In two years, the Philippines will be ready to go toe-to-toe with the best of what Macau and the rest of Asia have to offer in terms of gaming and entertainment when its own version of Las Vegas-the 90-hectare Bagong Nayon Pilipino-Manila Bay Integrated City (BNP-MBIC)-commences operation.
The state-owned Philippine Amusement and Gaming Corp. (Pagcor), which enjoys the monopoly over casino operations in the country, has already approved the concepts of four local and international groups for their respective visionary developments in the gaming-cum-entertainment tourism hub.
Japan 's Aruze Corp., Genting Berhad of Malaysia, the Philippines' SM Investments Corp., and British Virgin Islands' Bloombury Investments Ltd. have committed to infuse an average US$2 billion to US$3 billion for their projects at the tourism city, Efraim C. Genuino, Pagcor chair and CEO, recently announced.
"Seven companies originally submitted their proposals but not all qualified because some concepts are on a smaller scale and they cannot comply with the US$1 billion minimum investment," Genuino said.
The four qualifiers are expected to sign their actual contracts by the second or third quarter of this year. All have held groundbreaking ceremonies last month during the Pagcor-organized 2008 Asia's Gaming and Entertainment plus Leisure Expo (Asia's GEM) in Manila. On the sidelines of the signing, Genuino acknowledged that the four prospective license holders will be pushing ahead with the actual developments in the meantime.

Birds-eye view on four concepts

Pagcor refused to divulge the specific features of their projects pending the signing of the contracts although it gave some highlights of the concepts.
Aruze Corp., a global manufacturer and distributor of gaming machines and known as having ties with the Wynn Resorts, proposed the development of the Okada Resort Manila Bay–an integrated resort with 2,000 standard rooms and 300 VIP suites.
Its main features would be an oceanarium touted to be the world's largest, theaters, a sports arena, a special museum, and a giant Ferris wheel similar to the London Eye that will be called the "Manila Eye."
Genting Berhad, with its partners Star Cruises and Philippine property giant Alliance Global Group Inc., is planning to build several hotels with a minimum room capacity of 2,000 rooms, a world-class theme park, a museum, and a tower that will be the tallest in the world.
The Genting Berhad Group owns the Genting Highlands Resort in Malaysia and holds the exclusive development rights of film giant Universal Studios in Asia. Sources say the company is putting up another Universal Studios in the Manila Bay Integrated City and will be among the first entertainment facilities that will be completed there."Most likely that is what they would do and that is also what we want," a Pagcor insider said.
SM Investments Corporation, the Philippine retail giant which owns three of the top ten biggest malls in the world, proposed to build a world-class gaming facility in partnership with Asia Pacific Gaming of Australia, a major luxury hotel to be managed by Radisson Hotels & Resorts, a museum and a sports arena. All will be built beside the SM Mall of Asia, touted as the largest in the region.
Bloombury Investments, meanwhile, plans to build three luxury hotels with a total capacity of 1,500 rooms, with high-end retail shopping, celebrity-themed dining, a showroom and museum, and a major entertainment and sports center.

Employment boon

Edward King, Pagcor spokesman, said with the BNP-MBIC starting operations in 2010, Manila will more than double its current capacity of 6,000 hotel rooms as the project is seen to have at least 8,000 new rooms.
This will enable the Philippines to attract at least three million more tourists per year and generate an additional 250,000 local jobs.
According to King, about 50,000 Filipinos are working in Macau and Pagcor expects a big number of them, specifically the entertainers and hotel personnel, to come home and work instead at the new tourism city of Manila, where they would also be paid in dollars and at rates comparable to Asian standards.

Family entertainment focus

King admits that the focus of the integrated city is family entertainment, unlike Macau, which is concentrated on gaming.
In fact, gaming facilities will only cover 5 percent of the total area, states King, as they want to emulate Las Vegas which gets a significant percent of its revenues from other forms of entertainment and only about half from gaming.
"Our target tourists are family-oriented. We want families to come over, watch the shows, be entertained and go to the theme parks. The children will be wandering around while the elders play slot machines. They can also use Manila as a jump-off point if they want to go to our beautiful beaches," he said.
Manila, he added, also has numerous golf courses that charge cheap rates. King noted that it would be cheaper for Japanese and Koreans to buy plane tickets to Manila and play golf here for a weekend than have a round of golf in their own countries. In contrast, King said Macau only has limited golf facilities and beaches.
"The difference between Macau and the Philippines is in Macau, you have no other place to go but the hotels and casinos. Here, you can jump to other parts of the country like Boracay (white sand beaches), Ciargao (for surfing), and Banaue Rice Terraces. We have lots to offer versus Macau. In Macau, if you do not gamble, it is a boring place," he said.

