[ad_1]
WE have long taken the position that no government agency should serve as both a regulator of a particular industry and an operator in that industry. There are several existing agencies to which this obvious conflict of interest applies, but none is perhaps more contentious than the Philippine Amusement and Gaming Corp. (Pagcor), which is both the regulator of the gambling industry and the operator of several dozen casinos and a substantial online gaming business.
That is why we were heartened to hear what Pagcor Chairman and Chief Executive Officer Alejandro Tengco had to tell lawmakers during a budget briefing at the House of Representatives on Monday. Tengco stressed that “[it] is unethical that we [Pagcor] are the regulator, the one issuing licenses, and at the same time we are an operator,” and told the legislators that his focus would be on privatizing Pagcor’s 45 casinos, noting that President Ferdinand Marcos Jr. has approved the plan.
However, we find the proposed timeline for the privatization troubling.
Tengco explained that he is currently studying the privatization plan with an eye toward “increasing the value of what we will privatize,” and stated that the privatization would likely push through beginning in the third quarter of 2025 “at the earliest.”
Even more troubling is the indication that some in Congress are actively trying to discourage the privatization from being carried out. Cagayan de Oro Second District Rep. Rufus Rodriguez stated: “I advocated before, two Congresses ago, for privatization, but after hearing the new chairman of the Pagcor, Chairman Tengco, it seems that everything will be in order in the coming years. So, why are we going to sell the goose that lays the golden egg? I am really asking you to reconsider this privatization.”
The possibility that Congress, which may be taking a one-dimensional view of Pagcor, might derail the privatization plan is one reason why it should be accelerated. Ironically, the very “golden egg” that is apparently causing some misgivings is the bigger second reason why the privatization effort should be well under way, if not completed, by the current 2025 target date.
It is true that Pagcor contributes substantially to government revenues. Figures presented during the budget hearing indicated that its total income rose to P58.96 billion in 2022, from P35.48 billion in 2021, of which P34.67 billion was remitted to the government, up from P22.91 billion in 2021. Pagcor also reported an income of P36.21 billion for the first half of this year, indicating that its full-year income for 2023 could be about P75 billion.
High costs, ethical dilemma
However, as impressive as those figures are, they still indicate that Pagcor’s expenses are considerable, amounting to about P24.3 billion in 2022 and P12.57 billion in 2021, a year in which in-person patronage in its casinos was prevented for a long period of time due to the Covid-19 pandemic. Under privatization, Pagcor would indeed lose those revenues, but it would likewise reduce its costs; in addition, a substantial part of the funds it remits to the government would be replaced by tax revenues collected from private casino operators, as well as the proceeds from the sales of the assets. Obviously, a detailed accounting analysis would need to be conducted to confirm this, but we believe that it would show that, contrary to current assumptions, there is a clear financial benefit to the government from going through with the privatization.
And of course, there is the elimination of the significant ethical dilemma of Pagcor’s carrying out the divergent missions of being both a regulator and operator in the gambling business. The situation is one in which its regulatory role is constantly questioned, because it is constrained by the need to carry out business profitably, as any government-owned corporation must. Letting go of the business will give Pagcor a free hand to regulate the gaming industry fairly and with the best interests of the government and people in mind, as well as reduce a substantial amount of complexity and expense in its operations in line with the Marcos administration’s aim to streamline government. Taking steps to obtain these benefits should not wait until 2025.
[ad_2]
Source link