The online gaming industry has become a new and important factor in China-Philippine relations. The uniqueness of the Philippine online gaming scene has gain traction to Chinese customers. With the advancement of technology, customers can now place bets through their computers or mobile devices within the comforts of their home.
Where there is profit, there will naturally be an industry. China's crackdown on gambling is the first in the world, and it has achieved great results. According to estimates by the Philippine Gaming and Entertainment Company, license fees and royalties from the offshore gaming industry will reach 8 billion pesos (S$210.45 million) this year, an increase from last year’s 6 billion pesos (S$157.84 million) 33%. In addition to the 8 billion pesos, the industry has also contributed more than 12 billion pesos (S$315.68 million) to the government through other means in the past three years of legalization.
Following this trend, most local gaming operators seek assistance from Chinese employees to facilitate business development. In terms of employment, the Philippines currently has 58 accredited online gaming operators with approximately 138,000 employees; 60% to 70% of employees are foreign nationals (Chinese nationality), and the remaining 30% are Filipinos
However, in the global digital age, cyberspace transcends national boundaries, and the legal systems of each country are different, which undoubtedly provides manipulative space for those who exploit loopholes. Moreover, even though the abrupt growth of the gambling industry has brought huge income to the Philippines, the tax losses are also considerable.
Many Chinese enter the Philippines as tourists and work in gaming-related industries, but they have not applied for work permits. Philippine employers pay these Chinese employees through Alipay and WeChat and they can perfectly avoid taxation. So far, the Philippine Internal Revenue Service estimates that due to the non-payment of taxes by employees in the gaming industry, the government loses about 24 billion pesos (631.36 million SGD) annually.
Since July, the Philippine government has imposed a stricter tax system on foreigners working in the Philippines, including online gambling operators. The Philippine government has begun to force the gaming industry employees to automatically withhold personal income tax.
Pornography, gambling, and drugs are not separated, and the unregulated online gaming industry is also contributing to illegal criminal activities such as kidnapping, fraud and prostitution. Recently, anti-kidnapping group of the Philippine police arrested three Chinese citizens. They allegedly kidnapped a Chinese who owed gambling debts in Balanyugi City, Philippines. Philippine Immigration Bureau agents arrested several Chinese in several operations in Metro Manila where these suspects were wanted by China for conducting online lottery fraud in China. These fugitives will be blacklisted by the Immigration Department and banned from re-entering the Philippines.
The gambling industry has also raised serious concerns in the Chinese society. For the Chinese, "pornography, gambling, and drugs" are the root causes of the destruction of a family. Philippine Foreign Minister Lochin has also recognize the negative impact of gambling in China's social structure.
In addition, the online gambling industry has not been only a legal issue. The gambling industry has always been inseparable from many underground industries, such as money laundering. If it develops without restrictions, it cannot be guaranteed that it will not become a social problem in the Philippines.
The Cambodian government, which is also troubled by the harm of the gambling industry, has also stated that online gambling and betting activities are not conducive to the long-term economic development of the country and such activities should be prohibited. Cambodia needs to develop the national economy through tourism, cultural and eco-tourism services, rather than relying on Internet gambling to increase national income.
Discussions on the regulation of the online gambling industry in the Philippines has been on the table. Philippine President Duterte has suspended the issuance of licenses to new offshore gaming company applicants. What the Philippines can do and is willing to do is to strictly supervise the online gambling industry to make it abide by the rules and regulations of the Philippines. Since no new licenses have been issued, the dozens of original franchise companies should be strictly managed.
For employees employed in the gaming industry, especially foreign employees, strict identity management must be adopted. For foreign employees who use temporary tourist visas to work, it can be stipulated that once they are found out the employer shall be held accountable and the license shall be withdrawn.
Strictly implemented measures can allow employers to dispel the idea of reducing costs and exploit loopholes and operate in compliance with laws and regulations. This is also the necessary action for the Philippines to stop the loss of tax sources, prevent potential crimes, and ensure national security.
Hundreds of thousands of gambling practitioners roaming the streets of Manila not only have potential criminal dangers, but if they are not regulated, some people may collude with gangs and traffic drugs.
Many of these matters overlap the scope of the legal system in both countries. Some of these issues may have started inconspicuous before but the growing concern in the impact on societal structure and international relations has gain the attention of both Chinese and Philippine governments.
With both countries taking joint actions, we can hope to gradually resolve the thorny issues surrounding online gambling.