Ban on new NCR eco-zones puts P34B in BPO investment at risk

Janina C. Lim | BusinessWorld | June 30, 2019

Some P34.238 billion worth of business process outsourcing (BPO) projects are at risk due to President Rodrigo R. Duterte’s recent order to halt the processing of economic zone applications in the National Capital Region.

In a mobile message last week, Deputy Director-General of the (Philippine Economic Zone Authority) PEZA’s Policy and Planning Tereso O. Panga said this was the total worth of 22 projects — 21 information technology (IT) centers and one IT park — pending at the Office of the President (OP).

Some 131 more projects, which have not been turned over to the OP, are also at risk.

Meanwhile, the Department of Trade and Industry said it will seek a longer period for the business process outsourcing industry to fulfill the OP’s documentary requirements in order to obtain an official proclamation for their economic zones.

Asked to comment on Administrative Order (AO) 18, Trade Secretary Ramon M. Lopez said the DTI will request from Mr. Duterte a longer transition period.

“I will just review (whether we will seek) three months or how many months. Offhand, three months is good enough,” Mr. Lopez told reporters Friday night in Makati City.

“We will discuss internally. Kung pumayag si Presidente, amend (If the President agrees, we will amend). I don’t know. The best case is an amendment). Kung hindi, the boss, sinabi na niya yan, yan na ang policy (If not, that’s the policy, because that’s what the boss says),” Mr. Lopez added.

The DTI’s three-month request is shorter than the six-month minimum transition period to be sought by PEZA as the agency considers the time needed to make many locations ready, in terms of infrastructure and technological capacity, to host BPOs.

The six months would also allow the applicants more time to meet the documentary requirements, some of which Mr. Panga has said are difficult to obtain and are unnecessary.

However, Mr. Lopez defended the need for the requirements as part of a thorough due diligence.

In all, Mr. Lopez said the policy is necessary to bring jobs to those in the rural areas who are compelled to move to Metro Manila to find work.

AO 18 took effect on June 22. The moratorium covers applications submitted to the OP and puts under pressure those that are lacking in their documentary requirements. It gives PEZA until July 22 to address those deficiencies.

PEZA will be given 30 days to act on an incomplete application upon receipt of notice from the OP.

Mr. Panga has yet to draft a letter of request to the president as PEZA awaits input from the Information Technology and Business Process Association of the Philippines (IBPAP) and Union of Local Authorities of the Philippines.

IBPAP President and CEO Rey C. Untal had said the industry projects most of the growth to be generated by Metro Manila, noting the group forecasts the take-up of office space in Metro Manila to hit 400,000 to 450,000 square meters this year.

The BPO industry accounts for 30% to 35% of the total office space take-up in the metropolis.

About 56.17% of the 381 PEZA-registered IT economic zones nationwide are in Metro Manila.

In the four months to April, IT-related investment pledges at PEZA fell 7.08% year on year to P4.632 billion.

In the first quarter, exports from the sector rose 6.75% to $3.071 billion while employment rose 10.68% to 741,905 persons.

Source: https://www.bworldonline.com/ban-on-new-ncr-eco-zones-puts-p34b-in-bpo-investment-at-risk/