ASEAN Beat | Economy | Southeast Asia

How Southeast Asia Can Responsibly Harness Chinese Gambling Activities

Southeast Asian countries should conditionally allow, rather than outright ban, China’s offshore gambling activities.

By Jason Hung for
How Southeast Asia Can Responsibly Harness Chinese Gambling Activities
Credit: pixabay

In China, gambling is illegal except in the city of Macau. Therefore, an offshore gaming industry geared toward China has developed in Southeast Asian countries, including Cambodia. The pull factor for the expansion of online gaming activities in the Cambodian port city of Sihanoukville is the appealing economic returns for the Southeast Asian country.

The push factor, alternatively, is Beijing’s approval of the development of online gaming operations overseas as part of private investment which supports its Belt and Road Initiative (BRI) in Cambodia.

Despite the economic returns, the influx of Chinese nationals into Cambodia has led to a rising number of crimes such as murder, kidnapping and extortion. Hiring child labor and money laundering activities have also been revealed in casinos. Many massage parlors have been built to serve gamblers. The growth of Chinese involved in gambling-related conflicts have affected the country’s national security, public order and social order.

As an alternative to Cambodia, the Philippines is another hotspot for China’s online gaming development. In April 2019, an estimated 138,000 Chinese nationals were issued work permits for Chinese-speaking gambling operations, locally known as Philippine offshore gambling operators (POGOs). One consequence of gaming industry development has been an increasing number of reported gambling-related crimes, including kidnappings, with Chinese nationals the offenders. The Philippine National Police Anti-kidnapping Group (PNP AKG) announced that to date 67 kidnappings have been committed by Chinese nationals due to gambling conflicts. PNP AKG noted, “[Now] it’s two to three [kidnapping] cases involving Chinese every day in Metro Manila.”

Despite the increasing in crime, Philippine President Rodrigo Duterte continued to support China’s offshore gaming industry development in his country due to the creation of jobs. He further emphasized that the Philippines is financially reliant on the fees and taxes earned from online gambling operators.

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Cambodian Prime Minister Hun Sen took a different approach than the Duterte government, however. Hun Sen announced a decision to reject the granting of new licenses or renew current licenses for online gambling in the country. Under such a policy, foreign investment in Cambodia would significantly fall and presumably social order and security would be strengthened. 

From a socioeconomic perspective, a conditional operation rather than an absolute ban of China’s offshore gaming activities should be upheld. On one hand, the Cambodian and Filipino governments should set up strict regulations for the operation of offshore gaming activities, such as strengthening recruitment screening to ensure that no underage children are hired by gaming operators and banning the operation of massage parlor businesses. 

On the other hand, these governments should assign more law enforcement officers to monitor everyday activities within and beyond casinos for the purpose of preventing and deterring money laundering and other gambling-related crimes. Independent monitoring authorities should be set up to oversee the conducts of law enforcement officers and arrest those engaging in corrupt activities.

Moreover, immigration screening should be reinforced in order to ensure that all Chinese nationals entering these Southeast Asian countries hold a valid working permit. Any Chinese nationals who take part in gambling-related job activities while holding a visitor visa should be detained and deported. Immigration departments should, moreover, limit the issue of working visas to Chinese nationals, preventing China’s offshore gaming industry from too much expansion. 

By limiting the scale and activities of the offshore gaming industry, Southeast Asian countries can continue to benefit from lucrative earnings from gambling-related fees and taxes. These countries can also create a certain amount of job opportunities for locals in order to minimize their unemployment rates. 

In sum, China’s offshore gaming activities should be restricted rather than absolutely banned, for the sake of the socioeconomic development of Southeast Asian countries.

Jason Hung is a visiting researcher at Stanford University and a Clinton Global Initiative University (CGI U) fellow at Clinton Foundation.