DOF recommends total POGO ban

The Department of Finance (DoF) submitted a recommendation to President Marcos to totally ban POGOs (Philippine Offshore Gaming Operators) “a few weeks ago” [link], according to Finance Secretary Ralph Recto, who added that President Marcos has yet to respond to the DoF’s recommendation. Mr. Recto reasoned that POGOs would be “fine” if “they were not doing any hanky panky and they’re paying taxes”, but noted that “there are many issues already surrounding the POGO industry” and also revealed that he is “not a fan of gambling.”

MB BOTTOM-LINE: POGOs are an artifact of the Duterte administration that fueled the development of what is now a glut of commercial real estate in Metro Manila. The incompetent oversight of the industry caused taxpayers to lose billions in uncollected taxes while exposing citizens to increased crime and troubling commercial and residential property market distortions. Skipping over the debate on whether the government, through PAGCOR, has the capacity to effectively regulate POGOs, the issue for PSE investors comes down to how a total ban would impact the commercial real estate market in Metro Manila. Our property developers have been trying to shield themselves from the blowback of a crackdown or total ban for many years now, first by reducing their direct exposure to POGO lease clients, and later by diversifying their REIT portfolios to include non-commercial office assets like malls, hotels, and industrial lots. While a total ban wouldn’t be the armageddon for real estate developers like it would have been a few years ago, POGOs still take up a material chunk of the market’s total inventory and a ban would have a negative impact on occupancy and lease rates with no clear fix on the horizon. Hopefully, we’ll get an update from Leechiu Property Consultants to help guide investors on the updated potential impact that a ban may have on our market.
 

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