Since Senator Sherwin Gatchalian appears to have the scenarios for an abrupt exit of Philippine Offshore Gaming Operators figured out, those who will be displaced primarily real estate owners should seek him out for assistance.
The government should also ask him for the recovery of lost revenues similar to the crafting of a counterpart measure when Congress passes a revenue-draining bill such as one providing for a populist tax cut.
Gatchalian is now urging the Department of Labor and Employment to expedite a program that would assist Filipino workers in the event of displacement from the POGO’s closure.
“While we do not expect an abrupt displacement of POGO workers, it is important that immediate assistance or intervention is readily available for these Filipino workers to find replacement jobs as soon as possible,” Gatchalian said.
According to the senator, the licensed POGOs were under-declaring their income resulting in a tax leakage of P1.9 billion a year.
Gatchalian’s efforts should be seen in the light of his past pursuit as chairman of the Senate energy panel when he blocked a private transaction between oil giants Chevron and Shell with the Udenna Group that caused a setback in the rehabilitation of the Malampaya field.
He also offered solutions that were later found untenable, while the intrusion caused uncertainties among investors who detest government hand in business deals.
Real estate expert David Leechiu said a ban on POGOs would be felt in various sectors of the economy, far from the oversimplified assessment of Gatchalian.
An immediate impact would be in the property sector where P26 billion in office rent was already lost since 2020 after 630,000 square meters of POGO offices were vacated.
The closure of POGO outlets resulted in the contraction in the real estate market for the past 3 years, according to Leechiu.
He added that a full exit of the POGO industry is expected to “not only accumulate further losses in sources of income and tax but also increase office vacancies and push rental rates further down than the pandemic effect.”
Rent has declined among offices in key business areas, Leechiu said.
In the Manila Bay area, office rent now fell from P1,500 per square meter in 2019 to P600/sqm.
During the same period, Makati City rent went down from P1,500/sqm to P900/sqm; Alabang, P1,000/sqm to P600/sqm; Cavite, P700/sqm to P400/sqm and Ortigas Center and Mandaluyong, P900/sqm to P600/sqm.
A full withdrawal of POGOs will be disastrous to the property sector as forecast rent in the Manila Bay area will further dip to P300/sqm; Makati City, P700/sqm; Alabang. P300/sqm, Ortigas Center and Mandaluyong, P300/sqm and Cavite, P250/sqm.
Total income displacement would be P45 billion annually in missed rent, according to Leechiu.
The other potential losses are 567,000 jobs, up to P91.4 billion in foregone income tax, P22.5 billion worth of annual electricity consumption, P46.5 billion in annual housing rent, and P1.5 billion in daily spending from POGO agents.
Gatchalian’s simplistic solution is that the losses can be regained in the Business Process Outsourcing sector including for those who will be laid off.
The only likely beneficiary of the POGO pullout would be Gatchalian, who gets to collect brownie points at the expense of an economic growth driver.