Biz Buzz: Closing the loophole
A year after the Bangladesh cyber heist grabbed local and international headlines, Philippine lawmakers have finally moved to close off a gaping loophole in the nation’s financial system that attracted the perpetrators in the first place.
Recently, the Senate and the House of Representatives voted unanimously to include casinos in the coverage of the Anti-Money Laundering Act—something that the gaming industry has lobbied against ever since the original law was passed in 2001.
But it appears that last year’s incident—where $81 million in funds stolen from the Bangladesh central bank penetrated the Philippine financial system via the Rizal Commercial Banking Corp. as conduit and eventually finding their way to the casinos—made the continued exclusion of gaming hubs from the prying eyes of regulators untenable.
And the major players in the industry seem to know that, with the biggest, Solaire Resort and Casino, expressing no objections to being subjected to more scrutiny.
“We’re OK with that,” Solaire’s owner Enrique Razon Jr. said recently, adding that the additional regulations only covered suspicious transactions anyway.
The fear of the gaming industry in the past, of course, is that potential casino patrons, especially the high rollers from abroad, would be discouraged from coming to the Philippines if their finances were scrutinized too closely.
But this has apparently been solved by setting a threshold amount below which the government will not bother poring over the transactions (of which there are millions in the local industry). And what’s the threshold approved by both chambers of Congress for the new law? The magic number is P5 million.
Razon is confident that the industry will not be adversely affected by this new rule, especially since the bulk of Solaire’s retail players have bets below this amount. As for the high rollers who play for weeks on end, winning or losing in the hundreds of millions of pesos, the tycoon is also not worried.
“That’s no problem for us since it only covers suspicious transactions,” he said. How to avoid being classified as “suspicious,” of course, means some kind of enhanced know-your-customer rule not only for Solaire, but for the rest of the booming Philippine casino industry.
How this will ultimately play out, of course, will only become clearer once President Duterte signs the bill into law. Abangan. —Daxim L. Lucas
After hurdling the threat of a change in tax regime years ago, the gaming industry is seen facing another potential regulatory challenge in the form of a bill seeking to slap a P3,000 entrance fee on casinos. This is in the aftermath of the recent rampage by a gun-toting gaming addict at Resorts World Manila (RWM) that killed a number of employees and guests and resulted in the suspension of the provisional gaming license held by RWM developer/operator Travellers International Hotel Group Inc.
Yesterday, shares of City of Dreams Manila operator Melco Resorts fell by 8.02 percent while Solaire developer and operator Bloomberry slipped by 3.21 percent. Travellers International Hotel Group, already trading near 52-week lows, fell by 1.64 percent.
The industry is expected to band together to fend off the proposed legislation of Isabela Rep. Rodolfo Albano III especially since the imposition of an entrance fee on casinos could curb their mass market business while not necessarily preventing any rampage by a deranged gambler.
Meanwhile, the buzz within the gaming industry is that a foreign gaming player, who has long been thirsting to enter the local casino business, may be positioning to assert its campaign, with the help of some Duterte allies. —Doris Dumlao-Abadilla
Megawide ups the ante
It seems the GMR-Megawide consortium is doubling down on the Mactan Cebu International Airport with a new P208-billion offer in the wake of a still uncertain air gateway policy for the greater Manila area.
Recall that the competing mega-budget proposals of GMR-Megawide and JG Summit-Filinvest for Clark International Airport in Pampanga were rejected by the Department of Transportation. (Still no certainty on separate offers in Bulacan and Sangley Point, Cavite for an eventual replacement to Manila’s Ninoy Aquino International Airport.)
Roberto Lim, who recently resigned as aviation undersecretary, left with little if not vague direction when he said the greater Manila area should adopt a “multi” airport scheme instead of the long-standing dual airport policy.
It does make sense to focus on a project that carries more certainty such as the MCIA that GMR-Megawide is already expanding and will be operating through 2039 (add another 25 years if its offer is accepted).
It’s a massive undertaking that would involve land reclamation, a brand-new runway and a third passenger terminal over 50 years. The idea is to avoid congestion headaches like the ones in Naia.
Perhaps the most remarkable aspect of GMR-Megawide’s proposal is the unprecedented takeover of airside operations, which typically refers to the area after security and passport control. These are currently handled by the government in Cebu and all major airports around the country.
We say it’s remarkable because it comes at a time when the government had signaled a general bias against private sector exposure in big-ticket projects.
Call it what you want— the government calls it the hybrid public private partnership (PPP) scheme—but the recent fate of several PPPs and even Clark Airport is proof of this.
Under GMR-Megawide’s proposal, handling airside operations means it can act faster on crucial rehabilitation such as repairing the runway and building a new one since it would no longer be constrained by the government’s procurement process.
It would also allow the company to modernize traffic control facilities.
GMR-Megawide sees other advantages, especially given the long-term nature of its plans, which would extend over several more six-year administrations.
“By submitting our proposal, we can relieve the government from the burden of planning ahead. We can do it for them,” GMR Megawide director Louie Ferrer told Biz Buzz.
The next question, of course, is how the government treats this latest idea from the private sector. As we say here, abangan! —Miguel R. Camus
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