Curtains rise on Pagcor’s $4B gaming complex
(First of two parts)
Cristino Naguiat Jr. is a man visibly relieved. And he has good reason to be.
Ever since he assumed the top post at the Philippine Amusement and Gaming Corp. (Pagcor), Naguiat has been a lightning rod for criticism, from accusations that he was appointed for being President Aquino’s university schoolmate to having accepted free accommodations and perks overseas from a license holder in the agency’s multibillion-dollar gaming project.
But it was his decision to continue the controversial Pagcor Entertainment City—a project initiated under the scandal-plagued administration of former President Gloria Macapagal-Arroyo—that made Naguiat most vulnerable to attacks from critics.
The tide may begin to shift on Saturday when one of the four licensees in the gaming development—touted to be the country’s answer to Las Vegas, Macau and Singapore—opens its doors for business.
“Ibang klase talaga (It’s really something else),” Naguiat gushes, describing the Solaire hotel and casino, which will be the Entertainment City’s flagship project. “[Tycoon Enrique] Razon [Jr.] spared no expense in building it.”
The Pagcor chief told the Inquirer that Solaire, owned by Bloomberry Resorts of ports tycoon Razon, “raised the bar” for the three other casino license holders, which are expected to complete their respective projects one year after another.
“This will help the Philippine economy a lot in terms of creating jobs and investments, plus boosting tourism by serving as a jump-off point for other destinations and attractions around the country,” he said.
Started in 2007 under the management of then Pagcor chief Ephraim Genuino (who has since been charged in court for alleged anomalies under his watch), Entertainment City was an ambitious project set on 100 hectares of reclaimed land at the Manila Bay.
The agency’s earliest estimates put the project’s total investment value at $15 billion (muted expectations by the new management brought the figure down to a conservative $4 billion in direct spending), and was envisioned to exceed the annual revenues of Las Vegas, Macau and Singapore. Pagcor spared no expense in marketing it, even running regular TV ads over CNN in 2009.
Naguiat’s optimism is shared by many foreign investors and analysts who believe that the Philippine gaming industry will be one of the most attractive investment areas in the country over the next few years.
In a recent study, investment banking powerhouse Credit Suisse advised their clients to buy stocks of Bloomberry and Belle Corp., which is another Entertainment City license holder controlled by the family of the country’s richest man, Henry Sy Sr.
“We believe that the Philippine gaming industry is well placed to exceed the current size of the Singapore market within the next six years,” Credit Suisse said. “In the near-to-medium term, we expect growth to be largely capacity driven, with sequential supply coming on stream [from 2013 to 2016].”
The project will attain even greater momentum once fully completed in 2016—before President Aquino leaves office, Pagcor officials hope—and will be complemented by adjacent real estate developments which will continue to drive growth of the industry and associated businesses.
Today, property prices around the Entertainment City complex have doubled in anticipation of the commercial possibilities in the area, according to David Leechiu, who heads the local unit of property consultancy firm Jones Lang LaSalle.
Stock brokerage firm COL Financial Philippines is also bullish on the project, the gaming industry, and its effects on the Philippine economy as a whole. COL Financial believes that gaming revenues (already boosted by Resorts World Manila of property tycoon Andrew Tan) could rise even further to $2.7 billion annually by 2015, from only $500 million before Entertainment City was envisioned.
But like any bet on the gaming industry, there are several unknowns that could spoil the party, not least of which is the nagging opposition by some vocal sectors of society against “gambling.”
“Pagcor spends a lot of money to emphasize the benefits casinos bring to the government and to people,” said Roman Catholic Archbishop Oscar Cruz, who is a staunch anti-gambling crusader. “But those are small numbers compared to the social cost of gambling … all illegal activities it spurs and all the lives it destroys.”
Cruz, who does not use the industry term “gaming” and is critical of certain policies of both the Arroyo and Aquino presidencies, lamented the headway made by gambling over the years.
“Under President Marcos, gambling used to be held on board ships that would sail out into Manila Bay,” he said. “Under President [Corazon Aquino], they let gambling step on land. Then it spread across the country. Ngayon, kinoronahan ng anak (now, the son of President Cory Aquino has crowned gambling).”
(To be continued)