The impasse between two agencies—one granting incentives to Investment Promotion Agencies like PEZA and the latter is still not over. And IT and Business Process Operators are saying this leaves a bad image among investors.
The Fiscal Incentives Review Board’s dismissal of the work- from- home extension until March granted by the Philippine Export Processing Zone Authority (PEZA) to IT and Business Process Outsourcing locators in ecozones is “inconsistent with the objective of attracting investors in the country.”
The IT and Business Process Association of the Philippines (IBPAP) said FIRB’s dismissal of the collective wisdom of all these parties, who are advocating continued WFH/Hybrid work beyond BCP (business continuity plans) and the pandemic-- by citing it has no legal basis by virtue of CREATE (or the Corporate Recovery and Tax Incentives for Enterprises) Law—is shortsighted and inconsistent with the objective of attracting and retaining investors in the country’s biggest job- generating industry and contributor of foreign exchange revenue,” said a statement from IBPAP president/CEO Jack Madrid.
Madrid said the flagship organization of the Information Technology and Business Process Management (IT-BPM) industry stands by the Philippine Economic Zone Authority (PEZA) and its power to enable hybrid work for registered business enterprises (RBEs), Business Mirror reported.
“This long-standing policy is irrefutable legal basis for the continuance of the 30-percent work-from-home (WFH) arrangement for IT-BPM companies; and the provisions of the PEZA law, which grant the agency authority to oversee the operations of its RBEs, have not been amended based on the opinion of PEZA and other lawyers,” Madrid asserted.
Adopting to global work trends
Madrid said IBPAP’s push to have WFH/hybrid work set-up goes beyond business continuity plans (BCPs) related to the Covid-19 pandemic. “This is more to adopt to global work trends for business flexibility that investors look for and to strengthen our country’s competitiveness in retaining existing and attracting new IT-BPM investors.”
Madrid said this has been explained to their partners in government, including leaders of key Executive departments and some senators. Madrid said IBPAP members believe they have been “well-understood” and “supported.”
The fact that there’s clamor for and an overwhelming preference for WFH/hybrid work expressed by employees should make the government’s decision to consider allowing work setup even more compelling, Madrid added.
The long-standing standoff with the FIRB and its “very public exchanges” with PEZA in relation to the WFH/hybrid work is “not only detrimental to our narrative of industry agility, innovation and resilience, but also to our positioning of the Philippines as the IT-BPM investment destination of choice,” he stressed.
Madrid said this has “detracted” the organization from what’s truly important— generating more employment and more foreign exchange revenue-- for the country. In addition, this has been a recurring problem that has “negatively impacted” the ease of doing business in the country, and the confidence level of IBPAP’s principals and potential clients.
Still, considering that the issue is between and among government agencies, Madrid said IBPAP hopes that the FIRB resolves this internally so as not to give investors the impression of an “unstable policy environment,” which he said affects the country’s image.
1.1-M jobs to be lost by 2028
In fact, the IBPAP chief underscored that if this continues, the IT-BPM sector’s potential to provide 1.1 million new jobs by 2028 will be “seriously imperiled.”
Madrid is urging FIRB to explore all possible means by which it can support the continued growth of the industry, noting the sector’s contribution to the retention and creation of jobs, the generation of significant forex revenue in the two years of the pandemic, including how the industry fuels the recovery and growth of other major industries.
“With what is at stake given the resounding support from many of our legislators in Congress and from the heads of several Executive Agencies, the FIRB’s continuing ‘no legal basis’ hardline stance and the penalizing of investors and IT-BPM companies for implementing WFH/hybrid work arrangements is perplexing to us,” the IBPAP chief stressed.
“We echo the call of Senator Grace Poe for the government to ‘think outside the cubicle’ to prevent excessive bureaucracy from choking out innovation and damaging the image of the Philippines as a progressive and viable investment location,” said Madrid.
Last week, FIRB stated that PEZA’s decision to extend WFH arrangements for the IT-BPM sector until March 2023 “lacks legal basis.”
IBPAP members were earlier told by PEZA that they can extend WFH arrangements until March 2023. However, the FIRB clarified that the extension of the WFH arrangement of the sector is “still up for discussion.”
The FIRB is the government agency that oversees the administration and grant of tax incentives by the Investment Promotion Agencies (IPAs).
In a position paper submitted to Finance Secretary and FIRB Chairperson Benjamin E. Diokno, Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata said neither the CREATE law nor the previous FIRB resolution gives any of the IPAs, such as PEZA, the power to unilaterally allow the adoption of WFH arrangements.
Danofrata said the current and effective resolution issued by the FIRB states that the WFH arrangement for the IT-BPM companies within the ecozones is only until September 12, 2022.
Moreover, Danofrata said last week that any move to extend the WFH arrangement beyond September 12 would need the approval of the Cabinet-level interagency body through a resolution.
Tags: #PEZA, #FIRB, #CREATELaw, #incentives, #WFH, #IBPAP