As part of a campaign against the infamously murky online gaming market, the Philippines would shut down 175 offshore gambling companies and deport around 40,000 Chinese employees, a justice ministry official announced on Monday.
As a result of operators taking advantage of the Philippines' lax gaming rules to market to customers in China, where gambling is prohibited, the sector started in 2016 and developed tremendously. Over 300,000 Chinese employees were employed by Philippine offshore gambling operators, or POGOs, at their height, but the pandemic and rising taxes have pushed many of them to relocate.
"The crackdown was triggered by reports of murder, kidnapping, and other crimes committed by Chinese nationals against fellow Chinese nationals," justice ministry spokesperson Jose Dominic Clavano said.
As reported by the finance ministry, POGO fees alone produced 7.2 billion pesos ($122.21 million) for the government in 2020 and 3.9 billion last year. Economists estimate that much bigger sums are spent on taxes, employee spending, and office renting.
According to Clavano, the licenses of the POGOs slated for closure were either expired or had been canceled due to infractions such as failure to pay government fees. He also stated that the deportation of Chinese workers would begin the next month.
In a statement, China's embassy in Manila said Beijing supported deportation and a crackdown on POGO-related crimes, adding that the government "firmly opposes and takes tough measures to combat gambling."
A request for clarification was not immediately answered by the Philippine regulator, which recently reported that there were 30 approved POGO enterprises as opposed to 60 before the outbreak.
A complete exit from the POGO sector, according to real estate firm Leechiu Property Consultants, would leave vacant 1.05 million square meters (259 acres) of office space, which is a third of Central Park in New York, as well as 8.9 billion pesos ($151 million) in lost annual rent.
Leechiu said that the vacant offices might force the closure of medium-sized and smaller real estate players and bring rental rates back to levels from as much as 20 years ago. The property industry, which has already recently been brought to its knees by previous global meltdowns like the Asian financial crisis of 1997 and the US mortgage crisis of 2007, may experience a liquidity crunch as a result of higher vacancy and lower rental rates, which could lead to another crisis for the sector.
As per Leechiu's analysis, which estimates POGOs bring 190 billion pesos ($3.22 billion) to the economy each year, a windfall to the property and retail sectors, the sector employs 111,000 Filipinos and 201,000 Chinese.
