|Pagcor sets $1-B ante
for gaming complex
BY RUBY ANNE M. RUBIO, Senior
INVESTORS EYEING a priority
government project aimed at positioning the country as an Asian gaming
haven need to pony up at least $1 billion to participate.
Recently issued terms of
reference (ToR) for the Bagong Nayong Pilipino Manila Bay Integrated City
— formerly called Entertainment City Manila — state that firms wishing
to apply for licenses to run integrated casino-entertainment complexes
must submit proposals with a minimum project cost of $1 billion, consisting
of both equity and debt.
"They must have a plan to
spend at least $1 billion. We feel that is an appropriate cost because
it is the same amount being spent in other resorts," Pagcor spokesman Dodie
King told BusinessWorld.
The floor amount, he said,
would guarantee that applicants for Pagcor licenses have the financial
capability to operate the facilities.
"We just want a guarantee
that they will pursue the project they will put up, that is why the terms
of reference calls for at least $400 million in investments to be made
in the first phase of the project," he said.
The initial phase of the
project involves approximately 40 hectares of reclaimed land along Manila
Bay in Parañaque. Other locations in the vicinity could also qualify
with Pagcor approval.
The ToR states that full
implementation could boost Pagcor’s income to $1.5 billion annually from
$500 million, which in turn would add to the National Government’s coffers.
Pagcor released the ToR last
month, indicating that the gaming firm was ready to accept applications
for permits to operate casinos and entertainment facilities.
Mr. King said that so far,
seven groups from the United States, Europe and Asia have expressed interest.
He declined to be more specific.
The terms of reference also
require each application to be accompanied by a non-refundable manager’s
check amounting to $50,000.
Applicants must also have
"a well-established experience" in the hotel and gaming business.
Financial companies can apply
for permits, "but will be required to engage qualified hotel and gaming
operations entities [whether organizations or individuals], who have the
track record in organizing and operating world-class hotel and gaming projects."
All project proponents must
have a minimum debt to equity ratio of 50% equity and 50% debt to "assure
the project’s financial viability."
Pagcor said the number of
licenses to be issued would be flexible and would depend on the number
of applicants who conform to the ToR.
Upon receipt of the license
application, Pagcor will immediately review and evaluate the project. It
will issue a decision within 30 days after receipt of the application.
Applicants who propose to
own the land should meet the constitutional cap on ownership — that the
firm should be 60% Filipino-owned.
Firms which opt to lease
Pagcor-owned land may be 100% foreign-owned.
The lease period has been
set at 25 years, renewable for another 25, while the annual lease rate
has yet to be set.
Upon approval of the project
application, the proponent must submit a bank guarantee, letter of credit
or surety bond "to guarantee the completion of the project", to be secured
from a "reputable firm acceptable to Pagcor".
Grant of a provisional license
requires the proponent to open an escrow account of a minimum $100 million.
In lieu of this, Pagcor said it will accept an actual investment of $100
million in the project at the time of the application.
Once gaming operations start,
Pagcor will impose several fees in lieu of all taxes with reference to
For "non-junket table and
slot machine operations", these are 10% of gross revenues from "high roller"
tables (those with a minimum bet of $10,000), 25% of gross revenues from
"non-high roller" tables and slot machines, and 2% of gross revenues from
both high roller and non-high roller tables "for the restoration of cultural
For "junket operations",
the fee is 10% of gross gaming revenues.
Prospective license applicants,
in submitting their concepts, must detail the company’s profile (highlighting
its experience in casino development and operation); consularized company
registration, articles of incorporation and bylaws; accomplished directors’
and officers’ personal history statements; organizational set-up; financial
profile including audited financial statements for the last three years
of operation; and bank certification on the availability of adequate credit
The business plan must address
the following Pagcor objectives: boost tourism/increase influx of tourists,
generate jobs, and create economic impact. The proponents must indicate
the projected number of tourists, number of jobs to be created and sourced
in the Philippines, and earnings for government, aside from indirect benefits
Local hiring should be 95%
for the whole hotel entertainment complex, and salaries should be in US
The business plan must also
include long-term development and expansion programs, target foreign markets
and marketing plan, and the positioning of complex in the region as compared
to Singapore or Macau and other countries.
"The general concept is the
creation of a destination that will attract not just gaming enthusiasts
but also business tourists and leisure travelers as well; the concept must
be unique," the Pagcor said.
"Key components must include
the establishment of tourism facilities such as theaters, exhibition halls,
museums, and other tourism-oriented facilities. The concept must also include
staff house/s for the casino employees."
Foreign gaming firms have
had discussions with Pagcor regarding the proposed Entertainment City.
Among those said to have visited were Malaysia’s Genting International,
which is building a $3.4-billion integrated casino resort in Singapore’s
Sentosa island, US-based Wynn Resorts Ltd., and Storm International BV.
Tim S. Shiah, consultant
to Wynn International Chairman Jack Binion, was reported to have said that
Wynn could invest at least $500 million up to $1.5 billion for an integrated
Paul Michael Boettcher, chairman
of Storm International B.V. which operates at least 30 casinos in Russia,
has also been reported as expressing interest in the Philippines.
Pagcor’s Mr. King said ground
breaking for the Entertainment City could be held before the end of the
year. The project will likely be finished after two years, he added.
He said the project might
expand to 800 hectares, given proposals to continue building over water.