BWorld 202, Tourism, casinos, and Boracay

* This is my article in BusinessWorld last April 5, 2018.

“Every man has a property in his own person. This nobody has a right to, but himself.”

— John Locke (1632-1704, considered the father of classical liberalism)

The forced closure for several months by the Duterte government of all resorts, hotels, restaurants and shops in Boracay, both errant and compliant enterprises, raises the question of private property protection and compensation for the affected private owners.

NEDA has announced that the closure of the entire island from tourism is “very insignificant, only 0.1% of GDP.”

On Twitter, I asked NEDA, DoT, DENR, and Malacañang if they will compensate the losses of the environment-compliant enterprises, especially since the amount is “very insignificant” anyway. Or would the Duterte government not care because this is just tourism in Boracay and not in Davao? As expected, the response I got from the government was the sound of silence.

In 2017, at least 3.7 million people visited the island, less than a million of which came from abroad.

There was also a surge in tourist arrivals in the first quarter of 2018 partly due to cruise ships that visited Boracay. For this year, 27 cruise ships were set to visit the island and some have already canceled.

Tourism is an important revenue earner for an economy or a country. The Philippines being an archipelago with lots of beautiful islands and white sand beaches is unable to optimize this potential yet. For instance, tourism receipts in 2016 was only one-third (⅓) that of Malaysia and Singapore and one-eighth (⅛) that of Thailand.

In terms of visitor arrivals, the nearly six million visitors in 2016 was good enough but at the rate Cambodia is attracting visitors, it might overtake the Philippines in about three years (see table 1).

A rising tourism earner in the Philippines is the gaming sector. Huge hotels and casino resorts have sprouted in Metro Manila and more are poised to come in.

A friend who works in one of the big hotels at the Entertainment City told me that the minimum bet at the casino is P2,000; the maximum bet of course is the stratosphere. Only rich locals and foreigners would have the resources to make that kind of bet. The extent of job creation in the casino is very high with lots of workers and security officers being employed.

Revenues for the big hotels and the government-owned gaming regulator and operator at the same time, PAGCOR, are huge (see table 2).

Based on these numbers, one thing is noticeable — revenues from Philippine Offshore Gaming Operations (POGO). These are Philippines-based online gaming outfits that exclusively serve foreign markets and players (which means people in the Philippines cannot access their games). The same friend told me that the bulk of gamers in this new trend are from China.

In terms of installed capacity, Pagcor has the biggest number of electronic gaming machines with 9,751 in 2017 vs. Okada’s 2,914, Solaire’s 1,926, City of Dream’s 1,781, and Resorts World’s 1,381.

Two big hotel-casinos are coming to Boracay soon. The timing of their planned entry has added suspicion to the wholesale closure of the island from tourism. It is possible that the forced closure with no government compensation will drive many resorts to bankruptcy and this will open up new space for new players like these two big hotel-casinos.

The Duterte administration’s wholesale closure of Boracay for months is tantamount to indirect expropriation of private businesses. This sends bad economic signals to local and foreign investors. It also sends a bad political signal to the federalism push. The central government purports to give more power to the provinces and regions then it moves to totally disempower them. However you look at it, the move is bad for Philippine business, bad for ordinary Filipinos.

--------------

See also:
BWorld 199, Charity and giving should not be legislated, March 27, 2018 
BWorld 200, IPR in the ASEAN and plain packaging in the West, April 03, 2018 
BWorld 201, Expanded environmental rights and anti-coal drama, April 05, 2018

ASEAN Voices 3: Gaming and Casino Tourism in Asia

* This is my article for ASEAN Voices, a new Jakarta-based magazine, February 2015 issue.

----------

Tourism is a major economic player and job creator in many developing countries including in Southeast Asia. The region places next to China as being the most dynamic and fastest-growing area in  the  world, as it offers thousands of beach resorts, mountain resorts, and city centers that cater to visitors from other countries.

The main destinations for foreigners visiting East Asia are  China, Thailand, Malaysia, Hong Kong, and Macau, which is especially interesting because while its visitor-arrivals in 2013 was only one-quarter of that seen on mainland China, its tourism receipts were similar to those from the entire country.

Table 1.

source: http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf

What explains for such enormous tourism receipts from Macau? It is, of course gaming and casino tourism. Macau is No 1 on the planet in gaming revenues. In 2013 it reaped US$45.1 billion, followed by Las Vegas with US$6.5 billion; Singapore with US$6.1 billion; Atlantic City at US$2.9 billion; and the Philippines, which took in US$2.2 billion.

