25 cities lined up as potential IT-BPM hubs

The Department of Information and Communications Technology (DICT) and Information Technology and Business Process Association of the Philippines (IBPAP) unveiled the 25 cities in the countryside to be developed as potential information technology - business process management (ITBPM) host hubs in five years.

As countryside development is being pushed, the government is urged to declare more Philippine Economic Zone Authority (PEZA) zones as IT-BPM firms particularly, new entrants need to grow in the National Capital Region in order to expand to provincial areas. During an online briefing yesterday, IBPAP president Rey Untal said the 25 cities to be developed as IT-BPM hubs are: Balanga, Batangas, Cabanatuan, Dagupan, General Santos, Iligan, Iriga, Laguna Cluster (San Pablo, Calamba, and Los Baños), Laoag, Legazpi, Malolos, Metro Cavite (Bacoor City, Imus, and General Trias), Metro Rizal (Taytay, Cainta, and Antipolo), Olongapo, Puerto Princesa, Roxas, San Fernando in La Union, San Fernando in Pampanga, San Jose Del Monte, Tacloban, Tagbilaran, Tarlac, Tuguegarao, Urdaneta, and Zamboanga.

The cities were selected using a scorecard developed by DICT and IBPAP, as well as insights provided by Leechiu Property Consultants (LPC) to show priority areas for investors which are availability of talent, infrastructure, cost, and business environment.

As part of the Digital Cities 2025 initiative, there will be a focus on institutional development, talent attraction and development, infrastructure development, and marketing and promotion.

This initiative will also involve the strengthening of ICT councils, sharing of best practices, launching awareness campaigns, and facilitating infrastructure initiatives.

It aims to encourage existing IT-BPM firms to expand outside Metro Manila, and encourage new ones to set up shop in the Philippines.

“Digital Cities 2025 aims to build the resiliency of the IT-BPM sector as an engine of growth for the Philippine economy. It also aims to bridge industry progress in the countryside to strengthen local economies. The 25 new locations, alongside the Centers of Excellence and established Next Wave Cities, shall serve as investment destinations for a thriving digital economy,” DICT Secretary Gregorio Honasan II said.

Untal said the launch of Digital Cities 2025 is timely as the government is implementing Administrative Order 18 which seeks to promote the development of economic zones in the countryside, as well as Executive Order 114 which institutionalizes the Balik Probinsya program.

“We want to support the national government’s efforts in redirecting opportunities and relocating people in the countryside for overall growth of the economy and achieving inclusive growth aspirations,” he said.

While the aim of the initiative is to encourage expansion in the countryside, LPC chief executive officer David Leechiu said it is also necessary to acknowledge that the only way IT-BPM firms would go to the provinces is if they are allowed to grow in Metro Manila.

In January to May this year, 40 to 41 percent of office space taken in the Philippines happened outside of Manila with Cebu, Iloilo, Pampanga, Davao, Cavite, and Bicol as the biggest beneficiaries.

“This is unprecedented because we’ve never seen the provincial demand hit the levels that they have now. Now, why is that happening? It’s because many companies are already very largely placed in Manila and only after that have they decided to expand in the countryside. That is the natural behavior of many companies and again, in order for them to grow in the provinces, we have to help them grow in Manila because it is only in Manila that they are able to generate the scale of management they need to be able to expand in provinces,” he said.

As demand for office space is not just coming from the IT-BPM sector but also from Philippine offshore gaming operations, he said the government should declare more PEZA zones in Metro Manila and the rest of the country given limited space available today.

At present, he said the available office space is at around 200,000 to 300,000 square meters in the country, significantly lower than where demand is going to be for PEZA space.

“I am encouraging government, please award more PEZA space because if things work out right and the demand for office space from BPO sector is the same as last year which is 600,000 square meters, and we only have 200,000 square meters of PEZA space today in the country, how are we going to get these jobs in the Philippines? Other countries have better incentives and they will go back to India. Biggest beneficiary of constriction of PEZA space is India because they (firms) cannot get PEZA space here,” he said.

Having more PEZA space available is important as the IT-BPM industry is seen to be instrumental in the country’s recovery from the health crisis.

Under AO 18, there is a moratorium on the processing of applications for ecozones in Metro Manila to encourage development of such in the countryside.