[In This Economy] POGOnomics: Weighing the costs and benefits of POGOs

JC Punongbayan

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[In This Economy] POGOnomics: Weighing the costs and benefits of POGOs
Just like any other thing in economics, POGOs have benefits and costs, and we need a more sober discussion on them moving forward

If you step back from the teleserye-like recounting of Bamban Mayor Alice Guo’s idyllic life at an infamous “farm”– that somehow led her to owning a piggery and helicopter – the bigger question we should be asking is: What should we do with Philippine Offshore Gambling Operators, more commonly known as POGOs?

Just like any other thing in economics, POGOs have benefits and costs, and we need a more sober discussion on them moving forward.


First, the benefits. Undeniably, POGOs brought in economic activities that led not just to new investments and new buildings being erected (from the Manila Bay Area to a town as nondescript as Bamban, Tarlac), but also to Filipinos being employed.

Back in October 2022, it was reported by the Philippine Amusement and Gaming Corporation (Pagcor) that 19,671, or nearly half, of POGO workers then were, in fact, Filipinos. That didn’t yet include Filipinos hired as cooks or househelps catering to the needs of the influx of Chinese immigrants.

Recently, it was alleged by the Association of Service Providers and POGOs (ASPAP) that about 23,000 jobs would be destroyed by a total POGO ban.

All this adds up to the POGOs’ contributions to the country’s gross domestic product or GDP.

If you recall from your high school economics, GDP is nothing but the peso value of all goods and services produced in a country per quarter or year, regardless of the nationality of people who produced such goods and services – Filipino, Chinese, etc. So in principle, POGOs must reflect in GDP.

The government actually came out with numbers. Professor Sarah Lynne Daway-Ducanes, a colleague of mine at the UP School of Economics (UPSE) and a former assistant secretary at the National Economic and Development Authority (NEDA), testified in Congress that POGOs likely contributed about 0.2% of GDP (a fifth of 1%) in 2023. That amounted to about P42 billion.

That’s puny by itself, and lower than the 0.3% of GDP in 2022 and the 0.7% in 2019 (just when POGOs were at their full might during the Duterte administration).

By the way, in Bamban alone, a whopping P6.1 billion was spent for the 10-hectare POGO hub situated on the land previously owned by Mayor Alice Guo. Initial POGO investments like that also generate multiplier effects, meaning a cascade of economic activities surrounding POGO hubs (think of the restaurants and convenience stores catering to POGO workers).

With economic activity comes tax revenues. POGO collections by PAGCOR and the Bureau of Internal Revenue (BIR) peaked at P14.4  billion in 2019, but have since dwindled, according to data shared by Professor Cielo Magno, a former undersecretary of the Department of Finance and another colleague at UPSE.

Another major source of economic activity would be real estate rentals, from office spaces to residential units. In 2019, POGOs reportedly occupied more than a million square meters of office space, or “about 10% of total leasable office space in Metro Manila.” That’s a lot. But of course such demand has since diminished.


Now let’s move on to the costs of POGOs, which are plentiful (maybe too many to mention here).

First, the significantly higher demand for real estate units drove up prices of condo units and office spaces, to the detriment of Filipinos wishing to use them. In 2019, one report by ANC indicated that in some instances condo costs per square meter more than tripled because of POGOs.

But even as POGOs have exited in earnest since the start of the pandemic, new properties are just being finished. And the glut of vacancies is driving real estate prices down. You can just imagine that such wild swings in real estate prices are not good news for the real estate sector.

Much more important are the social costs of POGOs, which have resulted in too many reports of links to criminal activities such as human trafficking, online scams, and even torture.

On June 5, it was reported that a woman in a POGO hub in Porac, Pampanga was “tortured and sold online for sexual services.” Meanwhile, in November 2023, authorities discovered a “torture chamber” in an internet gaming license hub in Pasay City, where some victims were “hit with a stick” or “kicked and punched several times for not meeting the quota set by management.”

In August 2023, some 28,000 SIM cards were discovered in a POGO hub in Parañaque City, allegedly involved in online scams. This, despite the passage of the SIM Registration Act. Other POGOs are suspected to be involved in “love scams” and cryptocurrency scams.

Then, of course, in the sprawling, 10-hectare POGO hub in Bamban town in Tarlac province, authorities discovered a “secret tunnel” that connected villas and was allegedly used by the operators to escape before authorities raided the facility. If their operations were above board, why the need for a secret tunnel?

POGOs have also been suspected of harboring money laundering activities. Back in 2020, the Anti-Money Laundering Council (AMLC) reported that of the recorded P54 billion worth of POGO transactions then, P14 billion (easily a fourth) were tagged as “suspicious activities.” As for the P6.1 billion POGO investments in Bamban, the AMLC allegedly could not trace such flows.

There are environmental costs, too, as shown by an island in Cavite province – a wildlife sanctuary – that was turned into a POGO hub around 2019. (To be concluded) – Rappler.com

JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he was given The Outstanding Young Men (TOYM) Award for economics. JC’s views are independent of his affiliations. Follow him on Twitter/X (@jcpunongbayan) and Usapang Econ Podcast.

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.