Inside Asian Gaming

April 2009 | INSIDE ASIAN GAMING 27 A s well as the potential goodwill created by local resort developers being able to raise money locally, the tax burden on the new Philippines resort schemes will also be lower than that found in Macau (which comes in at just under 40% of the gross when payments for social schemes are included). It will however be less competitive than Singapore’s regime, where the IRs will pay 15% of gross revenue on the main floor as direct tax, but only 5% on ‘premium’ play (i.e., that of high- rollers and players brought in by junkets). Singapore will however charge its citizens and permanent residents a fee—S$100 (US$65) per day or S$2,000 per year—to enter the IRs, while admission for tourists will be free. Under the terms of reference supplied by the government-owned operator-cum-regulator Pagcor (the Philippine Amusement and Gaming Corporation), the new Manila resorts will pay the following taxes: - 15% of gross gaming revenues generated from high roller tables; - 25% of gross gaming revenues generated from non-high roller tables; - 25% of gross gaming revenues generated from slot machines; - 2% of total gross gaming revenues generated from both high roller and non-high roller tables, for the restoration of cultural heritage. In addition, Pagcor will charge junket operations 15% of gross gaming revenues generated from both high roller and non-high roller tables. “We are trying to come up with the best environment for our investors and at the same time to do the best for our country,” says Rafael Francisco, President of Pagcor. “TheTourismAct of 2009means the government will definitely support the Entertainment City and other projects in the pipeline.” In Focus centre, their training centre—so that is the kind of commitment they are putting into this country after they have seen the quality labour we have in the Philippines. I think the incentives and the policies have already been well laid out by Pagcor. I think it’s time for us as investors to actually execute it, so we’re doing just that,” asserts Mr Sian. Manila Bay “The other project we will start this year is what is called the Bagong Nayong Pilipino project and we have a 40-hectare development there. This will be part of a larger vision of the [Pagcor] chairman [Efraim Genuino] in that area. We will start this year on that project. Since that is a larger project, it will obviously be completed over a number of years,” explains Mr Sian. Merril F. Yu, President of the Philippines company SM Hotels, part of the SM Group, is another participant in Bagong Nayong Pilipino. SM’s parent company SM Investments Corporation is through its other subsidiaries the developer and operator of the SMX Convention Center and the Mall of Asia near to the proposed Manila Bay gaming resort site. “We have a very aggressive schedule in terms of supporting tourism around the country,” says Mr Yu. “We want to develop the Mall of Asia as a tourist and entertainment hub in Manila. That supports Pagcor’s drive tomakeManila a competitive centre that draws its fair share [of visitors] against the other short haul Asian markets, including Macau and Singapore when eventually it [the casino resort sector] opens. “There are fairly extensive designs for the casino as well as the existing SMX [Convention Center] which we plan to expand. It is aggressive, but we are taking the extra time to make sure that what we build is competitive and augments the existing Mall of Asia complex,” adds Mr Yu. “We are one of the three licence holders [in the Metro Manila gaming market expansion]. And SM even before this has always been a firm believer in the natural talent of the Filipino people. We hold the greatest strategic location in the short haul market in Asia. For that reason we’ve supported the initiatives,” he explains. “We’re in the process of executing a development plan that will fulfil our requirements to really achieve this dream in the near horizon. Specifically we have already announced a rather large project which is a Radisson Hotel which will augment our SMX [Convention Center] operations. We also have planned a secondary hotel to support the casino operation as well as some other things in the pipeline. We are really quite excited about getting started on this. When you look at the horizons past the present financial crisis—within say a 24-month horizon—we’d expect our operation to be open.” Net Benefits On tax at least, the Manila schemes should be competitive with Macau