The Cagayan Economic Zone Authority (CEZA) said it experienced last year a surge of investments — its biggest jump in more than two decades — following the unveiling of its cryptocurrency hub and the retooling of its online gambling business.
CEZA administrator and CEO Raul Lambino triggered the transformation of the ecozone into a haven for cryptocurrency and blockchain companies by implementing a number of major reforms.
In mid-May, Lambino unveiled the cryptocurrency initiative that he christened “Crypto Valley of Asia.” The innovation set off a rush of cryptocurrency and fintech firms to locate in Sta. Ana, Cagayan, applying with CEZA as principal licensees for blockchain and virtual currency trading.
This transpired despite CEZA’s high ceiling for the initial investment to be made by the licensed exchanges just to locate their permanent offices in Santa Ana: $100,000 for application fees, $150,000 for license fees, and $1 million each as investment commitment to be delivered in two years.
At the end of the year, 23 offshore fintech firms were given principal licensees by the agency. Every exchange, once given the license to operate, had to put up a minimum of P2 billion in investment, and sign up at least a minimum of four traders or brokers.
‘Crypto Valley of Asia’
Launched in May 2018, the crypto initiative has generated the bulk of CEZA’s revenues for the year, contributing P476.314 million to its coffers, P31.482 million to Customs collections while paying to the BIR a corporate tax amounting to P110 million.
As a result, CEZA more than tripled its 2017 revenue collections of P233.063 million to P706.512 million last year, or a 330-percent increase — an all-time new agency record in total revenues collected.
Even as crypto firm stripped the title of the online gambling operators as CEZA’s major tax payers, their biggest contributions are expected to overflow agency’s coffers this year. That is when their asset-backed tokens start to be traded in the offshore market and their coins used as tokens in the lucrative online gambling industry.
Even land-based gambling and online gambling would eventually be overshadowed by the influence of the cryptocurrency market in the expanding territory of global entertainment and tourism promotions, the agency said. The reason for this is that digital assets enjoy certain advantages. Not only are they low in transaction costs, much lower than those incurred using credit cards or bank transfers.
More significant is that they are irreversible and transparent, done at the flick of a finger, and have no chargebacks because proof of payment is readily available on blockchain, which in an online distributed ledger, according to CEZA.
No more online gambling duopoly
Lambino also dismantled the online gambling duopoly by rationalizing the power of its two master licensors — the First Cagayan Leisure and Resort Corp. (FCLRC) and the North Cagayan Gaming and Amusements Corp. (NCGAC).
He led a crackdown on illegal online gambling that had the registration of 58 Inter-Active Gaming Licensees (IGLs) cancelled, as well as those of 77 business process outsourcing (BPO) firms that served as their back-offices in compliance with the mandate of Executive Order No. 13 which prohibited the operations of CEZA-licensed IGLs outside of the Cagayan Special Economic Zone and Freeport in Santa Ana, Cagayan.
Also, two Chinese companies — one engaged in train technology and the other in finance — entered into agreements with CEZA to establish a hub in the ecozone dedicated for the development and production of Maglev (magnetic levitation) trains, the world’s fastest floating trains.
For the initial R&D effort, Hunan Goke Maglev Technology Development of Changsa City and Hongkong-based Eminova Asset Management are investing $1.5 billion.
A $30-million investment made by the Taiwan Electronic Company-EV will usher in production of electric vehicles in support of the agency’s push for green technology.
In an agreement, CEZA also gave broadband firm Converge ICT the green light to install underground fiber-optic cable and an aerial distribution network to secure a digitally-enabled special economic zone.
Linked to Taiwan and the world, the Converge ICT submarine cable will boost the existing cable infrastructure built by LR Data and connected by submarine cable to Hongkong, and by underground fiber optic line to its Pasig City-based headquarters.