Lifting of moratorium on Peza accreditation in Metro Manila pushed

A flood of Philippine outsourcing opportunities will be unleashed with the lifting of the moratorium imposed by state-run Philippine Economic Zone Authority (Peza) on Metro Manila economic zone applications, according to leading real estate services firm Leechiu Property Consultants.

Leechiu says in a statement this will help the IT & Business Process Association of the Philippines (IBPAP) reach its target of creating 1.1 million new jobs by 2028. Another 3.3 million jobs could be created indirectly, it adds.

Outsourcing and IT segments have been the primary growth driver of Philippine real estate for more than 20 years, Leechiu says.

New entrants typically open their headquarters in the National Capital Region, which accounted for up to 75 percent of industry-wide employment as of 2021. These firms eventually expand to provincial areas after establishing a foothold in Metro Manila.

IBPAP estimates that 265,000 employees were hired by the IT-business process management (IT-BPM) industry from 2020 to 2022 amid the COVID-19 pandemic while 110,000 new jobs are projected for 2023 alone.

In the first half of 2023, 24 percent of the total office space leased in the country were to IT-BPM firms in Metro Manila.

“Opening up applications for new Metro Manila Peza locations will encourage new tenants and hasten new employment,” Leechiu says.

A moratorium on new ecozone applications in Metro Manila was imposed in 2019 amid the previous administration’s push to divert more investments to provincial areas.

Peza provides fiscal incentives and streamlined business processes in designated ecozones. Locators also enjoy the “one-stop-shop services” given by Peza for all their permits, licenses and taxes.

In addition, the Corporate Recovery and Tax Incentives for Enterprises Law allowed investment incentives similar to the Peza accreditation, albeit not necessarily within ecozones, Leechiu points out.

“But, these companies will need to liaise with multiple national government agencies and the local government,” it adds.

Leechiu says IT and other outsourcing operators will “likely remain as the primary takers of this office space.”

“Office demand to date for 2023 has already reached 554,000 square meters with a projected live demand of another 500,000 square meters for the second half, the company says.

“And while office absorption is moving toward prepandemic levels, the lifting of the moratorium will bolster further growth benefiting projects in Metro Manila, as well as in the provinces,” it adds. INQ