The Department of Finance (DOF) stated that the country was only getting less than half of the economic costs it incurred from allowing Philippine offshore gaming operations (POGOs).
Finance Secretary Ralph G. Recto said that the total economic benefits from POGOs amounted to P166.49 billion every year, 37 percent lower than the estimated total economic costs of P265.74 billion.
This is based on the DOF’s cost-benefit analysis presented to President Marcos on June 25, which led to him ordering the Philippine Amusement and Gaming Corp. (Pagcor) to wind down and cease operating POGOs by the end of the year.
He also cited that the net cost, which excludes production costs, of POGO operations reached around P99.52 billion every year.
These benefits mainly came from tax obligations from the Bureau of Internal Revenue (BlR) as well as gross gaming revenues from the Pagcor.
Other estimated economic benefits include income from office and residential space rentals, transportation, and demand from employees’ and entities’ private consumption.
Indirect economic benefits, which comprised the associated economic activities and government revenues earned from POGOs’ multiplier effects, were also considered.
On the other hand, the economic costs of POGOs took into account the effects of reputational risks, such as POGO-related crimes, which impacted foreign direct investments.
Recto said that these crimes also had a negative impact in terms of the country’s attractiveness as a tourist destination.
He also noted the unquantifiable social costs of POGO-related crimes that include loss of life, physical and psychological harm to victims of criminal activities, and fear and anxiety associated with illegal activities.
The perception that groups engaged in illegal or criminal activities wield significant economic influence in certain areas erodes institutional integrity, Recto also said.
“I fully support his directive to ban POGOS. As I have recommended to the President, POGOs come with significant reputational risks and we have seen the negative impacts and destruction they have caused to our country because of crimes,” the finance chief said.
“Banning them won't significantly affect the economy because the costs of keeping them far outweigh the benefits,” he added.
Recto assured that the government will employ all displaced Filipino workers by the end of the year and that their income will not be disrupted.
“The DOF will work closely with the Department of Labor and Employment (DOLE) to ensure that the workers’ incomes will not be severely disrupted and that we provide them with proper reskilling and upskilling training for new employment,” he added.