C hinese offshore gambling is supposed to be the goose that lays the golden eggs. But Filipinos are discovering that finding those eggs is easier said than done. Philippine offshore gaming operators, or Pogos, have turned the country into a multibillion-peso gambling haven targeting Chinese citizens through casinos and online games. Chinese-backed firms that are largely based in Metro Manila and employ tens of thousands of Chinese workers, Pogos rocketed in number after President Rodrigo Duterte took office in 2016. The problem is, the government does not know how many Pogo companies there are, how many people they employ, nor whether they are paying any taxes. And while economists and finance officials feel the Pogos should be paying more, government leaders cannot seem to agree on how to deal with the gambling firms. In the past three years, Pogos have snapped up office space in Manila, paying premium prices, to the delight of real estate firms. Government, too, has benefited. A Philippine Star report said that next year the Philippine Amusement and Gaming Corporation (Pagcor) expects to collect 10 billion pesos (US$200 million) in licence fees from Pogos. There are other benefits. Congressman Ruffo Biazon told This Week in Asia : “There are downstream economic activities where we earn … real estate is booming because of the Chinese. The retail industry is getting vibrant with the Chinese workers spending money here. The operational costs they entail are paid to local suppliers, contractors.” China turns the tables on Philippines’ offshore gambling habit But the explosive growth of the gambling business seems to have caught the government unprepared: there are no fiscal, regulatory or immigration policies in place, and Duterte officials seem to be divided on these issues. For instance, this week in an opinion given to Pagcor and the Bureau of Internal Revenue (BIR), Solicitor General Jose Calida said that the gaming companies couldn’t be taxed by the Philippines because their income comes from abroad. He was responding to moves by the Department of Finance and the National Economic and Development Authority to impose income as well as value-added taxes on Pogos. Finance secretary Carlos Dominguez said Pogos owed at least 21.62 billion pesos in taxes. Calida was immediately contradicted by the office of the president. According to presidential spokesperson Salvador Panelo, the decision to tax is up to the BIR and the Finance Department. “This administration will not be stymied nor estopped by technicalities caused by the exploitation of developing technologies in collecting what is due to the government,” Panelo said. There’s another problem: nobody has been keeping track of exactly how many Pogos there are. Pagcor’s list of approved Pogos as of this month names 60 companies, but in a television show last weekend, congressman Joey Salceda said there were at least another 100 operating illegally. He said even of the 60 registered companies, only 10 paid taxes. And there are no exact figures on just how many Chinese citizens are employed by the offshore gambling business. While this April, the Department of Labour and Employment said that 56,180 Chinese worked for Pogos, the actual number is much higher, thanks to shady practices involving Chinese “tourists” arriving in Manila and promptly becoming Pogo workers. The BIR admitted it really had no idea just how many Chinese citizens worked in the Philippines . Some reports have put the figure at more than 100,000. The sudden and unprecedented influx of Chinese citizens has created concerns: there have been stories of Manila residents being turfed out of their residences to give way to higher-paying Chinese tenants, who are packed barracks-like into the apartments. There are also police reports of Chinese involved in kidnapping , prostitution and bribery. Chinese nationals have been arrested on charges ranging from traffic violations to kidnap for ransom – and the authorities have revealed how some Chinese gambling syndicates employ rogue Filipino policemen as “muscle”. Why the Philippine economy is trading call centres for casinos The visibly growing numbers of mainland Chinese, plus conflicts with Beijing over the South China Sea , might account for growing public disenchantment with the new visitors. The latest public opinion survey by the respected Social Weather Stations polling company showed that in a matter of months this year, respondents’ trust in China fell from “poor” to “bad”, the lowest ever. By comparison, the US had an “excellent” trust rating. All these issues have prompted a group of congressmen to file a resolution to investigate “unregistered foreign workers” and “non-payment of income taxes” in relation to Pogos. Congressman Biazon, who signed the resolution, said he “wanted to inquire about the effects of Pogos on illegal immigration, human trafficking … the possibility of drug syndicates using the influx of Chinese as a network of importation and distribution and even espionage”. He told This Week in Asia : “I am concerned about criminal syndicates piggybacking on the Pogo industry. Recently, sex dens have been discovered, petty crimes reported at the local level, and [there has been] corruption of our institutions, such as immigration and police.” The heart of the matter is that Pogos fall in a grey and murky area. Gambling is illegal in China and Beijing has expressed its displeasure over its citizens’ involvement, both as gamblers and workers. This August it asked the Duterte government to crack down on Pogos and protect any Chinese citizens who had been victimised. Duterte said he was not a fan of online gambling but was unwilling to ban the activity, because of its contributions to the economy. He warned operators to pay their fees. In a column written for the online news site Rappler, analyst Bob Herrera-Lim pointed out that since 2016, Pogos had “largely flown under the policy radar”, to the satisfaction of the participants. He said Pagcor “earned its fees, and real estate developers benefited from the higher demand. It also meant fewer regulations and less public and media attention”. China holds the cards as online betting booms in the Philippines These good times could come to an end, if Philippine government finance managers and some lawmakers have anything to say about it. Pagcor has since mid-August banned licences for new online gaming firms, and Congressman Salceda has filed a bill that would impose a 5 per cent franchise tax on Pogos, and a 25 per cent personal income tax on Pogo workers. With those taxes, government could earn about 45 billion pesos. “It’s not coffee money”, the Philippine Daily Inquirer quoted socioeconomic planning secretary Enresto Pernia as saying. Salceda said “a clear, definitive tax regime for Pogos will be a potent revenue source, as well as a means of placing these facilities under stricter oversight”. He said any Pogos not paying taxes would not be given a permit to operate. “No tax, no licence. Let them go,” Salceda said. ■