The Myth of Chinese contributing to the Philippines Offshore Gaming Operations

Philippines Offshore Gaming Operations (POGOs) is usually considered as a booming gaming industry, employing several thousands of people, serving  as a source of recreation for boosting both internal and external tourism in the country. But the reality associated with POGOs in Philippines is completely different. Over the years, the non-transparent investments by Chinese companies have turned POGOs  into a sector that promotes illegal entry of Chinese people into the country, snatching away jobs from the locals and an  industry that cause economic disruptions, social and governance issues and national security challenges.

The speculative and non-transparent investments into POGOs by Chinese companies since 2016 have been a matter of concern for the Filipinos. The Philippines Government and Philippine Amusement and Gaming Corporation (PAGCOR) from 2016 to 2019 justified licenses to POGOs for the economic benefits they were supposed to bring to the country. But the adverse impacts it generated over the years outscored the benefits it was supposed to bring in every way.

            Employment of the youth is one of the major concerns of any government in the world and so is the case with the Philippines. As of 2019, as reported by the Bureau of Immigration (BI), out of a total of 166,265 people employed in the POGOs sector only 28,265 people are Filipinos, which comes to only 17 per cent. [1] Rest all are foreigners. A total of 138,000 foreigners are legally employed in the sector and as many as 470,000 Chinese are illegally employed in the industry. Many of them enter the Philippines through visas valid for six months and remain in the country illegally thereafter as was exposed by the Pastilla Scandal.

The spread of Dutch disease and economic disruption is also caused by the economic bubble created by the POGOs. In economics, Dutch disease is the apparent causal relationship between increase in the economic development of a specific sector and a decline in other sectors. In case of POGOs, it was estimated that in December 2019, POGOs from China occupied 1.14 million square meters of office space in the Manila National Capital Region (NCR). This accounted for 10 per cent leasable office space in the NCR. The sudden spurt in the property prices caused by POGO bubble disproportionately benefitted some companies through economic rent. Without adding economic value, these rents created an irrational exuberance, which saw money flow into the Philippines, which in turn resulted in the currency Peso’s exchange rate fluctuations in 2019 and 2020, that caused setback to other industries and the country’s overall economy.

The adverse impacts of the POGO’s sudden and irrational growth due to non-transparent investments are not just economic, but also have far-reaching social consequences as well. According to the Philippines National Police (PNP) there was an increase in the rate of street crimes, prostitution and money laundering in the Philippines due to the influx of POGOs. Interestingly, in most of the violent street crimes and prostitution cases, police have identified involvement of Chinese citizens.

Moreover, many POGO clusters are located in the vicinity of military establishments. One cluster is located in Araneta Center in Eastwood City, close to Fort Aguinaldo and Camp Crame (Philippines’ Armed Forces Headquarter). Another is located in Kawit, Cavite near the Sangley Point (Philippines’ Naval Base) and yet another is located in the Pasay City near the Villamor Air Force Base.

            Observers view that POGOs provide higher employment to the Chinese than to the local Filipinos, while creating economically harmful situations. Their social consequences are disturbing the Filipino society at all levels, physically, economically and psychologically. They may also further turn into instruments for China’s espionage operations in the Philippines. POGO is a harsh reminder to other countries that allow unrestricted operations by foreigners, especially Chinese that invariably have socio-economic repercussions, affecting the safety and sovereignty of the nation.