It is only logical then, that other Asian economies seek to duplicate the fantastic performance of gaming and casino tourism in Macau, and have launched various casino projects. Among them, according to Asia Awakens: The Growth of Casino Tourism, are the following:

·         Singapore’s integrated resorts in Marina Bay and Sentosa Island, with a combined value of approximately US$9 billion.

·         Philippines’integrated resort project, Entertainment City at Manila Bay, with a projected value of US$15 billion.

·         Vietnam’s integrated resort projects in Ho Tram, Danang and Phu Quoc, each involving investments of more than US$4.5 billion.

·         Cambodia’s projects in Koh Rong island, costing some US$2 billion, along with an integrated resort at Angkor Wat.

·          Malaysia’s Resorts World.

·         South Korea’s integrated resort development in Jejuisland, valued at some US$3.6 billion.

These casino developments are evidence of the dynamic and growing competition among countries in the Asean region, as well as in the gaming tourism sector.

However, one only has to look at the Las Vegas model, being a once-derelict patch of dry land that has become a multi-faceted entertainment venue centered upon frivolity. It is crucial to note that Las Vegas has never depended entirely upon casinos to bring the cash in.

According to the World Trade and Tourism Council, the city’s Disney-style hotels, boasting some 133.000 rooms, along with attractions, shows and recreational activities, account for half of the casinos’ revenue streams, meaning that wider tourism development and casino construction merely go hand-in-hand with one another.

Meanwhile, in the Philippines, the biggest player is the government-owned Philippine Amusement and Gaming Corporation with its dozen-plus casinos in Metro Manila and other major cities throughout the country.

But the country’s much-recognized and largest project is “Entertainment City” in Manila Bay, a huge 120 hectare development built on reclaimed land and hosting four huge licensees.

Table 2. 

Resorts World Manila is the sister company of Resorts World Genting, Malaysia, and Resorts World Sentosa, Singapore. From 2009 to 2013, it was the only casino resort in Metro Manila, until the opening of Solaire Resort and Casino.

Solaire is a new and large project by billionaire Enrique Razon, owner of International Container Terminal Services, Inc, which moves ships and cargo to 19 countries throughout the world. The resort includes a five-star hotel with 500 rooms and 1,000-seat ballroom.

City of Dreams casino held a soft opening last December, then a grand opening on Feb 2. The casino is a joint venture between Henry Sy, the Philippines’ richest family, Australian billionaire James Packer, and Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, and son of Macau casino mogul Stanley Ho.

Melco Crown Philippines Resorts Corporation President Clarence Chung said the new casino will provide additional choices for their customer base in Macau.

COD has three hotels: Crown Towers, Nobu and Hyatt. It is said to have attracted some 60,000 visitors during its soft opening last December, and since then has averaged 15,000 daily visitors.

The Manila Bay Resorts is owned by Japanese billionaire Kazuo Okada.

With these four resorts and casinos, the Philippines’ gaming sector is projected

to earn big, increasing from US$2 billion in 2012 to US$4 billion by 2016.

Table 3.

Sources: 2009-2013 actual, PAGCOR; 2014-2017 Forecast, The Innovation Group.

Regarding area infrastructure, there is ongoing large-scale skyway construction that connects Manila’s four airport terminals to Entertainment City. When this project is completed in 2016, it will drastically cut the travel time for visitors, local and foreign, from the airport to the resort-casinos.

But how do most Filipinos view these foreign gamblers and visitors? Generally, their opinions range from neutral to positive. Foreign gamblers do nothing to harm local residents, instead they just spend and spend, winning money if they are lucky, and in the process they provide lots of jobs and lots of tips to Filipino resort employees, officers and entertainers. Direct hires are about 5,000 jobs per casino; hotel rooms supply are expanded.

Other sectors, of course, will complain that the gambling and casino culture could permeate many Filipinos’ lives, as people seek to get rich-quick. Yet, this is not a strong argument because there are many types of gambling that Filipinos are now engaged in, from ordinary card games to bingo for charity, as well as the lotto and sweepstakes, and even cockfighting.

On the other hand, the government should see the enormous opportunities in the resorts-hotels-casino sector. There is no doubt that casinos need to always be considered in the wider tourism context—as better infrastructure leading into a casino will inevitably allow the casino to have a more positive impact on a region.

It is also a large job creator, from airlines to hotels, restaurants and entertainment, and can even evolve into medical tourism.

The government, in the meantime, collects taxes from 5%-17% based on GGR. Staring last year, casinos also pay corporate income tax.

