Payback time for Stanley Ho?

With his 41-year-old monopoly in Macau ended, controversial gambling mogul Stanley Ho is reportedly once again actively pursuing his goal of building a gaming and hospitality empire in the Philippines.

Before his falling out with former Pre-sident Marcos in the 70s, Ho operated nine casinos in the country. Supervision of these gambling houses was eventually assigned to what is now known as the Philippine Amusement and Gaming Corp. (Pagcor).

In 1999, just before his exclusive contract on gambling operations in Macau expired, Ho moved one of his Jumbo Pa-lace floating casinos to the Manila Bay. Strong protest from religious groups however forced the Estrada government to retract their permit to allow Ho to set up gambling operations.

Surreptitiously Trying Again

But Ho does not easily surrender. He keeps on rolling his dice and shuffling and dealing different cards until he gets what he wants.

So in 2001, shortly after the current Arroyo administration took over the Estrada government, Pagcor signed an agreement with a well-known long time business associate of Stanley Ho to invest $120 million in a hotel-casino project. Of course, the project is reportedly on hold until after election results are known.

In 2002, William Gatchalian unloaded his equity in Fort Ilocandia to a Taiwanese group, rumored to also have strong ties with Stanley Ho. Air Macau, Ho’s flagship airline, brings in hundreds of gambling-gaga tourists from Hong Kong, Taiwan and Macau directly to Fort Ilocandia.

Things should have remained fuzzy had Ho not accepted to personally receive an honorary doctorate degree from the Angeles University Foundation (AUF) last April. The President’s brother, Diosdado Macapagal Jr., is an AUF trustee.

This naturally fueled talks that the 83-year-old casino tycoon was a major contributor to President Arroyo’s election campaign chest, reportedly donating P700 million through Pagcor chairman Efraim Genuino. Ho’s brief private visit, as expected, did not go unnoticed.

Immediately after the doctorate degree was conferred on Ho, Lingayen-Dagupan Archbishop Oscar Cruz returned his own doctorate award from the AUF. As head of the Catholic Bishops Conference of the Philippines‚ anti-gambling campaign, Cruz did not want to share the prestige with Hong Kong and Macau’s gambling lord for obvious reasons.

More Than Morality And Politics

With a net worth of over $2 billion, Ho would have been a much-valued foreign investor in the tourism industry. But issues of cronyism and the Church’s distaste for gambling makes him otherwise. "A culture of gambling will lead us to a generation of lazy adults who depend on suwerte rather than hard work," said former Manila Archbishop Jaime Cardinal Sin.

But that is not what I want to discuss in this column.

More than the issue of morality, from an economic and practical point of view, Stanley Ho’s money in the Philippines for Macau-type casinos, and even the horse- and dog-racing attractions he has promised to introduce in the country, duplicates what already exists in the country.

For starters, we already have two franchise holders – the Manila Jockey Club which operates the San Lazaro park in Cavite, and the Philippine Racing Club which runs the Santa Ana Park in Makati – operating horse-racing interests and meeting the needs of local horse-racing enthusiasts. These clubs, if there would be a demand from their patrons, can easily go into dog-racing.

The casinos and the legal gambling industry should best be left to the control of Pagcor alone. This way, proceeds need not have to be remitted elsewhere, which would be the case should government allow Stanley Ho to participate.

Why Share Pagcor’s Gravy?

Despite the reported shenanigans and other misgivings, Pagcor – since its incorporation in the 70s – continues to be a reliable source of income for government and is vital in providing funds for infrastructure projects and other social concerns, such as the free medicards issued by PhilHealth just before elections.

Pagcor reported an income of P5.41 billion for the first quarter of 2004, representing a 7.13-percent increase from the year-ago level. This is said to be the highest ever quarterly profit of the gaming firm in its 21-year history. Imagine how much more could be earned if management is professionalized and corruption is reduced?

It is worth noting that 50 percent of Pagcor’s revenues is remitted to the National Treasury as dividends, five percent goes to the Bureau of Internal Revenue (BIR) as franchise tax, and the rest is allotted to other government agencies and other public concerns.

Why then should the loot be shared when government remains to be the biggest winner under the current set-up? Why allow Stanley Ho to share in the gravy? Unless of course, it’s payback time now that the ongoing canvassing by Congress appears to be moot and academic.

The Mounting Garbage Issue On TV

"Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) starts today the discussion of the garbage problem of Metro Manila and many of our provincial cities. With more and more people living in our urban centers, the amount of garbage generated grows. We have become a generation that has lost its appreciation for managing waste and refuse. Unless our attitude about managing waste changes, we may find ourselves being buried in tons of garbage soon. Watch it.

‘Breaking Barriers’ With L. De Lima, PEZA Director General

"Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature Director General Lilia B. de Lima of Philippine Economic Zone Authority (PEZA) on Wednesday, 9th June.

PEZA management is confident that its efforts to make "doing business easy" in the ecozones is bearing fruits. Although the legislative act to rationalize and enhance investment incentives is still pending, PEZA feels that this is a big factor in our favor when prospective investors evaluate opportunities in the Philippines.

There is also that large pool of easy-to-train, literate and English-speaking labor resources that the country is producing each year. Estimated to grow at about a million annually, this vital resource should not be wasted. Let’s have more businesses, both foreign and local, by bringing down the unrealistically high cost of doing business in the Philippines. Can PEZA do it? Watch Director General de Lima on Wednesday.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.