
China has a new casino: the Philippines - rschnalzer
https://www.latimes.com/world/asia/la-fg-philippines-china-gambling-20190701-story.html
======
9nGQluzmnq3M
> _Real estate prices around Manila have soared 40% since offshore gambling
> took off in 2016._

Yes, but it's not _all_ because of Chinese offshore gambling. In particular,
there are 1.2 million people working in BPO, almost all in Manila, and the
industry continues to grow at 20%/year.

[https://en.wikipedia.org/wiki/Business_process_outsourcing_i...](https://en.wikipedia.org/wiki/Business_process_outsourcing_in_the_Philippines#Growth_and_impact)

~~~
cylinder
I think people are just waking up to how good Philippines BPO can get. I
regularly deal with several people there and have only started to realise they
are in the Philippines

~~~
culturestate
The advertising industry has had big offshore technical teams in the
Philippines for years, and call center business has been shifting there as
well. Overheads are low, the educated population speaks English at a high
level, and it's (in my experience) an easier place to do business than India.

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a-ve
The money stolen from the Bangladeshi central bank robbery was also directed
to Philippines casinos.

[https://www.livemint.com/Industry/ZFo31eoIE2QjFBlGDX6Q8M/Ban...](https://www.livemint.com/Industry/ZFo31eoIE2QjFBlGDX6Q8M/Bangladesh-
to-sue-Manila-bank-over-81-million-cyber-heist-i.html)

~~~
qserasera
Very interesting. Thank you for this source.

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jacknews
More so, Cambodia.

Since it's dollarized, it's very convenient for laundry.

~~~
tomglynch
12 months ago in Sihanouk(ville) in Cambodia I was astounded by the amount of
Chinese development. Rent had increased 10 fold, with something like 30
Chinese Casino's being built as well as heaps of accomodation. Unfortunately
this doesn't help the local economy much, forcing the locals out due to price
increases, and Chinese development companies bringing over their own Chinese
workers.

~~~
duxup
>Chinese development companies bringing over their own Chinese workers

The same pattern in Africa, development projects staffed by Chinese workers in
segregated company run communities.

They built a train line in Africa, had a big opening day ceremony with a local
running the train. After that day... the local guy never ran the train again.

~~~
BurningFrog
The benefit of a train line is not whether a local guy runs it, but the train
line itself!

~~~
undersuit
I'm definitely not an expert on the subject, but isn't the primary benefiter
from the Belt and Road initiative... China?

~~~
barry-cotter
No. The Chinese government and its state owned enterprises are lending piles
of money to fund infrastructure projects no one else will touch. In some cases
that’s because they don’t care about environmental impact statements,
involving local communities or dealing with dictatorial governments but mostly
it’s because they’re offering more money than the World Bank and other
international financial institutions or large institutional investors. Those
investors and the IFIs have decades of experience doing these kinds of
development projects. They don’t do the ones China is doing because mostly
because they can’t see a return. So China’s lending money to people who won’t
be able to hold up their end of the deal. China might think that they’ll come
out ahead on taking over as the projects’ owners but they don’t see how
politically toxic this will be. China may not care if they’re viewed as a
threat, a bully and a new colonial power but that’s likely to be the end
result of many of these loans. The money would have been far better spent on
investments within China, where there are still plenty of desperately poor
people.

The Belt and Road Initiative is going to go down in history as a colossal
white elephant, an extension of the domestic Chinese model of

“Let's borrow a ton of money to spend on infrastructure and keep doing it
forever to pump up the economy.”

to other countries.

Thing is, even governments need to pay off loans eventually, whether in hard
currency or in wrenching economic adjustment when the bubble finally pops.
China hasn’t had a real economic downturn since Deng opened China up in the
80s. When it happens it’s going to be _bad_.

~~~
hnzix
China might not care about the cash returns so much as the real estate and
political leverage.

~~~
yorwba
There is not much political leverage to be gained by building a port named
after the current president [1], if he then loses the next elections and his
successor decides to pay the debt by handing them the port.

Gaining that real estate might look like a win for China, except of course now
they're stuck operating it for very little profit. (Certainly less profit than
the interest on the loan was planned to be, since otherwise the Sri Lankan
government would've just repaid it.)

Many Chinese infrastructure projects in other countries appear irrational if
you consider the Chinese government as a single actor. However, they become
rational if you consider that they are a way to turn money from the coffers of
the Chinese state into foreign currency in the hands of a Chinese construction
company. Some of that money will certainly find its way back into the pockets
of the decision makers approving the project.

[1]
[https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_...](https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_Port)

~~~
InvaderFizz
My impression of what China is doing with the whole BRI is to colonize Africa
and bring it under their sphere of influence.

It appears to me that in another decade everyone will be shocked that the
Great Firewall encompasses large portions of Africa and Asia. Additionally
everyone will be surprised that a lot of manufacturing has become too
expensive domestically in China and is now outsourced to Africa.

At least, that is my read of the whole situation.

~~~
BurningFrog
I think "colonize" is way too crude, but "bring it under their sphere of
influence" is probably correct.

And there is nothing wrong with a powerful country winning influence by
helping out poorer nations around the world. The US did it with the Marshall
Plan, and it was a good thing for everyone involved.