It is therefore commended that the high taxes that actually also hound many other local businesses is slashed. At the end of the day, when people have high-paying and stable jobs, they become less dependent upon various government welfare and subsidy programs.

-------------- 

See also: 
ASEAN Voices 2: PH Multinationals in the Region, February 01, 2015 

Privatization 9: PAGCOR and Casino Operations, May 16, 2012

Fat-Free Econ 12: Privatizing PAGCOR, June 08, 2012

Privatization 10: More on Selling PAGCOR, June 12, 2012

Privatization 10: More on Selling PAGCOR

My article in interaksyon last week, FAT-FREE ECONOMICS: Pagcor privatization and reducing public debt has attracted some reader comments. I reply to them as much as possible, in order to clarify more points that I already made.

Here are the comments and my clarifications.

Roy Roger If the government wants new revenue, it should sell non-performing assets like idle lands first. Revenue earning assets such as pagcor & pnoc-ec should be sold last. Why sell a cash cow all of a sudden?
6 hours ago

Shan Tiodianco How much kickbacks will REcto gets from privatization of pagcor? These senators are very devious getting kickbacks of selling gov. owned companies.
Saturday at 1:52pm

Shan Tiodianco I don't trust sen. recto. why sell PAGCOR? it generates big revenues to our gov.
Saturday at 1:57pm

Paul Eugenio You haven't read the article, do you?

Saturday at 6:53pm

Nonoy Oplas Sen. Recto's goal is to raise more money for DepEd, DSWD, LGUs, the Treasury. I suggested that all privatization proceeds should go to retire some public debt, not to any specific department. Savings from annual interest payment can be used for other socio-econ programs. We just need to reduce that huge public debt stock and avoid future Europe type of econ instability.

Why sell Pagcor, to help reduce the public debt, save huge interest payment yearly. Pagcom as a regulatory body expected to earn more money as more huge casino/gaming companies from abroad are coming in.

Yesterday at 3:39am

Paul Eugenio What's the use of earning P40 B from Pagcor if it just goes to debt service, right?

Sunday at 7:53am

Nonoy Oplas hmmm, some people just want to argue on numbers even if the data are already given to them. 

Sunday at 11:26pm

Nonoy Oplas   Top Commenter · University of the philippines
Yesterday I went to the Senate for the Committee hearing of Pagcor privatization. I briefly argued the above in about a minute, in front of Sen. Koko Pimentel III and Sen. Ralph Recto. Thanks to Red Atienza for the invite.
Friday at 11:50am

Benedict Bernabe · Top Commenter · University of Melbourne
Nonoy, one of the reasons why European economies have huge public debt is because they radically privatised many of the state's income-generating activities in pursuit of the neoliberal model of growth (example, UK under Thatcher and US under Reagan), arguing that a scaled back state will be better for the market, and that the state should not operate those outside its spheres of competence. Yet even the World Bank, the IMF and ADB have repositioned themselves about scaling back the state. The Philippines has a healthy debt to GDP ratio, to the point that the country has become a net IMF creditor. A big majority of our public debt is peso-denominated, which means it's used in making the local economy work. Having lower public debt per se is not a good thing in itself. We need some public debt. For one, it's an investment vehicle for the financial market. What we need is a change in perspective in terms of looking at public debt. The governments obligations are reverse side of the coin of the investments of the market. Lastly, there are no guarantees that we will see the entry of more foreign gambling companies once we privatise gambling. Besides, if foreign gambling companies come in, that means they will take their earnings out of the Philippines. There are many ways to improve PAGCOR operations, including amending the PAGCOR charter. But not outright privatisation. I believe that gambling should remain a state monopoly.
17 hours ago

Nonoy Oplas ·A "healthy debt/GDP ratio" at 40%? And we pay P328 B a year on interest payment alone, it's "healthy? come on. CCT spending of about P25B already caused huge political debate here, and people don't think that paying debtors P300+ B a year is just fine? come on.
14 hours ago

Benedict Bernabe · Let's just say it's "manageable." It's important to know who our debtors are. According to latest estimates, 60% of public debt is owed to the domestic market. Meaning, the government is borrowing from Filipino individuals and corporations. So most of the interest payments go to Filipinos and circulate within the Philippine economy. The government is also progressively paying off foreign debt so that it will constitute a much smaller percentage of the national debt. Debt is important in plugging crucial gaps in public spending. The only sustainable way to reduce debt-to-GDP ratios is to grow the economy organically and raise new taxes. Privatisation creates one-off revenues that looks good on paper for one year but leaves a gaping hole the following year that can only be matched by another big ticket privatisation. At one point, the government will run out of things to privatise. Besides, the only time that privatisation makes sense is if the state enterprise is operating at a loss that it requires a lot of state subsidy. I don't think this is the case with PAGCOR. There are better ways to cut public debt than to sell off the state's monopoly on gambling.
13 hours ago

