Contraction in IT-BPM investments slowing

The decline in IT-BPM investments has narrowed further into single-digit level in the first 10 months of the year, showing signs of improvement after months of sustaining huge drops in pledges, data showed.

According to data from the Philippine Economic Zone Authority (Peza), the contraction in new investments in the industry has reached 8.44 percent, dropping from P15.73 billion in January to October in 2016 to P14.4 billion in the comparative months this year.

Although still in a decline, this is already an improvement from the industry’s performance earlier this year. In the first five months of the year, the decline was nearly 35 percent, which was blamed on political uncertainties both here and overseas.
Asked for comment, the Information Technology and Business Process Association of the Philippines (IBPAP) said it was “pleased” with this improvement. However, it said it should not be considered a “contraction.”

“The reduction in investments this year does not constitute a contraction. It indicates the industry grew less compared to the previous year. But with these numbers narrowing down, we are very pleased, and it validates the information we have been getting from the ground that investment activities are increasing,” IBPAP said in a statement sent to the Inquirer.

This develops amid a plan to reduce the tax perks given to the industry as part of the first package of the comprehensive tax reform program. There are two different versions of the package. The one passed in the Lower House seeks to remove these tax perks which IBPAP considers crucial to maintain the industry’s competitiveness, while the Senate version seeks to keep them.
IBPAP wants to have a midyear review of the industry starting next year to assess the current performance of the sector. Until then, the group would rely on Peza reports, especially since the agency accounted for the largest of IT-BPM pledges across the country, according to IBPAP president and CEO Rey Untal.

In spite of this drop, over-all Peza investments grew nearly 90 percent in the first 10 months of the year. From January to October, investments grew 89.28 percent to P203.18 billion from P107.34 billion in the same period last year.

While in constant growth, it remains to be seen if Peza would be able to hit its own year-end target. Peza director general Charito Plaza previously said the agency wanted to close the year with at least P654.54 billion to P872.72 billion worth of pledges, meaning, they would have to grow by 200 to 300 percent.