Lifting of NCR Peza ecozone moratorium to help create 1.1M IT-BPM Jobs

Leechiu Property Consultants (LPC) anticipates that the lifting of the moratorium on Philippine Economic Zone Authority (Peza) applications for Metro Manila ecozones will bring in new Information Technology and Business Process Management (IT-BPM) companies to the Philippines.

This will help the IT & Business Process Association of the Philippines (IBPAP) achieve its target to create 1.1 million jobs by 2028, and generate another 3.3 million in indirect employment, said LPC, the country’s premier real estate advisory firm.

IT-BPM companies have been the primary growth driver of Philippine real estate for more than 20 years. New IT-BPM entrants typically open their headquarters in the National Capital Region, which has about 70 percent to 75 percent of the industry headcount as of 2021, and only after will be willing to expand to the provinces.

Peza has provided fiscal incentives and, more importantly, ease of doing business to IT-BPM companies located in designated ecozones. Locators enjoy the one-stop-shop services given by Peza for all their permits, licenses, and taxes.

However, in 2019, Administrative Order (AO) 18 was passed, imposing a moratorium on new applications for Metro Manila Peza ecozones to help disperse investments to provinces. This created a barrier to entry for new IT-BPM tenants preferring to locate in Metro Manila.

In addition, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law allowed the same investment incentives similar to the Peza accreditation, albeit not necessarily within ecozones. But, these companies will need to liaise with multiple national government agencies and the local government.

IBPAP estimates 265,000 employees were hired by the IT-BPM industry from 2020 to 2022 despite the COVID-19 pandemic. Another 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.

As among the few countries experiencing net positive absorption in the office sector today, the Philippines will be further boosting this growth by making available another 2.8 million sqm of office space in the next 10 years, of which, 1.8 million sqm will be in Metro Manila. IT-BPM tenants will likely remain as the primary takers of this office space.

Office demand to date for 2023 has already reached 554,000 sqm with a projected live demand of another 500,000 sqm for the second half.

And while office absorption is moving towards pre-pandemic levels, the lifting of the moratorium will bolster further growth benefiting projects in Metro Manila, as well as in the provinces.