Saturday, 17 July 2010

Pagcor’s high revenues–tough act to follow

Written by Butch del Castillo
Business Mirror
http://www.businessmirror.com.ph/indexPagcor’s high revenues–tough act to followPagcor’s high revenues–tough act to followPagcor’s high revenues–tough act to follow.php?option=com_content&view=article&id=27754:pagcors-high-revenuestough-act-to-follow&catid=28:opinion&Itemid=64

P-Noy has let on that he may be sympathetic to the idea of privatizing the Philippine Amusement and Gaming Corp. (Pagcor). He told the media during a get-together late Tuesday night. He was quoted by the Philippine Star as saying that “we have uncovered several anomalies in Pagcor amid allegations that the government is not really getting its share of the revenues.”

He also reportedly said Pagcor was a corrupt agency that served as a milking cow for high government officials during the (nine-year-and-a-half) Gloria Macapagal Arroyo era.

For these reasons—and mainly to end the corruption—he said he was inclined to eventually “turn over” the operations of Pagcor to the private sector. These are statements he made as quoted or paraphrased by the Star and the Philippine Daily Inquirer.

So now, according to the grapevine, a number of big businessmen with known links to the Aquino administration see these public statements by the Chief Executive as their cue to try and go for it. I will not be surprised if certain big one- or two-syllable names are now actually salivating and starting to organize a consortium that would, in effect, “go for the gold.”

The takeover of a corporate giant with an exclusive, long-term operating franchise like Pagcor would undoubtedly be an enviable trophy catch in the game of corporate takeovers.

For here is a huge, well-oiled money machine that has been churning out an average of P30 billion in revenues for the national government under the chairmanship of Efraim Genuino. Genuino, whether his critics like it or not, is credited with having at least trebled the government’s share in Pagcor profits, from an average of only P10 billion annually, under Alice Reyes, his predecessor.

Under the Pagcor charter (Republic Act 9487, which amended Presidential Decree1067-A and extended the gaming firm’s franchise for another 25 years), Pagcor’s revenue earnings are now being allocated as follows: 50 percent goes to the National Treasury; 5 percent to the Bureau of Internal Revenue as franchise tax; 5 percent to the Philippine Sports Commission for the country’s sports development programs; 1 percent to the Board of Claims, a fund administered by the Justice department to compensate victims of wrongful detention and prosecution; fixed amounts for local governments hosting Pagcor casinos, to be used for community projects.

Apart from all these, some P1.5 billion to P1.7 billion goes to the Presidential Social Fund, “to help fund the priority projects of the government.” This is actually a discretionary fund that the Chief Executive may disburse for any government undertaking that he or she may choose.

For the past nine years, the Pagcor has been the third-largest revenue center of the government, next only to the Bureau of Internal Revenue and the Bureau of Customs. Under Genuino’s chairmanship, it has opened up several additional strategic gaming centers in the country to maximize revenue generation. As a result, its work force has practically doubled from 10 years ago to around 11,000-strong.

Pagcor, to the government, is like the fairy tale Magic Goose that can be counted on to lay its golden eggs with clockwork regularity and efficiency. I wouldn’t be surprised, therefore, if the newly appointed fiscal managers of the Aquino administration would be among the first to object to the idea of getting rid of this magical fowl.

It’s easy to predict that they would resist any move to privatize Pagcor now or in the future. Right now, coping with the huge budgetary deficit that could exceed P340 billion this year is already a mind-boggling problem. These fiscal managers are in the best position to see that letting go of Pagcor for any price—even for, say, P200 billion in spot cash as rumored—would only compound the deficit for the next five years.

State-sponsored gaming, as an effective and reliable means of generating revenue for any country, is a concept that has come to its own throughout the Asian region. The ultra-conservative Japanese society, which regarded the idea with contempt for centuries, has finally come to grips with reality and began following successful models in the United States, Europe and a few other Asian capitals, notably Taipei, Hong Kong, Jakarta, Kuala Lumpur and Macau. Even Singapore—which, under the conservative father figure Lee Kuan Yew, eschewed gambling as a matter of state policy—has seen the light and has, in fact, set up an elaborate infrastructure for its own Las Vegas-style casinos to serve as magnet for tourists and investors.

In the Philippines, the Pagcor under Genuino came up with the fantastic idea of building a family entertainment city at the reclamation area in Parañaque. As envisioned by Genuino, the mini-city would consist of five-star hotels to cater to the high-rollers of the world. But not only that, the amusement complex would have convention centers, theaters, restaurants, fast-food chains, shopping malls and a theme park—in short, a place that would have something wholesome to offer to each and every member of any family of tourists. That “city” would rival, if not actually exceed, the features of the gaming capitals of Macau or even Las Vegas. Genuino’s vision got the wholehearted support of the Arroyo administration. The proposed complex actually drew commitments of participation from the biggest entertainment corporations of the world such as Genting Highlands, Star Cruises, and others. Local big names in business such as Henry Sy and Andrew Tan also indicated that they wanted to be part of the “action.” All told, their potential investment commitments added up to more than $10 billion.

This is the kind of big ideas that can only come from big minds. But, as the wheels of political fortune have turned, that vision, I’m afraid, is fading into a blur.

But still, why throw away a good concept—state-sponsored gaming as a revenue raiser—when your purported goal is to stamp out corruption? P-Noy also spoke of “several anomalies” unearthed by the new bosses in Pagcor.

If the new incumbents in Pagcor, indeed, have the goods on Genuino, et al., why not simply put them together and file the corresponding cases against them instead of making generalized statements for public consumption?

And if it is true that the government has been “short-changed” or has not been getting its rightful share of Pagcor revenues through the years, why not simply ask Cristino “Bong” Naguiat, the new Pagcor chairman, to exceed Genuino’s annual revenue record and thereby help ease the national government’s horrendous budget deficit?

The way I look at it—and I’d be happy to be proved wrong, of course—Genuino’s revenue record would be one tough act to follow. But certainly, this shouldn’t be reason to sell the whole enchilada.

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