Philippines gambling revenue could double in two years: Lawrence Ho
Mogul says Manila could challenge Singapore, but urges government backing over tax issue
Macau casino mogul Lawrence Ho Yau-lung says gambling revenue in the Philippines "could easily" double to US$4 billion in two years, setting the stage to challenge Singapore as Asia's second-biggest gaming hub.
To ensure success, the Philippines would have to decide how to tax casino developers and operators, Melco Crown Entertainment co-chairman Ho said.
In April, the tax bureau ordered all casino operators to pay income tax on their gaming earnings, removing an exemption given to four operators developing casinos in Manila.
The Philippines was "within striking distance" of overtaking Singapore's gaming market, said the 36-year-old son of Macau gambling tycoon Stanley Ho. "A lot of it would depend on how regulators and government support this industry."
The Philippine gaming market was now worth US$2 billion, a third of Singapore's US$6 billion, Ho said. Gaming revenue in Macau was US$38 billion last year.
The tax bureau wants to impose a 15 per cent income tax on Philippine Amusement & Gaming Corp, the state regulator known as Pagcor, and its licensees on top of a 5 per cent franchise tax.
Philip Tulk, a Hong Kong-based analyst at Standard Chartered Bank, said: "It's obviously unsettling for shareholders when there's a tax issue hanging.
"A higher income tax could discourage investors from further investment or even completing their casino projects. Thus it could reduce the country's appeal to gamblers."
Casino operators are in talks with the tax bureau and Pagcor over the end of the exemption.
The Philippines' relative tax advantage was supposed to help attract high-end gamblers.
Singapore has a 5 per cent tax on gaming revenue from high- rollers, or those with a S$100,000 (HK$620,000) deposit account with the casino operator. For other players, the gaming tax rate is 15 per cent.
Pagcor president Jorge Sarmiento said yesterday that the regulator had asked the Supreme Court to help settle the matter.
Ho said a "bidding war" had already started among operators who wanted to take clients to Melco Crown's City of Dreams Manila. He also said the company would have to "do more" to bring in high-rollers from Macau to Manila, such as providing private jets and helicopters.
He said it was important for Manila to maintain stability when it came to business policies, as well as building the infrastructure to attract tourists.
"The reason we took the dive here is because we were comfortable with the government, that they are pro-business and that they really want to welcome businesses," Ho said.
"If the country is really serious about trying to bring in foreign capital, then there can't be sudden rule changes."