Aquino: $10-B Pagcor bid ‘interesting’ - INQUIRER.net, Philippine News for Filipinos

Aquino: $10-B Pagcor bid ‘interesting’ - INQUIRER.net, Philippine News for Filipinos

“This could be the mother of all mega-deals and would really prop up the government’s economic development program,” said Parañaque Rep. Roilo Golez.

Having such an amount could also free the country from the clutches of the World Bank-International Monetary Fund, Golez said.

It would also remove the government’s direct participation in gambling operations, he said, as well as do away with its “unsavory implications.”

Golez also said that should the government sell Pagcor, it would still reap benefits from residual income such as taxes, and interest income from investing the balance of proceeds.

Aquino: $10-B Pagcor bid ‘interesting’


By Gil C. Cabacungan Jr., Leila B. Salaverria
Philippine Daily Inquirer
First Posted 01:50:00 08/10/2010

Filed Under: Casinos & Gambling, Government offices & agencies, Privatisations, Economy and Business and Finance


MANILA, Philippines—It’s the “mother of all mega-deals” that deserves a good look.

This in a nutshell was the reaction in Congress and Malacañang to the offer of businessman Ramon S. Ang to buy Philippine Amusement and Gaming Corp. (Pagcor) for $10 billion to raise funds for the cash-strapped government and transform the country into a “tiger economy.”

President Benigno Aquino III Monday said that the government would have to do a lot of math before considering Ang’s offer to lead a group of Malaysian and Indonesian investors to buy Pagcor.

“You have to ensure that if you intend to sell something, it is at the best price that we can get. So it is a proposal, it is a very interesting proposal. But at the same time we have to study the matter first,” Mr. Aquino told reporters in an impromptu interview at the Department of Foreign Affairs.

Senate President Juan Ponce Enrile said he supported Ang’s proposal.

“But they have to separate the regulatory function because that is government and the operation must be privatized. It will be more manageable if the government is not involved in the winning and losing in the business. It regulates, gets its taxes and gets its share of the outcome of the operation,” Enrile said.

He said that Congress would only need to change Pagcor’s charter by creating a regulatory body patterned after the Nevada Gaming Commission with its assets to be spun off for sale in exchange for shares of stocks.

Enrile concurred with Ang’s view that the $10 billion to be realized from the sale of Pagcor would be a “catalyst” to make the country a tiger economy.

“This could be the mother of all mega-deals and would really prop up the government’s economic development program,” said Parañaque Rep. Roilo Golez.

Having such an amount could also free the country from the clutches of the World Bank-International Monetary Fund, Golez said.

It would also remove the government’s direct participation in gambling operations, he said, as well as do away with its “unsavory implications.”

Golez also said that should the government sell Pagcor, it would still reap benefits from residual income such as taxes, and interest income from investing the balance of proceeds.

Regulator, not operator

Senators Francis Escudero and Franklin Drilon said that Pagcor should just be a regulator and not an operator of casinos.

“I think we should go through this carefully. We should not be blinded by the amount being dangled but we should decide whether this is the best time to do this,” Escudero said.

Drilon said that Mr. Aquino need not wait for Congress to amend Republic Act No. 9487, or the Pagcor charter, and move to adopt a policy barring Pagcor from continuing to run casinos.

Without headaches

Sen. Edgardo Angara is also backing Ang’s proposal as long as the government continues to get its share of Pagcor’s annual gross revenues, which last year reached P29 billion.

“The government should get what it has been getting in the last five years or more. Also, the sale to a private buyer should guarantee that the local government would get a share of its casino earnings and at least 20 percent of its earning should go to social services. If we don’t demand this, it will be a give away,” Angara said.

Sen. Miguel Zubiri said that the government’s take from the casino operations could come in the form of franchise fees. “It’s a huge amount of money without the headaches and the charges of corruption,” said Zubiri.

‘He speaks with authority’

House Deputy Minority Leader Danilo Suarez said Ang’s offer “shouldn’t be taken for granted because when he speaks, he speaks with authority.”

Negros Occidental Rep. Alfredo Benitez said: “I am in agreement only as far as selling the operational assets of Pagcor but we must retain its regulatory function as well as its recurring revenues.”

Albay Gov. Joey Salceda said that the proceeds from the sale of Pagcor should be placed in a perpetual trust fund whose annual yield would be automatically appropriated and earmarked for antipoverty social services.

“That P500 billion must benefit future generations not just this one.” Salceda, an economic adviser in the Arroyo administration, said in a text message.

Transparent, competitive

Finance Secretary Cesar V. Purisima said in a statement that the government was open to Pagcor’s privatization in a “transparent, competitive manner,” but that the state should keep its regulatory functions.

The government intends to ensure that the company’s potential to generate tourism, investment and employment are maximized, while the social costs of gambling are minimized, he said.

Purisima said that sweeping changes had taken place in gaming in neighboring territories such as Macau and Singapore, and that the government must ensure that the Philippines could compete internationally.

“Pagcor is also reviewing its own finances and licenses issued in the past, to come up with a comprehensive picture of its financial and operating position,” Purisima said. “Pagcor will be privatized after these issues are fully understood and addressed.”

Pagcor spokesperson Jay Santiago said: “We will have to review and do some financial evaluation and modeling to determine if the value being attributed to Mr. Ang is actually accurate. But it’s a good benchmark to start with.” With reports from Cathy Yamsuan, Ronnel W. Domingo and DJ Yap in Manila; and Carla Gomez, Inquirer Visayas