By Bernadette D. Nicolas, September 19 2019; Business Mirror

https://businessmirror.com.ph/2019/09/19/risks-gains-of-pogo-operations-both-high-says-house-leader/

Image Credit to Philippine Star

HOUSE Ways and Means Committee Chairman and Albay Rep. Joey Salceda said on Wednesday they are weighing the risks that may come with either allowing or banning Philippine Offshore Gaming Operators (Pogos) in the country.

In a Palace press briefing, Salceda said they need to determine the correct strategy in dealing with Pogos besides taxing them properly because this will definitely pose a systemic risk, which may include a possible glut in residential office space if their operations are ordered to stop.

The highest risk of an immediate stop to Pogo operations, said Salceda, is the “glut especially in office and residential condominiums [where renters] paid 12 months advance.” If the following year finds no one to take these up—“it has 440,000 workers so presumably, that’s 10 each divided by two times 10 square meters. So more or less, 1 million square meters of residential office space,” that
would deal the property sector a big blow, he said.

While they have yet to assess the risks, Salceda said letting Pogo operate in the country is “high risk, high return for the economy.”

“What is the risk? Are you willing to take it [if] 11 million square meters of condominiums are suddenly empty? Suddenly empty and you did not prepare for it” Now, they acquire condos more than BPOs. So they have high return, high risks,” he explained.

However, Salceda said it is likely that Pogos will not stay for long because of China’s policy against gambling.  “Enjoy while it lasts and prepare when they go,” he said.

In order to monitor the risk from Pogo, he said the Philippine Statistics Authority (PSA) must include Pogo under the Services sector in the computation of gross domestic product.

He explained Pogo is only captured through its consequence; but as an industry, it’s not included in the income accounts.

He also said he requested Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno to make a separate account of service exports for Pogo.

But in terms of returns, Salceda pointed out that at present, Pogos are now breaching 1 percent of GDP and pay higher wages than business-process outsourcing firms (BPOs).

Meanwhile, Finance Undersecretary Karl Kendrick Chua said Pogos which still refuse to settle tax liabilities of their workers will be padlocked.

In a statement on Sunday, the Department of Finance has ordered the Bureau of Internal Revenue to shut down tax-dodging Pogos due to the “slow pace” of collections of withholding income taxes from Pogos despite the issuance of 130 letter-notices to firms with combined liabilities worth P21.6 billion.

“…We have an existing administrative regulation called Oplan Kandado. If you refuse to pay your proven liabilities repeatedly, then we will apply the Oplan Kandado fairly to anyone who doesn’t comply,” he said.

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