IBPAP urges new lawmakers to work with industry players

CEBU, Philippines —  The IT and Business Process Association of the Philippines (IBPAP) is calling on the new lawmakers in the country to work with industry players in crafting legislations that promote growth in the promising outsourcing sector.

In a statement, IBPAP president Jack Madrid said that economic zone locators should be given the freedom to choose which investment promotion agency (IPA) to register with, calling the process of switching to another IPA onerous.

“IBPAP believes that the long-term implementation of WFH [work-from-home or hybrid work can be better addressed through the continued study and eventual amendment of Section 309 of CREATE or possibly the revision of the applicable portions of its Implementing Rules and Regulations (IRR). It will be an important undertaking that IBPAP and our partners in the government will jointly and collaboratively work on for the global competitiveness of the IT-BPM industry of the Philippines,” said Madrid.

The industry has been on a standoff with incentive-granting agencies over remote work arrangements, which were adopted as a temporary measure during the pandemic but not extended this year.

Economic zone locators, including outsourcing companies are required to perform 100 percent of their work onsite or risk losing their tax incentives.

According to Madrid, if mass transfer of registration from one IPA to another is mandated, RBEs will be subjected to an arduous task that not everybody may be willing to take for the time being and under the present circumstances.

“This appears contrary to the ease of doing business principles that the government has been trying so hard to establish,” he added.

Earlier, Philippine Economic Zone Authority (PEZA) Director-General Charito B. Plaza said she supports freedom of choice on IPAs, responding to a recent proposal from Albay Rep. Jose Ma. Clemente S. Salceda to make the BOI specialize in registering information technology and business process outsourcing (IT-BPO) companies.

“While incentives have been made uniform across the different IPAs… the policies that govern the administration and supervision of registered enterprises among IPAs are not uniform and transfers of registration from one IPA to another may not be as easy,” Madrid noted.

“We must take into consideration that those who are currently registered with PEZA have been faced with immense uncertainties in the past couple of years—adapting their operations to the changing regulatory landscape while managing the upheavals caused by the pandemic. The best we can do for them in the interim is clear and consistent legislation that will ensure minimal disruptions to their business operations. This includes giving them autonomy on whether to keep their projects with PEZA or to transfer their registration with BOI,” added Madrid.

The government recently required registered IT-BPOs operating in economic zones to return to 100 percent on-site work or risk losing their tax incentives.

According to Salceda, IT-BPO firms need to transition to a more flexible system of enhanced deductions, whether they are classified as exporters or registered domestic enterprises.

“The proposal to let IT-BPO companies transfer from the PEZA to BoI is misleading because, under the CREATE Law, all IPAs now have the same incentives to offer to investors and locators both as exporters or domestic-market registered business enterprises (RBEs),” Plaza said in a report, adding that concerns about work-from-home arrangements should not be used as a pretext for IT-BPOs to transfer to other IPAs.

In Cebu, IT/BPM industry already felt the pinch of the back-to-office directive, with the apparent increase of attrition rate or high resignation rate.