Manolo Quezon is #TheExplainer Newsletter — Manila irks Beijing Again

My column last week was on the continuing saga of the POGOs and Beijing’s continuing frustration with Manila. After my article went to press, it turned out the Senate President was indiscreet leading the Chinese ambassador to deny the conversation he had with Philippine senators.

These were the columns I found useful in preparing my column:

Helen Gao’s The Chinese Public Doesn’t Know What the Rules Are Anymore

Dimitar Gueorguiev’s Making Sense of Tightening Party Control in China

Michael Schuman’s What Xi Jinping’s third term means for the world

Nathan Levine and Johanna Costigan: Xi Jinping’s position is secure but growing gloom will have impact

Reuters: Explainer: The ways China’s Xi Jinping amassed power over a decade

Leeichiu Property Consultants: Property consultancy firm estimates POGO exit losses

Before the pandemic, I started and maintained for some time, a timeline of POGO activities and issues in the Philippines.

This week started with a photo release of the First Lady meeting with the Chinese ambassador, mending fences obviously.

The First Lady with the Ambassador of China

Last week’s The Long View

What can Manila really offer Beijing? | Inquirer Opinionopinion.inquirer.net

By: Manuel L. Quezon III@inquirerdotnet

Philippine Daily Inquirer / 04:30 AM October 12, 2022

FSince colonial times, and, who knows, perhaps even before, the history of the Chinese in the Philippines has been one of extortion at the hands of officials. Let us combine this sweeping generalization with another, best expressed by an American congressman: that all politics is local. These two lenses are useful when it comes to viewing the story of Philippine offshore gaming operators (Pogos) in our country.

To recap my views on the matter, whatever lofty policy goals concerning Philippine-China relations our chief executives may have, in recent years, the proliferation of Pogos has created a complication that won’t go away. Pogos have proven a bonanza to many sectors, from local governments to security providers (official and unofficial, shall we say), to middle and upper-class property owners, to all sorts of (aboveground and underground, shall we also say) service providers. Whenever there is (ritual) talk of cracking down on them, dire warnings are made of the economic consequences of such moves. Leechiu Property Consultants has taken to issuing a press release on the topic: it will lead to P18.9 billion in office property rental losses (plus P52.5 billion lost annually in terms of contracts for fitting out offices), and P28.6 billion in housing rental losses, not to mention P9.8 billion in unrealized income for power distribution companies and P11.4 billion in losses to the services sector for commissary meals alone, and another P952 million in daily spending, not to mention P5.25 billion lost in regulatory fees and P5.8 billion in terms of lost taxation income from Pogos — and P54–57 billion in taxes from Pogo employees. And they’ve learned to organize and lobby for themselves: the Association of Service Providers and Pogos declared 23,000 Filipinos would lose jobs were Pogos to leave (a big difference from the 347,000 jobs Leechiu claims depends on Pogos).

The Pogo gravy train means these domestic benefits are more than enough to subvert relations with Beijing, which has found Manila far from cooperative when it comes to its desire to clamp down — smash — the Pogos who, to Beijing, are a drain on domestic wealth, and a continuing affront to state (and party, one and the same thing) control.

Commentaries on China, its economy, the ruling Communist Party, and the expected mid-October achievement of an unprecedented third term for Xi Jinping, all point to what one such commentary describes as “a tottering amalgamation of encroaching emergencies that the party is either ignoring or making worse.” These range from problems in real estate, public dissatisfaction with a relentless and harsh Zero COVID-19 policy, a crackdown on the independence of moguls and their firms, and corresponding measures by the government to restrict opportunities for its citizens to be exposed to ideas and trends it disapproves of.

So, when in March 2020, China imposed strict travel restrictions, which up to now show few signs of being lifted, compounded, in May of this year, by the government announcing that “nonessential travel” was forbidden (which also meant getting passports and other travel documents would be harder), some observers suggested this wasn’t a temporary but rather, represented a likely permanent, policy. Around that time, the government also decided to cancel international sports events scheduled for the middle of next year, which only strengthened such assumptions. At the very least, even a selective loosening of restrictions allows China to leverage its massive tourism potential when it comes to bilateral relationships.

Which is arguably what is happening now. Yesterday, Senate President Miguel Zubiri in a hearing said that last Monday, the Chinese ambassador informed him the Philippines has been blacklisted as far as our being an acceptable travel destination for Chinese tourists. Ambassador Huang Xilian is supposed to have told Zubiri and other senators because many Chinese in the mainland have died, committed suicide, or ended up in jail for theft and robbery because of Pogos, particularly those here. Zubiri, in the hearing, mentioned that the country has witnessed a “significant drop” in Chinese tourism, which might have less to do with an outright blacklist and more to do with a general policy of China forbidding its citizens to engage in foreign tourism, period. But that might have been an unhelpful dose of reality.

Officially, of course, originally the perspective of the government seemed to be focused on weeding out Pogos that were no longer paying dues. Justice Secretary Jesus Crispin Remulla had originally quantified this as follows: (Sept. 27) 216 previously licensed Pogos with a back-of-envelope estimate of 200 employees each, meaning 40,000 individuals ripe for eviction proceedings; this subsequently seems to have been calculated more carefully (Oct. 2) at 48,782 — the number of visas the Bureau of Immigration says it intends to cancel (the fine print? The same bureau says it is in the process of verifying if these individuals are still in the country or not). This is a marked increase from the 2,000 Pogo workers the government originally announced it was going to deport.

The justice secretary is scheduled to meet the Chinese ambassador tomorrow. An official says this is the first time the Philippine government is meeting its Chinese counterparts on the issue. One could frame it, in fact, from the Filipino perspective as a win-win: it might soothe Beijing while sending a message to the Pogos that remain: pay up or ship out. But if this were so, it would be a tone-deaf message to China. Because, as more cooperative countries like Cambodia understood, and implemented, what China wants is active cooperation in shutting down all Pogos, without exception. How can Remulla make any meaningful gestures to China, when the Philippine Amusement and Gaming Corp. (Pagcor) (in which his brother, Gilbert, sits on the board as we were reminded when he showed a marked disinclination to consider joining his brother in the Cabinet as potential press secretary) continues to consider Pogos an invaluable source of income? Not to mention the province of Cavite (Remulla country) in which the former Remulla-owned Island Cove was transformed into a Pogo city?

For his part, Finance Secretary Benjamin Diokno has been more categorical, pitching the elimination of Pogos altogether, on the basis of social ills and damage to the country’s reputation — as well as declining revenues. Pagcor countered this by saying that recent arrests of foreigners are of individuals unrelated to legitimate Pogos.

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Manuel L. Quezon III

Columnist, Philippine Daily Inquirer. Editor-at-large Spot.ph. Views strictly mine. I have a newsletter, blog, podcast, and Patreon.