Gaming ka na ba?
And now for a bit of good news: According to think tanks in business, the next big wave of foreign tourists coming to the Philippines will most likely start next year.
Expected to generate the initial surge is the opening of the first of the four big-ticket hotel-casino projects at the so-called Entertainment City, the ambitious $20-billion 100-hectare project of Pagcor, at the reclaimed area in scenic Manila Bay, dubbed by media as the future “Las Vegas in Asia.”
Pagcor is Philippine Amusement and Gaming Corp., the controversial state-owned casino operator and franchiser, considered the third-largest revenue-maker of the government, next to the BIR and Customs.
Head of Pagcor as chair and CEO is Cristino Naguiat Jr., a former classmate of our leader, Benigno Simeon (aka BS). Among the many close associates of BS in the government, Naguiat is probably the most favorite whipping boy of commentators in both electronic and print media. It seems that the poor guy cannot do anything right.
Still, in the past 24 months under Naguiat, Pagcor showed an excellent record, including a big jump in its revenues, plus the refinement that he put into the contracts with those four big-ticket proponents of the Entertainment City. As we all know, the four companies are combinations of big guns in the international gaming business and local tycoons who were on the Forbes magazine list of world billionaires.
First to open in 2013 will be the project of Bloomberry led by Enrique Razon, the man behind port operator ICTSI. The other three will open one after another, from 2013 to 2016, or before the end of term of the Aquino (Part II) administration.
The three others are also big names in gaming: the partnership between Macau-based Melco Crown and Belle Corp. (owned by the SM group of taipan Henry “Tatang” Sy), the partnership between Malaysian gaming firm Genting and Alliance Global (owned by Megaworld’s Andrew Tan) and the upcoming partnership between the group of the Japanese gaming tycoon Kazuo Okada (called Universal Entertainment) and taipan John Gokongwei Jr.
In the business sector, it is expected that the Entertainment City should put the Philippines on the world tourism map.
Aside from gaming, it is said that the country has much more to offer than most other gaming centers, such as the historical Walled City of Intramuros and Corregidor Island, not to mention the immaculate beaches less than an hour away from Manila.
Among business think tanks, therefore, tourism nowadays is considered as one of the four sectors that can propel the Philippines’ economic development in the next several years, the others being agriculture, infrastructure and mining.
While having fish and rice for lunch, Naguiat told me that in 2010, he wanted to fix the so-called terms of reference in the Entertainment City contracts with the four leading proponents. For instance, the original terms were silent on the time frame for the $1-billion investment from each proponent. Thus it was possible, and it would be legal, that one of them, or all of them, would invest only a small portion of the $1 billion to start the project. You know, just a small hotel, with hardly any other entertainment venues, with a casino as big as the Asian landmass.
Using what he called “friendly persuasion” with the four proponents, Naguiat said Pagcor was able to effect some changes in the terms of reference. For instance, the number of gaming tables would depend on the number of rooms in their hotels. Big hotel equals big gaming operation. Each project also committed to reserve space for retail outlets—the “shopping” segment of tourism.
The changes somehow assured Pagcor that the hotel-casino projects would really be, in a way, grand. Naguiat perhaps wanted to make sure that the Entertainment City would really cater to foreign tourists, in the mold of the Marina Bay project in Singapore or the phenomenon that was Macau.
Included now in the agreement with the four proponents are some out-of-pocket expenses for big infrastructure items such as electricity and water supply. The proponents must also pay for the construction of the streets, which are to be a little less wide as the widest street in the metropolis called EDSA. In fact, in cooperation with the DPWH, the proponents are putting up some P6 billion for the proposed tollway connecting the area to the airport. With the total cost of P12 billion, the proponents are, in effect, shouldering half of it.
It is not a surprise therefore that Naguiat is already touching base with other government agencies, such as the Department of Tourism, on how to market the project. In fact, the DoT just received a share of the dividend that Pagcor remitted to the government. This, by the way, is a first for Pagcor. For the first time in its 40 years of existence, Pagcor paid out dividends amounting to P1 billion.
Anyway, earlier in the Aquino (Part II) administration, Naguiat announced that Pagcor would review all of its existing contracts, including the casino-space leases with hotels, the 20 gaming arcades and the casino franchises. He said all the contracts had been amended, resulting in higher income for Pagcor. They say that numbers do not lie and just take a look at the Pagcor numbers: In the past 18 months, from July 2010 to end of 2011, Pagcor already posted a P9-billion increase in revenues. On the average, this is an increase of about P500 million a month.
Last year, Pagcor generated a P5-billion increase in its total income of P37 billion. This year, Naguiat is expecting it to rise further to P44 billion. Not bad! It is bound to increase further with the opening of the Entertainment City beginning next year.
And what is all that to the guys down here in my barangay? It means Pagcor can give more money to its mandated beneficiaries, such as its P1-billion funding last year for the construction of 1,000 classrooms nationwide, which Pagcor sourced from its savings.
Here is the deal: Pagcor remitted some P9 billion to the government from January to May this year, higher by P2 billion from P7 billion last year. The beneficiaries included the Philippine Sports Commission and some LGUs.
The question remains: How well do those recipients account for the funding?