Benedict Bernabe · Also: "Huge government debt, not private sector and household debt, is the main reason for the on-going economic and financial turmoil in a number of European economies now. Their governments have been over-spending and borrowing irresponsibly over the past years and decades." This is an oversimplification. The increase in sovereign debt of European economies is a result of the fallout from the US subprime crisis, to which many European lenders were exposed, requiring bailout by national governments. Bailout expenses, and stimulus spending, coupled with an unresponsive economy that translated to poor growth, hence poor internal revenue, places European economies in a position that made it harder for them to borrow money to finance spending. "Overspending and borrowing irresponsibly" does not capture the essence of the European sovereign debt crisis. The Philippines is in a stable monetary position because of the lessons learned from the 1997 Asian financial crisis, our markets and banks are well regulated and financial institutions adequately capitalised. This will not put us in any European-like crisis anytime soon. So public debt reduction does not justify PAGCOR privatisation.
13 hours ago

Nonoy Oplas · "reduce debt/GDP ratio... raise taxes" ouch. Perhaps you're working in govt or foreign aid bodies that raising taxes to the public is so easy to advocate.

"increase in sovereign debt of European economies is a result of the fallout from the US subprime crisis." See table 2 above, Greece, Italy, Portugal have debt/GDP ratio of 100%, 105% and 62% respectively, already high figures even before the US financial turmoil in 2008-09.
10 hours ago

Benedict Bernabe · Nonoy, I worked with Standard & Poor's Capital IQ as a researcher on the European market. The US subprime crisis started in 2006. European banks have been exposed to these securities even before 2006, hence the increase in debt to GDP ratio. In 2008-09. This era was marked by heavy stimulus spending, believing that spending will not stimulate economic growth. When that didn't happen, they attempted austerity measures, which are still not working. Now they're bailing out their banks. I work for the United Nations after that, on the development side and have seen that cutting out these revenue-generating entities will deal a serious blow to programs that address social inequality. We need more taxes, especially at the higher-tier income. We probably need to create a 40% income tax bracket, and we now have a political opportunity to do that. Your minimal government agenda works in developed countries but we're not there yet. Scaling back the state at this crucial point in development will only mean losing the gains that we have made so far. The privatisation of PAGCOR will only benefit the large capitalists who have enough capital to benefit from the windfall profits coming from gambling. What we need is legislation that dictates the use of proceeds from PAGCOR, not privatise it. Besides there are existing schemes that allow private sector involvement. Gambling should remain a state monopoly, at least in the next ten years.
9 hours ago

Nonoy Oplas · So you really work for one of those "spend-spend-spend, tax-tax-tax" agencies like governments and the UN, no wonder. Many government bureaucrats and politicians are busy operating casino, black jack, lotto, sweepstakes, cockfighting, etc. They are also busy regulating, taxing and restricting entrepreneurs who only want to put up a food shop, a bake shop, internet shop, barber shop, etc. Government failure in running after killlers, murderers, rapists, land grabbers, kidnappers, carnappers, other criminals is very high.

Why would govt bureaucrats and politicians want to endanger their lives running after armed robbers and murderers, when they can easily make more money operating casino and other gambling facilities.
9 hours ago

Benedict Bernabe · Your first paragraph is argumentum ad hominem and your second paragraph is argumentum ad captandum. Your entire proposition is based on reducing public debt through privatisation of PAGCOR. Why are we discussing crime rates all of a sudden? I believe this proves that the economic basis of this proposition is unsound in the first place, and mostly made up of generalisations. Your hypothesis is PAGCOR privatisation will help reduce public debt. The real question is whether the public will benefit from losing a revenue-generating enterprise and pre-paying its debt rather than paying its debt on original terms and keeping PAGCOR. Our credit ratings and credit outlook prove that we are in a very good position to pay our public debt in the long term. Perhaps it was best if you illustrated how the supposed gains from privatising PAGCOR and pre-paying public debt offsets the actual revenue losses that the government will incur.
8 hours ago

Nonoy Oplas · hmm, not ad hominem. That's how I look and view governments, the UN, other multilaterals WB, IMF, ADB, USAID, etc. Their main advocacies are consistent, government to spend-spend-spend, then tax-tax-tax, as what you precisely argued.

