THE Bangko Sentral ng Pilipinas (BSP) reiterated its position that the exit of Philippine Offshore Gaming Operators (POGOs) will have no significant effect on the economy.
BSP Governor Benjamin E. Diokno said: “Di naman talaga kailangan ng POGO. Yun pa rin ang assessment namin. (POGOs are not really needed. That remains our assessment.) It will not be a financial risk to the economy (if POGOs exit), kasi hindi naman ganon kalaki ang exposure nila sa real estate (the real estate sector’s exposure to POGOs is not that great).
Mr. Diokno was speaking to reporters on the sidelines of The Asset’s 14th Philippine Forum.
He added that said that Malacañang has yet to respond to his recommendation.
POGOs have become an irritant in the relationship with development donor China, which fears that its foreign exchange controls could be undermined. In August, the Chinese embassy in Manila announced a crackdown on online gambling, to bring the industry in line with its general ban on gambling in all forms.
POGOs have also generated discontent because of perceptions that the largely Chinese work force is taking away jobs and could be running rings around the alien work permit system and withholding tax rules.
At the same event, Finance Secretary Carlos G. Dominguez III said that the government is not against POGOs in principle but added that they should follow the tax rules.
“We are only implementing the law. But they have to follow and pay taxes as required by law,” he said in response to a question at a forum.
The exit of POGOs will leave a “glut” in office space which can be absorbed by traditional demand, UnionBank of the Philippines, Inc. chief economist Carlo O. Asuncion told BusinessWorld.
“There will be a glut in office space that, I think, will readily be taken up by traditional demand like that coming from conglomerates, construction, finance, professional services, technology, etc… The non-POGO office demand is still robust and stable,” Mr. Asuncion said in a text message.
He said POGOs take up between 1 million and 1.3 million square meters of office space in Metro Manila, with a high concentration in the so-called “Bay Area” reclamation zone.
However, Mr. Asuncion said in the real estate sector, “growth has softened from 10.9% in the first half of 2018 to 7.2% the same period this year. So, one can say that the impact of POGOs has not largely been felt.”
In a September report, Fitch Ratings said a crackdown on POGOs will have no significant effect on the banking sector.
“We understand that most major property developers have placed internal limits on their direct exposure to such operators in light of the potential policy risk,” Fitch said, noting that the vigilance over the sector could affect the domestic property demand more, as POGOs have absorbed about a third of Metro Manila’s office space from 2017-2018.
The government stopped accepting applications for new POGOs at least until the end of 2019 pending a policy review on the sector.
“POGO demand for space is expected to decelerate by the end of this year because of the temporary ban by the government,” Mr. Asuncion said. — Luz Wendy T. Noble