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totom1256
Laos as well, dubbed China's battery pack. Apparently entire villages are
getting leveled and replaced with dams. The electricity is then exported to
China for peanuts.

from the article: [http://www.lapsuslima.com/the-chinese-monkey-
trap/](http://www.lapsuslima.com/the-chinese-monkey-trap/)

~~~
noisy_boy
I have personally seen the transformation of a village in Laos from being
farming based to casino driven. People have sold their farms which have become
Chinese banana plantations (mostly for export as I don't see fruits from those
farms in the local market). Most of the people are now working in/around the
casino. If you are good at dealing cards, are presentable and can speak even
basic Mandarin, you have made it.

There is social transformation too. During my initial time there, people used
to walk to each other's houses and chat. Now most are out drinking in bars
that sprung up along with the casino or playing with their mobile phones.
Whole lot of young people are doing drugs with the new cash influx. More drunk
driving seems to be happening - last week a young boy died in an accident
riding his motorbike while being drunk - all his friends were drunk too. Such
changes are probably happening elsewhere too but the velocity of change I have
seen there makes it very stark.

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qserasera
China probably also sees the Philippines as a potential rival as a
manufacturing base and sea resource claims. This moneymaking scheme should
increase leverage the CCP has over Manila.

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AFascistWorld
Almost all the illicit Chinese online gambling sites are based there, they are
fraudulent so it's easy and big money, you probably have seen their ads on
porn videos, in the form of intros and texts on the corners, mostly claim to
be legitimate portals of Macao casinos.

------
neonate
[http://archive.is/Ln9Ad](http://archive.is/Ln9Ad)

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codesushi42
Makes sense. Macao is fairly underwhelming when compared to Vegas. Chinese
must be gambling elsewhere.

~~~
9nGQluzmnq3M
Macau is approximately 6x larger in terms of gambling revenue than Vegas.

[https://www.fool.com/investing/2018/11/04/the-difference-
bet...](https://www.fool.com/investing/2018/11/04/the-difference-between-las-
vegas-and-macau.aspx)

~~~
codesushi42
I suppose.

But if you have actually been, it is quite underwhelming in scale compared to
Vegas. Though certainly less low-lifes hanging around than Vegas, and much
more cleaned up. To be fair, Vegas had decades to build up its now empty
hotels.

~~~
FDSGSG
I've actually been to both, I'd definitely call Vegas underwhelming, not
Macao.

------
rootsudo
This has also been restricted heavily - the BSP - the central bank of the
Philippines have put more regulations on offshore Chinese Casinos in PH and
now requires identity of anyone whom wishes to deposit/withdraw cash via
Casinos in Pasay/Malate, etc as of last year.

This was to deter of course money laundering - but this does not touch the
issues that the majority of Chinese in the PH are on tourists visas illegally.

There is also massive speculation within business centers, e.g. Makati, Taguig
- BGC, Pasay, Malate and it's going to province areas such as Cebu and Clark.
Clark GLobal City is going to be rivaling BGC - Bonifacio GLobal city and the
PH is really embracing the whole idea of BPO.

BPO in PH can be _really_ good.

Real estate also is _waaaay_ to overpriced, from 2016 to now, filipinos that
acted first, like in every bubble are profiting and you can find many stories
of people who put down the bare minimum and afe renting it out profitably.

The problem with that is - they used developer financing, which after 2-5
years there is a balloon payment. Typical terms are usually 50,000-75,000 peso
"down" payment, 10-25,000 monthly payment for 2 years - which is just paying
the "down" payment on the property - e.g. the developer gets income and the
property appreciates in value.

Then at the end, or near, they need to grab a bank loan, and most banks in the
PH are very VERY risk adverse and do not hand out mortgages easily, nor
cheaply 8-15% normally.

So what you see often are opportunities to buy someone out and give them some
money for their trouble. --- But this will soon cascade because:

1\. There is no financial education in the PH on a standard level.

2\. Developers of these condos push hard on sales and say it's "10k/month"
pesos, which is ~$200 usd. The monthly income of a BPO "middle class" agent is
25,000 pesos. $500. Granted, in Business centers it's higher by 5-10,000 pesos
for mid level workers and then specialized/niched/non-entry level it can be
50,000 pesos+ which just is $1000~ USD/month.

The average GDP per captia for a filipino is somewhere under $5600/yr.

The economy is also largely based on Remittances.

May be unreliable source, but it gives a good floor:

"These remittances from countries literally all over the world to where
Filipinos fan out in search of work in services or industry were worth US$26.9
billion in 2016 - which was equal to almost one half (48 per cent) of the
$56bn of total merchadise exports during the year."

[https://www.thenational.ae/business/remittances-remain-
cruci...](https://www.thenational.ae/business/remittances-remain-crucial-to-
philippines-economy-1.666517)

tl;dr bubble is going to come, Philippines is going to get owned by China.