Tourist lure to include mega sport events

Pagcor will be in the running to garner a share of the estimated 200 million Chinese travelers that will be vacationing throughout Asia.
Attractions such as the Manila Eye by Aruze Corp., the Tower by Genting Berhad, the numerous museums, additional hotel accommodation, as well as the sports and entertainment shows that will be featured at the Manila Bay Integrated City will make the capital city comparable to renowned tourist magnets such as Paris, London, Bangkok and Tokyo.
He said the road system there will also be tailored fit to host F1 racing, while the sports arenas will be used as venues for international basketball, tennis and boxing events. Genuino said current World Boxing Council super featherweight champion Manny Pacquiao, who has become a global boxing icon due to his numerous conquests in Las Vegas fights, will definitely be strutting his wares in one of its big arenas.
On the economic front, Genuino said the Bagong Nayon Pilipino-Manila Bay Integrated City will triple Pagcor's revenue to US$1.5 billion, half of which will go to the national treasury, aside from the ripples it will create in the construction, hotel, restaurant and other tourism-related industries.
"This project represents Pagcor's shift from mere gaming into wholesome, family-oriented recreation and entertainment. With this, we aim to make Pagcor the catalyst for economic progress and national development," he said.

Pagcor to entertain more proposals for tourism city

Investors need only US$1 billion to enter the Philippine market. With the proposals phase still wide open, Manila regulators say late comers are still welcome
The Philippine Amusement and Gaming Corp. (Pagcor) is still accepting proposals for prospective investors in the succeeding phases of the Bagong Nayong Pilipino- Manila Bay Integrated City (BNP-MBIC) project.
"We are not saying no to anybody. Anybody who has money, with US$1 billion, can still submit their concepts to us," Edward King, Pagcor spokesperson told Macau Business.
King said they can always reclaim land for potential investors to add to the four companies–Japan's Aruze Corp., Genting Berhad of Malaysia, the Philippines' SM Investments Corp., and British Virgin Islands' Bloombury Investments Ltd.–that are set to occupy the 90-hectare initial phase of the BNP-MBIC.
Pagcor is even open to proposals that would entail construction over water, acknowledges King.
Pagcors terms for application are quite straight forward and involve certain key provisions:
Each applicant/project proponent to BNP-MBIC must pay a License Application Fee of US$50,000, payable to Pagcor and non-refundable.
BNP-MBIC applicants/proponents must have 1) financial capability and 2) experience in hotel and entertainment/gaming business.
Applicants who are principally financial investors are welcome, but are required to engage entities who have a track record in organizing/operating world-class hotels and gaming projects.
All applicants/proponents must submit proposals for a total entertainment complex with a minimum project cost of US$1 billion, consisting of both equity and debt. Of this, a minimum of US$400 million must be invested in Phase 1 of the project, which may be divided into sub-phases.
Gaming facilities (i.e. casinos) to be built during Phase 1 must be in operations within 2 1/2 years of Pagcor's approval of the project.
Other components of Phase 1 of a proponent's project must be completed within 5 years of Pagcor approval
All project proponents must have a minimum debt equity ratio of 50% equity and 50% debt, to assure the project's financial viability. Projects with less than 50% equity component will not be accepted.
Local and foreign ownership non-barrier to agreements:
Project proponents, who will own the land on which the project is sited, will be subject to the 60/40 Filipino citizenship requirement. While applicants to BNP-MBIC who will not own the land but propose to operate on leased land owned by Pagcor in the BNP-MBIC may be 100 percent foreign-owned. For applicants operating on a lease, the lease period is for 25 years, starting from date of issuance of Provisional License, renewable by mutual agreement for another 25 years.
Final process details include:
Performance Assurance: Upon Pagcor approval of application, each proponent must submit a Bank Guarantee, Letter of Credit or Surety Bond to be secured from a reputable firm acceptable to Pagcor. This will guarantee the proponent's completion of the project.
The proponent shall open an Escrow Account with a local bank acceptable to Pagcor and the proponent immediately after Pagcor grants a Provisional License. This account shall be jointly controlled by Pagcor and the proponent, who will make a deposit amounting to at least US$100 million.
In lieu of an Escrow Account, Pagcor will accept an actually investment of US$$100 million in the project at the time of the application.
Once the proponent's gaming operations begin, Pagcor shall impose the following fees in lieu of all taxes with reference to gaming revenues:
From non-junket table and slot machine operations:
1 10% of gross gaming revenues from High Roller tables (min. bet of US$10,000)
2 25% of gross gaming revenues from non-High Roller tables
3 25% of gross gaming revenues from slot machines
4 2% of total gross gaming revenues from both High Roller and non-High Roller tables, for the restoration of cultural heritage
5 From Junket Operations, 10% of gross gaming revenues from both High Roller and non-High Roller tables
6 Non-gaming revenues will be subject to the normal taxes or tax exemptions as may be specified by other government agencies under which the applicant is registered (e.g. Philippine Economic Zone Authority, Board of Investments)
8 The number of licenses Pagcor will issue for BNP-MBIC proponents will be flexible, depending on the applicant's conformity to Terms of Reference and on approved Integrated Proposal Concept.
9 Provisional Licenses will be issued to proponents effective for the duration of the project development period and shall not exceed the approved completion date of the whole project.
10 A gaming License will be issued upon the proponent's submission of certificate of completion and occupancy permit for the whole project to Pagcor. The term of the License shall not exceed the term of Pagcor as specified in Republic Act 9487. No sub-licenses will be issued or allowed.

