FIRST PERSON - Alex Magno (The Philippine Star) - July 2, 2020 - 12:00am

Cebu City will be kept under hard lockdown at least over the next few weeks. The NCR will remain under general community quarantine.

President Duterte tasked Roy Cimatu to oversee operations to quell the outbreak of infections in Cebu. The former general is the President’s most reliable troubleshooter. He has been given many missions in the past, from rescuing distressed OFWs in the Middle East to cleaning up Boracay and Manila Bay. Facing down the outbreak in Cebu would be his toughest assignment.

The effort to quell the outbreak in Cebu, that threatens to spread to the Eastern Visayas provinces, is vital to keeping the pandemic under control within our national borders. This could be the key battle to avert that feared second wave to infections.

Simply put, we cannot afford defeat in Cebu. Its population density notwithstanding, the city has much less hospital resources than the capital region. It is the hub of much movement of people coming from or going to the other central Philippine islands.

The large outbreak in Cebu happens at a time when the national government has nearly exhausted its resources to fight the pandemic. The first-round battle against the pandemic centered in Luzon forced government to realign funds for direct subsidies to poor communities, massive acquisition of medical gear and medicines, financial support to unemployed workers and financial support for small businesses and returning OFWs.

Public expenditure to fight the virus now runs into several hundred billion. The money that flows to the Social Amelioration Program and the local governments for their own social support programs is not free. They were realigned from savings and cancelled projects – and eventually from emergency borrowing.

By my own tally, we have added about $6 billion to public debt over the last couple of months. The borrowing includes: about $2.1 billion from the ADB under three different packages; about $1.3 billion in four World Bank emergency loan programs; $2.35 billion through two dollar-denominated bond offerings; and various other ODA loan contracts with friendly governments.

Over the next months, nearly every government on earth will be scrounging around for emergency funding both to fight the pandemic and restart their economies. Our sources of funding, notwithstanding our excellent credit ratings, will become tighter.

If we have to borrow more to continue this fight, the health crisis could soon transform into a debt crisis.

Understandably, we expect government revenues to drop in the coming months, reflecting the contraction of the economy and the business slowdown. We need every peso of revenue government could have its hands on, including from online business activities.

Otherwise, we will be facing the next stages of this long battle without much ammunition.


Some of our politicians have made a cottage industry out of complaining about what they insist is special treatment given the Philippine Online Gaming Operations (POGOs). It is clear they are doing this in the hope of tapping into a xenophobic undercurrent and converting this into political capital.

They conveniently forget to mention two things. First, Beijing actually frowns on our hosting of the online gaming firms because this defies their own anti-gambling campaign at home. Second, the POGOs are rigorously regulated and heavily taxed by a government that is desperately scrounging for revenues.

Our government, to put it bluntly, hosts these enterprises for the revenues we need to continue fighting the pandemic. The POGOs might not be a virtuous goose. But it lays the golden eggs.

There is an effort led by politicians to either restrict the POGOs further or force them out summarily. It is an effort to score political points although guised in self-righteousness. It is an effort that deliberately underplays the economic benefits we derive from hosting this service industry.

The legitimate POGOs, properly registered with PAGCOR and strictly supervised by the BIR for taxation purposes, have banded together in an association called Accredited Service Providers of PAGCOR (ASPAP). The association’s spokesperson Atty. Margarita Gutierrez claims its members contribute about P94.7 billion to the economy. This year, that number could grow to about P104 billion.

Apart from the hefty regulatory fees PAGCOR collects and the stringent taxes the BIR insists must be constantly updated, the this service industry provides employment to tens of thousands of Filipinos. The online operations account for a large amount of office space and pay rental for numerous residential units used by expatriate workers. Actual revenues from these service providers grew to P5.73 billion in 2019 and appear ready to grow even more dramatically this year.

In the first quarter of 2020, duly accredited POGOs have paid P1.8 billion in regulatory fees alone. That income, in turn, flows into the President’s Social Fund that has been used to help our most disadvantaged communities including those hit by the pandemic.

Leaseholds and rentals amount to about P25 billion. The association’s members account for about a million square meters of office space. All these are subject to VAT.

About 31,556 Filipinos employed by this sector pay income taxes. All the added consumption they add to the domestic economy helps prop up consumer demand. The multiplier effects of residential rentals and retail activities are enormous.

Gutierrez pleads with the politicians to carefully distinguish between duly registered online gaming operations and the clandestine ones. It is the latter that has produced much of the negative effects on the community and none of the direct revenues.

If the online gaming industry is forced to close tomorrow, that will blow a large hole in the domestic economy. We least need that in the midst of this pandemic.

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