ASEAN Beat | Economy | Southeast Asia

China’s Clandestine Gamble in the Philippines

Philippine Offshore Gaming Operators or POGO employ and cater largely to Chinese.

Mong Palatino
China’s Clandestine Gamble in the Philippines
Credit: Pixabay

The rapid expansion of Philippine Offshore Gaming Operators or POGOs is linked to rising Chinese influence on the government of Rodrigo Duterte. But this is a controversial, if not unmentionable, connection because the Chinese government has officially rejected POGOs, while the Philippines denies that it is giving preferential treatment to Chinese citizens for such businesses. For many Filipinos, however, POGOs have come to symbolize the dark side of state-backed Chinese investments in the country.

POGOs deal with online gambling. Since gambling is prohibited in many countries, POGOs allow bettors to play and transact through the internet.

According to the Philippine Amusement and Gaming Corporation (PAGCOR), POGOs began operating in 2003 but it was only in 2016, after Duterte came to power, that the government began regulating online gaming hubs.

The majority of POGO players are Chinese, which explains the recruitment of workers from mainland China to operate the businesses. An estimated 70,000 Chinese nationals are reportedly working in Manila-based POGOs. But the number could be higher since there are estimated to be at least 200 POGOs operating without a permit.

A series of Senate hearings conducted earlier this year about POGOs confirmed what media reports have been tracking over the past four years. Some of these issues include the limited hiring of Filipinos by gaming operators, the non-payment of taxes, minimal contribution to the domestic economy, the role of organized crime in trafficking workers, corruption in the processing of work permits, the security threat posed by the proliferation of Chinese-dominated gaming centers, and the popular perception that the Duterte government is promoting POGOs at the expense of other industries.

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The lobbying power of POGOs became more evident when PAGCOR actively pushed for the resumption of online gaming operations even if the capital is under COVID-19 lockdown. Duterte officials even argued that POGOs perform an “essential service,” which prompted the IT and Business Process Association of the Philippines to release a statement rejecting the claim that online gambling operators are part of their sector.

After the end of the Senate probe, the negative impact of POGOs continues to be highlighted. Environmentalists have condemned the destruction of mangrove habitat and its conversion into a “POGO island” cluster in Cavite, a province located south of Manila. Police blamed POGOs for the rise in prostitution cases involving Chinese citizens. The Anti-Money Laundering Council reported that it monitored suspicious transactions linked to POGO activities from 2017 to 2019. As the country struggles to cope with the pandemic, the media reported the existence of COVID-19 clinics and hospitals catering exclusively to POGO workers.

PAGCOR released a primer addressing the criticisms levied against POGOs. It pointed out that the government benefits from additional revenues generated by POGO operations. It insisted that POGOs create a positive ripple effect on the economy, particularly on the real estate, transportation, and retail sectors.

But PAGCOR should take note that even the Chinese government is pursuing a “crackdown on cross-border gambling activities.” The Chinese embassy in Manila said online gambling has undermined its financial institutions, exacerbated crimes and social problems in China, and imperiled the lives of its citizens, who are treated as “modern-day slaves.”

China’s sudden opposition to POGOs comes as a surprise. Surely Chinese authorities noticed the rise over the last four years of Chinese moving to the Philippines. 

Duterte continues to defend POGOs. Either he is openly challenging the Chinese prohibition on gambling or he is being cavalier in demonstrating his commitment to developing closer economic ties to China. The last view is increasingly shared by many Filipinos, who equate the rise of POGOs with Duterte’s friendly relationship with the Chinese government.

If there’s a surge in anti-China sentiment in the country today, it is mainly related to public outrage against China’s aggressive behavior in the South China Sea (known locally as West Philippine Sea). But the spread of POGOs is fanning animosities over China’s noticeable economic presence in the country. This is different from other Chinese investments and businesses, which employ Filipinos and are strictly regulated by government agencies.

POGOs are controversial because not only do they operate in less than transparent terms, but they are seen to be thriving through favor and privilege granted by the Duterte government.

Senator Leila de Lima, a critic of the president who has been in prison since 2017, sums up what many Filipinos think and feel about POGOs: “Why are these POGOs being recognized and extolled here, and given the status and perks of a legitimate enterprise, when they are outlawed in their country of origin? Where is the logic and the morality of it all? This legal and social anomaly is unacceptable.”