I brought up the issue of criminals and government failure, because ultimately we have to define "what is the raison d etre of government" and I argued that running casinos and operating poker and black jack is not and should never be a govt function.

On illustrating how PAGCOR privatization can lead to more govt resources (not losses), see the paragraph after table 1 above.
2 hours ago
---------

See also:

Privatization 3: UP, NDCP, other SUCs, March 27, 2010

Privatization 4: Utilizing Proceeds and Revenues, August 06, 2010

Privatization 5: Regulate Exec. Pay or Privatize Govt. Corporations? August 31, 2010 

Privatization 6: Camps Aguinaldo and Crame, January 08, 2011

Privatization 7: Debts -- Cut Borrowings, February 23, 2011

Privatization 8: Government Debts: Military Camps and Spratly Issue, June 20, 2011

Privatization 9: PAGCOR and Casino Operations, May 16, 2012

Fat-Free Econ 12: Privatizing PAGCOR

I went to the Senate yesterday as one of the invited resource speakers on SB 3178, privatizing the state-owned gambling firm PAGCOR, and creating a new regulatory body (no proprietory function) PAGCOM. Sen. Aquilino "Koko" Pimentel III chaired the hearing, while the bill's author, Sen. Ralph Recto, explained the proposed measure. Sen. Antonio Trillanes also came and asked a few questions.

I spoke for just about a minute, very brief, summarizing the arguments below. I talked to Sen. Pimentel twice, before and after the hearing. He looks as an intelligent and approachable senator.

Below is my article today (and 12th total) in TV5's news portal,
http://www.interaksyon.com/article/34177/fat-free-economics-pagcor-privatization-and-reducing-public-debt

(Editor’s note: This is the position paper Mr. Oplas presented during the joint hearing of the Senate Committees on Games and Amusement, on Government Corporations and Public Enterprises, and on Finance held on June 7, 2012)

There is no market failure in operating casinos, black jack, roulette and other gambling facilities. The existence of a government corporation, the Philippine Amusement and Gaming Corp. or Pagcor to provide this service for many years is a historical mistake that should be corrected soon.

A Senate bill privatizing Pagcor, while creating a regulatory body, the Philippine Amusement and Gaming Commission or Pagcom, has been filed by Sen. Ralph Recto, and is undergoing committee hearing chaired by Sen. Koko Pimentel.

Senate Bill 3178 is advantageous to the public for four reasons:

- Government can raise new revenues without raising existing taxes or creating new ones;

- Government can focus on more social and economic programs as there is no “market failure” in operating gambling facilities, and doing such function is far out as a government responsibility;

- Raise more revenues through tourism as private international operators mobilize their international network in bringing in foreign players and gamblers; and

- Reduce corruption in government as that corporation is known to be a major milking cow by previous administrations.

With the on-going financial, economic and political turmoil happening in a number of European countries, particularly the PIIGS (Portugal, Italy, Ireland, Greece and Spain), initiatives to reduce huge public debt by governments should be prioritized.

Governments should be able to raise additional revenues somewhere aside from increasing existing taxes and fees, or creating new ones, limit new borrowings, and drastically reduce the public debt to:

Reduce the heavy interest payment that on average, constitutes one-fifth of the annual budget;

Avoid future economic and financial turmoil that is currently happening in many European economies because of their huge public debt burden; and

Finance some government social and economic programs out of savings from interest payment, not from additional taxation or borrowings.

From 2010 to 2012, the government’s interest payment on its gross debt would be P328 billion per year on average, or 20 percent of the total annual budget. This is a big amount that must be reduced as quickly as possible, to give justice to the over-taxed sectors of Philippine society.

The lower box implies that if government can reduce the debt stock by P100 billion, say from Pagcor privatization, at an average interest rate of 6.5 percent per year, the government will be able to save P6.5 billion per year. This can be considered as perennial or sustainable revenues that otherwise would just go to the pockets of the rich lenders, but will be used for certain economic programs and services yearly.

Huge government debt, not private sector and household debt, is the main reason for the on-going economic and financial turmoil in a number of European economies now. Their governments have been over-spending and borrowing irresponsibly over the past years and decades.

The huge debt and other economic problems of the PIIGS have combined to make their GDP growth dive to negative territory, while their unemployment rate has significantly shot up.