And I didn't even talk about Duterte, Drugs or the ever right winged spectrum
the Philippines is moving. More fun reading can be found by typing into google
"Commission on Human Rights + Duterte + 1000 pesos" 1000 pesos is $20 USD.

~~~
rootsudo
One thing I forgot to mention:

What may work in favor of filipinos/locals that acted early is that if they
barely afforded the property, and the property appreciated rapidly (e.g.
seaside in Pasay / Around Mall of Asia or within Makati or Taguig/BGC) then
that equity can be used to finance since the original terms of the property
would've been WAY lower.

Example:

If you wanted to purchase a condo in Makati - a common unit is SMDC Jazz. in
2016, they were going for about 3-3.5 million pesos, rent was barely at 20,000
pesos a month. This is 60/70 thousand to purchase, $400/month.

To purchase the same unit today, the price has risen 20-25% depending on view
and condition - but I've seen people ask 5 million for originally a 3 million
used condo and get it sold w/ a chinese buyer CASH within a week.

Chinese then go around and rent it to their workers, and make a 28sqm condo
fit for co-habitation of 3-4 chinese workers and charge them 5-10k/rent (or
include it as part of their salary/benefits to make sure they can't quit the
job.) which means that unit is now giving the Chinese owner/company 20-40,000
pesos a month just to house their own workers.

Local Filipinos are then able to ride the wave and rent a similar condo to a
single occupant for 30-40,000 pesos a month. $600-800.

On Airbnb, you can find a monthly rental at the place for about 50,000 pesos.
~$1000.

You can run a quick check on local rates by common real estate scouting:

1\. Airbnb/Aridna 2\. Facebook groups. 3\. Classifieds such as OLX. 4\.
Contacting a broker.

tl;dr would I invest in Ph condo? Yes and No. They have generous foreign
ownership rights for _condos_ and you can use that to gain permanent
residency. But if you're over 35, then that route does not make sense as you
can get an SRRV.

For profit and speculation - you really have to understand the market. The
reason why in Asia, everyone likes new things is because of deferred
maintenance and that condos have a maximum life span of "50" years, but, look
at the ones that are 10, 20, 30 years old -- you'll quickly wonder if it's
worth the headache.

Condo ownership in the PH can work if you act right, and are at the right
stage of a cycle. IMO if you're targeting major parts of Metro Manila - you
are too late - but the bubble will burst with more regulation or if the
government 180 degrees it's Chinese friends.

There is no mortgage equivalent that happened in the USA 08' Recession/Florida
houses because:

1\. While there is Pag-Ibig, sort of a FHA equilivent, it does not always
underwrite and secure loans for housing.

2\. Banks are very risk-adverse and while there are defaults and foreclosure,
it's very different.

3\. The majority of property purchased are self financed by the companies that
built them to generate revenue and hope that the area appreciates and the
owner defaults so they can toss it back on the market and sell it for a higher
price. You'd think this means the developer has the mind-set of making the
property last or use high quality materials, but that's not so.

4\. Construction, Politics, Lending, Banking, are all _very_ dirty and fun in
the Philippines. I'd love to describe some of the stories and experiences I've
seen - but you can read up on them on several facebook groups or go to the PH
yourself. It is a culture problem and this makes investing in the PH quite a
bumpy journey. One great example I can say is Right of Way is non-existant,
and essentially if someone wants your property they can grab it via numerous
ways.

The highways are privatized, TPLEX, Subic Express Way are owned by the San
Miguel Corp - the beer company in the Philippines. They are rapidly expanding
and are now going into value/infrastructure investments. It's pretty awe-
inspiring learning how/why.

Also, all the companies/orgliarcoplies are a very _real_ thing. It's known,
it's obvious - everyone goes along with it because that's how the PH works.

Still, I love the country. :)

~~~
thaumasiotes
> make a 28sqm condo fit for co-habitation of 3-4 chinese workers and charge
> them 5-10k/rent (or include it as part of their salary/benefits to make sure
> they can't quit the job.)

It doesn't seem like quitting would really be a live option for Chinese
construction workers on a project in the Philippines. Or rather, they could
quit, but they'd then be leaving anyway, so why would the fact that their
housing came from you matter?

~~~
rootsudo
_Everything_

It's subtracted from salary. In most cases, a requirement.

It's more emphasis on employer and employee relationship, and in a way
control. Your housing depends on your employment. Your housing depends on whom
you're put with.

Not to mention, 3-4 in 28sqm is _Wayyyyyy_ to nice for construction worker.
Oh, no, that's Chinese Office worker in Philippines. Sometimes it can be just
2 in 28sqm, but it depends on which offshore casino they work for.

So, like - properties:

Acqua Residences - Mandalyoung - low end. Antel Spa - Makati - low/mid end.
Grammercy - Makati - high end

All within the general spot, and a bit outside the Makati CBD.

Construction workers are 5+ in a place, in worse places (but cheaper for
employer) and then are given daily shuttle. Mostly Mandaluyong now for people
whom are involved in the new Rockwell - Mandalyoung Bridge project (lol China
Aid!)

[https://i.imgur.com/6mqL904.jpg](https://i.imgur.com/6mqL904.jpg)

I'm from the USA, perspective is key. While that may be acceptable in China -
Philippines largely reflects USA values (in sometimes positive or very
negative ways) and employer housing isn't one of them.

