in 2019, maybe the height of when Pogos made a killing with the assistance of a extra welcoming Duterte presidency.

 

Article continues after this commercial

Jan-Loven de Los Reyes, head of analysis on the Jones Lang LaSalle (JLL) Inc., describes the loss from Pogos as “not sizable,” citing that the business has already shrunk within the final a number of years.

Article continues after this commercial

“In the course of the latter a part of 2019, there was a little bit of a clampdown of Pogos and a few of them have exited the market, and this carried over into 2020 after we had the COVID pandemic,” de Los Reyes says in a press briefing.

“So, the variance by way of vacancies wouldn’t be as excessive, however possibly on the metropolis degree, you’d see a better emptiness,” he says.

For Rick Santos, chair and chief govt of Santos Knight Frank, it’s too early to say how the exit of the Pogos would have an effect on the property sector.

“We all know that main builders, that are our shoppers, took steps some years in the past to de-risk their portfolios with respect to the gaming sector,” he says. However he cites the necessity to wait and see how this will likely be carried out. “It’s a bit unsure proper now by way of precisely what’s going to occur,” he provides.

In keeping with the Pagcor, there are round 250 to 300 Pogos working within the nation as we speak with no license, a staggering quantity six instances greater than the 46 operators registered with the federal government and regarded to be respectable.

 

Over on the banking business, any ripple impact from Pogos’ absence is essentially being downplayed.

United States-headquartered Fitch Rankings Inc., one of many world’s three largest credit standing corporations, says that native banks have sufficient buffer to cushion the impact of the Pogo ban.

“Residential mortgage and shopper mortgage credit score high quality could possibly be affected by job losses if the Pogo sector is wound down rapidly, although we count on extra bank-asset impairments to stay comparatively small as some riskier Pogo-related mortgages have already soured,” it says.

It notes that the residential mortgage nonperforming mortgage (NPL) ratio, a measure of how a lot of whole financial institution loans are usually not repaid, improved to 7 % throughout within the first quarter of this yr from a peak of 9.6 % within the third quarter of 2021.

It says, nonetheless, that the ratio stays increased than the prepandemic degree of three.1 %, reflecting partly a fallout from speculative exercise and extra lax housing mortgage credit score requirements through the Pogo increase years starting 2016.

“Since then, many banks have turn into extra averse to lending to Pogo staff, given excessive coverage threat,” Fitch says.

Moreover, the scores company doesn’t count on property-related losses related to Pogo closures to be vital for banks.

In keeping with the Pagcor, Pogos started working within the Philippines in 2003.

 

Stricter laws had been put in place starting 2016, when it earned P73.3 million in charges, which then rose sharply to P3.1 billion in 2017 after which P6.1 billion in 2018.

Underneath state laws, all Pogo licensees should remit 2 % of their gross gaming revenues as regulatory charges.

From 2016 to 2019, Pagcor’s revenue from Pogos reached P18 billion.

By 2022, it plunged to P7 billion, falling additional to P5 billion by 2023. Previous to President Marcos’ order to ban Pogos, which have turn into a hotbed for crimes from fraud to kidnapping and murders, the Affiliation of Service Suppliers and Pogos (Aspap) appealed for extra leniency.

It has mentioned the ban would render an estimated 23,118 Filipinos and 17,130 international nationals jobless.

The Division of Labor and Employment was earlier tasked to roll out a reemployment plan to assist displaced staff.

For Sergio Ortiz-Luis Jr., president of the Employers Confederation of the Philippines (ECOP), a perfect transfer is to implement the ban in phases to cushion the affect on Filipinos who misplaced or about to lose their jobs.

“The federal government ought to begin with eliminating the unlawful ones. If we are able to do the identical with casinos and regulate them, then we are able to do it for Pogos, too,” Ortiz-Luis mentioned.

Nonetheless, the ECOP official mentioned the enterprise is “simpler mentioned than executed,” however vows they had been dedicated to serving to the federal government create extra jobs.

“I believe lots of them can get jobs in name facilities, within the (enterprise course of outsourcing business). Though not all could also be a superb match there,” he mentioned.