Pagcor chief: Privatization might take time

The Pagcor privatization, deemed as the mother of all problems facing the Philippine Sports Commission in its continuing battle against budgetary constraints, seems far from being implemented.

According to Pagcor Chairman and CEO Alicia Ll. Reyes, a directive issued by President Estrada last October was for the convening of an inter-agency panel for gambling which shall assist the President in the formulation of a state policy in gambling.

"And one of the aspects being studied by the said panel is (just) the viability of privatizing the gaming operations of Pagcor," Mrs. Reyes told The STAR recently.

The privatization of Pagcor will have to be effected either through an amendment or repeal of its charter – Presidential Decree 1869.

The procedure and the manner by which it will be done, therefore, will ultimately depend on the intention of Congress.

Last October, the President announced that the government was pulling out of gambling operations, including those run by Pagcor, as a direct result of the controversy which led to the impeachment trial against the President. Pagcor then will be privatized.

But the President’s announcement was met by strong opposition since Pagcor is the country’s second biggest revenue earner behind the Department of Finance which handles the Bureau of Customs and the Bureau of Internal Revenues.

It will also be too hard for any single individual or corporation to acquire Pagcor under the privatization scheme since its contracts and operations amount to tens of billions of pesos.

And at the rate the country’s economy is going, it looks like there won’t be early takers.

Pagcor’s Relations with PSC

Republic Act 6847, which created the PSC in 1990, stipulates that Pagcor should remit 5 percent of its income to the PSC. The PSC share is being applied on the balance after deducting the five percent franchise tax for the BIR and the national government’s share of 50 percent.

The distribution of Pagcor’s income is done in accordance with the provisions of PD 1869, and other subsequent laws passed by Congress mandating Pagcor contributions to specified government agencies or other public concerns.

Pagcor began its regular contributions to the PSC, the country’s top government sports agency, in 1990. And from that year up to October this year, Pagcor has already remitted a big P2.7 billion to the PSC.

From January to October this year, Pagcor remitted a total of P252 million (or an average of P25.2 million a month) to the PSC which turns over the amount to the National Sports Development Fund – the hand that feeds the 34 national sports associations (NSAs).

The NSDF takes care of the NSAs’ expenses in equipment, training, the holding of national tournaments, international exposure, salaries of 154 local and foreign coaches, and for the allowances of the 778 athletes under the PSC.

The PSC recently suffered a blow when Congress decided to slash its General Appropriations budget from P152 million this year to P119 million for next year. This budget is reserved for grassroots development, maintenance, repair and construction of sports facilities, and salaries of PSC officials and 419 employees.

"It’s going to be a big problem if and when Pagcor is privatized because whatever amount we get from the general appropriations, we cannot spend them for the NSAs. So, it’s the NSAs that will really be affected if Pagcor is privatized," said PSC Chairman Carlos "Butch" Tuason.

Pagcor earnings

During the first 10 months of the year, Pagcor generated a total of P12.02 billion – up by 18 percent as compared to the revenues posted by the corporation for the same period last year. Of this amount, P10.96 billion was distributed to the government and the other agency-beneficiaries and various socio-civic undertakings.

After deducting the Five percent franchise tax, 50 percent government share and Five percent PSC allotment from the Pagcor income, another one percent goes to the Board of Claims, used to compensate individuals who were wrongly accused or prosecuted.

Cities hosting Pagcor casinos are regularly given a fixed amount for the implementation of community development projects in their respective localities while another P7 million is remitted monthly to the Department of Science and Technology’s scholarship program.

The remaining balance is remitted to the Social Fund of the Office of the President to help finance the priority anti-poverty alleviation projects of the President.

Doom’s Day?

The Pagcor chairman, who worked for the Development Bank of the Philippines for 25 years until her retirement as DBP governor in December 1986, said she’s not even certain on how Pagcor’s privatization, should it push through, affect the corporation’s mandated remittances to the various government agencies, including the PSC.

It is unlikely, however, that such mandated remittances can be continued if casino operations were privatized. At present, Mrs. Reyes also has no idea as to how much the government will earn from the proposed privatization, should this push through.

"As mentioned earlier, it’s is likely that the PSC and other agency-beneficiaries will no longer have the regular support they currently get from the state-gaming agency if Pagcor’s operations are privatized. No private operator will want to give the bulk of their earnings to the government as what Pagcor is doing now," added Mrs. Reyes.

For now, the PSC – and the rest of the Pagcor beneficiaries – can only wish for that day not to come.