Hong Kong Firms, Chinese Gambling Hit by Philippines President’s Freeze on Reclamation in Manila Bay

January 25, 2020 | Government

MANILA, Philippines – The Duterte administration’s decision to withhold approval for the reclamation of more than 10,000 hectares of land along Manila Bay could hamper the expansion plans of Philippine offshore gaming operators (Pogos), while adversely affecting firms from Hong Kong and mainland China which were meant to be part of the project.

South China Morning Post reports that on January 13, President Rodrigo Duterte said it would be unlikely for him to give the green light to the “mind-boggling” project if there was no guarantee that the environment would be protected, and people’s health safeguarded.

Joey Roi Bondoc, research manager at Colliers International Philippines, said Pogos would seek alternate locations for expansion should the reclamation bid not go ahead.

There will be some impact in the short term. Office vacancy in the [Manila] Bay area is less than 1 per cent. The offshore gaming firms’ expansion is already stifled by limited office space and residential units,” he said. “So with less supply in the pipeline, these firms are compelled to expand outside Metro Manila.”

More than 50 Pogos – which mainly cater to punters from mainland China, where gambling is illegal – are currently operating in metropolitan Manila, where they employ an estimated 250,000 migrant workers from China.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation, said Pogos’ operating costs were likely to rise if the proposed reclamation projects along Manila Bay were not pursued.

Given the lack of land supply in central business districts [CBDs] in Metro Manila, reclamation has been an option to increase the supply of developable land that is relatively proximate to the CBDs,” he said.

As a result, the additional supply of office and business space for Pogos’ operations, through reclamation projects in the Manila Bay area, could be reduced and could lead to higher prices and rental rates for existing properties that cater to Pogo operations in the Manila Bay area.

Ricafort said the area was among the biggest beneficiaries of Pogo operations, as it had experienced the highest property price appreciation and increase in rental rates since the licences for such firms began to be processed in 2016.

However, these spiralling rents and property prices were also likely to force Pogos to move to fast-growing cities and localities around the country, he said.

The Philippine Reclamation Authority (PRA), Boskalis and China Harbour Engineering did not respond to requests for comment on Duterte’s pronouncement.

Ricafort from Rizal Commercial Banking Corporation said arbitration or litigation, especially in international courts, could happen following the government’s apparent change of heart, though he noted that “some compromise or amicable settlement could be reached by the private investors and the Philippine government.

SOURCE: South China Morning Post.


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