AMONG the various disagreements between China and the Philippines, perhaps the only issue in which one side or the other is even close to being unambiguously right is that of gambling. The Philippines' perspective on it is quite frankly parasitic, and by refusing to accede to China's wishes or at least reasonably accommodate them, the Philippines is practicing the sort of interference in another country's internal affairs that it would never tolerate itself.
Although it was an incidental and only briefly acknowledged topic during The Manila Times' forum on the Regional Comprehensive Economic Partnership (RCEP) on Wednesday, China's Ambassador to the Philippines Huang Xilian did not mince the few words he devoted to it. Gambling is illegal in China, he explained, and Chinese citizens are not permitted to own or operate gambling establishments or be employed in them.
There is one exception to China's otherwise hard-and-fast "no gambling" stance, which we'll get to in a moment, but the implication of the honorable ambassador's comment was that the Chinese government would very much like the Philippines to put a stop to its POGO (that is, "Philippine" offshore gambling operator) nonsense.
It is common knowledge, undoubtedly to the ambassador as well, that the average POGO has precisely zero "Philippine" character other than being located here. Most are entirely staffed by and cater almost exclusively to Chinese citizens, and Chinese entrepreneurs control the ownership of them although this is necessarily disguised to circumvent Philippine laws.
All of this is illegal under Chinese law, but as it is happening here, not in China, the most China has been able to do is ask nicely for the Philippine government to put a stop to it. The government, which defines ethical practice on a sliding scale that is inversely proportional to the amount of money perceived to be connected with a particular subject, has declined to do so. Rather impolitely, as I recall, in rebuffing China, the government cited with no evident awareness of irony the interference with the Philippines' sovereignty the Chinese request represented.
POGOs are ostensibly a source of revenue for the government that is too valuable and too necessary, especially "in these difficult times," to let go, and it has steadfastly defended its decision to look the other way when it comes to the multitude of social ills the sector has brought, and the burr under the saddle of Philippine-China relations it represents, by offering assurances it can properly regulate and collect taxes from the industry. None of that is true, of course; even with the POGO industry greatly diminished by the Covid-19 pandemic, the government is still contending with all manner of problems caused by its presence, including billions of tax arrears that remain uncollected nearly two years after it vowed to "run after" delinquent POGOs. In addition to these issues, persistent problems, mainly out-of-control money-laundering by Chinese customers facilitated by the illicit junket business, associated with the traditional casino sector, have not been resolved or even addressed with any serious intent by the government since they were first highlighted by the Bangladesh Bank heist in early 2016.
News this week concerning the one exception to China's firm anti-gambling stance - the Macau Special Administrative Region, the one place in China where gambling is permitted - should be a wake-up call to Philippine officials who continue to have the naïve notion they can play in the dirt without getting any in their own hands.
On Wednesday, the city government began a 45-day public consultation aimed at tightening oversight of the casino sector in Macau, including, among other things, placing government representatives on the boards of licensed casino operators to monitor their operations. The announcement caused the stocks of the six licensed casino companies to take a nosedive, each losing between 13 and 24 percent and causing a great deal of worry among the public. Except for egg tarts and having the world's deadliest street racing circuit, casinos are about the only things Macau has going for it; the casino business provides 80 percent of the government's revenue, about 55 percent of the city's gross domestic product and a bit more than 17 percent of its total employment.
Beijing has been gradually tightening the screws on the Macau casino industry for several years. So, perhaps, in an effort to deflect the presumption that the latest move was not really its own idea, the Macau city government issued a statement: "While acknowledging the gambling industry is the city's lifeline, [the Macau government] is concerned by the local economy's overreliance on the industry and the associated inflated costs of living and doing business."
With all six licenses up for renewal in June 2022, which means that the license holders are likely beginning the work on their applications now, the message to each of them is pretty clear: You will do business in Macau on the government's terms, or you will not be doing business.
The likeliest outcome will be some contraction in Macau, which may look like an opportunity for the Philippines and other countries such as Vietnam and Cambodia, with whom China has also had the same uncomfortable conversations about their eagerness to accommodate the gray-market business. If it is indeed an opportunity - and the costs of the associated hazards make that debatable - it is at best a short-lived one. China will eventually find ways to finally correct what it considers a social and economic ill for its own people, and any plan that is based on the assumption that it will not is going to have poor results.
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Twitter: @benkritz