This deadly combination is something that we do not wish to happen to the Philippine economy someday. That is why we have to start somewhere in raising additional revenues while limiting new borrowings.

Only a few Asian economies have public debt of more than 50 percent of their GDP as of this year. One good news for the Philippines and the current administration is that the public debt-to-GDP ratio would decline from nearly 60 percent just seven years ago to the projected 40 percent this year.

Still, this is not a valid excuse why we should not aspire to further bring down that ratio to 25 percent or lower. And the proceeds from privatizing Pagcor is a good candidate to use for this objective.

Ultimately, more government corporations and financial institutions should be privatized. There is no market failure in operating banks, and it is not wise, it is not fair, that government is a regulator and a player at the same time.
--------

See also:
Privatization 6: Camps Aguinaldo and Crame, January 08, 2011

Privatization 7: Debts -- Cut Borrowings, February 23, 2011

Privatization 8: Government Debts: Military Camps and Spratly Issue, June 20, 2011

Privatization 9: PAGCOR and Casino Operations, May 16, 2012
Fat-Free Econ 11: GDP Growth and Private Sector Role, June 02, 2012

Privatization 9: PAGCOR and Casino Operations

There is a bill by Sen. Ralph Recto, SB 3178 abolishing and privatizing the Philippine Amusement and Gaming Corporation (PAGCOR), and creating the Philippine Amusement and Gaming Commission (PAGCOM), a regulatory agency.

I support this move for two reasons: One, get the money from such privatization and retire some public debts. When the debt stock is reduced, interest payment will decline. And two, government should shrink somehow, get out of casino operations and not be a player and regulator at the same time.

Proceeds of privatization should as much as possible, go to retire some debts or the excesses and over-spending in the past. Whatever savings from principal amortization + interest payment should be larger than privatization proceeds to be allocated directly to certain sectors. Hence, the savings from the reduction in debt stock and annual interest payment is sustainable.

I hope that this bill, with revision on the proposed allocation of proceeds, will become a law before the next elections in May 2013. Meanwhile, here are the 3 short papers I wrote in 2010.
-------

Privatize PAGCOR
August 02, 2010

(This is my article for People's Brigada News this week)

The main function of the government is to protect the citizens’ right to life, right to private property, and right to liberty and self-expression. That is, the government should promulgate the rule of law – the law against killing and murder, law against kidnapping and carnapping, law against stealing and plunder, and so on. And then people can concentrate on productive economic activities that expand the country’s wealth and resources.

The country’s public finance has been in an ugly situation for many years now, where government profligacy as indicated by persistent budget deficit (expenditures are larger than revenues) is the norm. From 2001 to 2009, for instance, the budget deficit averaged about P140 billion per year. That means borrowings of P140 billion per year or more.

This year, the projected budget deficit is P300 billion. But about 60 percent of it has been reached already in the first six months of the year. Raising existing taxes is a bad option for the public.

Privatization of many if not all, government-owned and controlled corporations (GOCCs) has a big potential of reducing the fiscal bleeding. And the Philippine Amusement and Gaming Corporation or PAGCOR should be among the first to go. Why?

One, government can raise new revenues without raising existing taxes or creating new taxes. Two, operating a gambling facility is far out as a "government responsibility." Far out compared to operating a public hospital or a public high school. Three, reduce corruption in government as that corporation is known to be a major milking cow by previous administrations. Four, raise additional revenues through tourism. Gambling and related entertainment is a big tourism project. The best tourist drawers will be the international gaming corporations like those operating in Las Vegas, Macau, Hong Kong and Singapore.

By privatizing PAGCOR and selling it to private operators, government can use the proceeds to retire some of the public debt. Then government’s annual debt servicing (principal amortization plus interests) will decline, then there will be less need for more borrowings and/or more taxation to pay old debts.

How much money will the government earn if it will privatize PAGCOR now? Based on independent assessments, that corporation can easily fetch between P67 to P100 billion if it is privatized this year. Former PAGCOR President Raphael “Butch” Francisco agreed with such valuation.

Gambling is an unproductive activity for the government. Unlike spending time and effort in public education, devoting time and manpower to operate casinos, poker, black jack and other gambling activities is not a wise move for the government.

Government can keep its function of regulating casinos and gambling facilities by private enterprises. In which case, PAGCOR can be renamed as a Philippine Gaming Regulatory Agency or similar name.

Plugging the budgetary leak and fiscal deficit this year and the coming years is among the most urgent challenges for the new government of President Aquino. Privatizing PAGCOR and other state enterprises is an important step in the right direction.