Philippine gaming-from illegal to state monopoly

"The Philippine Government's full control on casino operations ensures
that all gaming revenues will be used to serve the Filipino people"–Pagcor
The gaming industry in the Philippines started with privately owned casinos that were all, no matter how one dresses it, illegal, because they did not have official government approval.
In 1938, or just seven years after the US granted a license to its first gaming hall in Las Vegas, two Americans opened the first casino in downtown Manila.
Edward King, spokesman for the Philippine Amusement and Gaming Corp. (Pagcor), said this clandestine operation of casinos in the country went on up to the middle of the 1970s when the likes of Stanley Ho Hung Sun were the leading figures.
In 1976, however, the late strongman President Ferdinand Marcos decided that it was time for the state to take hold of the casinos and their vast revenues by issuing Presidential Decree 1067-B, creating Pagcor. "Basically he kicked out Stanley Ho then," King narrated to Macau Business.
A few years later, PD 1869, now known as the Pagcor Charter, was promulgated. Under its Charter, Pagcor serves three crucial roles: to regulate and operate all games of chance in the country, particularly casino gaming; generate funds for the government's infrastructure and socio-civic projects; and boost local tourism.
From illegal gaming halls with multiple private operators pocketing all the revenues, casino operations became not only a part of a government monopoly but also a leading source of state funds.
Pagcor earnings to date have a distribution of:
5 percent of net winnings goes to the Bureau of Internal Revenue as franchise tax;
50 percent of the 95 percent balance goes to the National Treasury as the National Government's mandated income share;
5 percent of the balance after the franchise tax and the National Government's mandated income share goes to the Philippine Sports Commission for financing of the country's sports development programs;
1 percent of the net cash income goes to the Board of Claims, an agency under the Department of Justice, which compensates victims of wrongful detention and prosecution;
Cities hosting Pagcor casinos are given a fixed amount for their respective community development projects;
The remaining balance is then remitted to the President's Social Fund to help fund the priority projects of the government.
Aside from these, Pagcor also provides funds for the implementation of vital laws:
US$9.6 million a year or US$48 million in five years to the Early Childhood Care and Development program;
US$2.4 million initial funding to the Sports Incentives and Benefits Act;
US$7million or US$240,000 a month to the Gasoline Station Training and Loan fund over several years.
US$6 million to be taken from Pagcor's remittance to the President's Social Fund to implement the National Museum Act of 1998;
US$120,000 a month to be taken from the National Treasury's share to support the Comprehensive Dangerous Drugs Act of 2002;
US$ 715,000 to fund the Children's TV Act of 1997;
US$7 million contribution to the Barangay Micro Business Enterprises Development Fund;
US$350,000 contribution to the Philippine Seafarers' One-Stop Processing Center (Presidential Administrative Order 56).
Pagcor is also tapped to be the major benefactor of the Comprehensive Integrated Shelter Financing Act and the Poverty Alleviation Program, among numerous newly enacted laws and other bills pending in Congress.
Fortunately, under the present leadership of Chairman and CEO Efraim Genuino, Pagcor has been recording high revenue inflows.
By the end of 2001, Genuino's first year in office, Pagcor posted a US$406 million total income, exceeding by almost 20 percent the previous year's US$350 million.
In 2007, Pagcor's revenue rose to US$645 million, and Genuino is targeting this to conservatively go up to US$ 716 million this year.
"Since all casinos are government-owned, all the money goes to the state and ultimately to the people, unlike in Macau where I think 35 percent of revenues goes to the casino operators," King said.
Pagcor has been granted recently by the Philippine Congress with a new lease on life after its franchise was extended for another 25 years, renewable for another 25.

by Max V. de Leon in Manila