LACK OF PEZA SPACE STUNTS IT-BPM GROWTH
The IT-BPM industry has the largest ecozone investment in the metropolis with 167 ecozones in Metro Manila, or approved investments of about P286 billion
The declining supply of space accredited by the Philippine Economic Zone Authority (PEZA) is seen taking its toll on the growth of the Information Technology-Business Process Management (IT-BPM) sector, which has been fighting for office supply with the rapidly rising Philippine offshore gaming operators (POGO) industry.
Property consultancy firm Leechiu Property Consultants (LPC) in a year-end report noted the country’s total office demand for 2019 hit 1.7 million square meters (sqm), up by 6 percent from last year. Of this figure, the IT-BPM sector took up a share of only 34 percent, or 573,000 sqm., equivalent to a 14 percent annual decline.
Comparatively, the POGO sector’s demand jumped to 738,000 sqm., nearly double from only 443,000 sqm. in 2018, outpacing the ITBPM’s share to 44 percent of the total. LPC noted the lack of PEZA supply “is making the Philippines a difficult place to operate for IT-BPM companies.”
Aside from competition with
POGO occupants, the IT-BPM sector is also facing president Rodrigo Duterte’s Administrative Order (AO) 18 issued in June, which stops PEZA from accepting ecozone applications in Metro Manila in order to support countryside growth.
The IT-BPM industry has the largest ecozone investment in the metropolis with 167 ecozones in Metro Manila, or approved investments of about P286 billion.
PEZA-accredited spaces, an essential factor for IT-BPM companies to set up shop in the country for its incentives, is expected to fall short of the industry’s annual estimated demand of 600,000 sqm. Data gathered by LPC noted the vacant PEZA supply for the next five years stands at only 920,000 sqm.
Moreover, the AO 18 risked the shelving of 22 pending ecozone applications at the Office of the President, and 131 other PEZA-approved applications that were yet to be endorsed to the OP.
LPC chief executive officer David Leechiu, in a briefing in Makati on Monday, said there should be a balance between job creation in the provinces and “the need of the BPO companies to expand in Manila.”
“It is not growing the provinces at the expense of Manila, or growing Manila at the expense of the provinces. There has to be a balance that we can only achieve with more dialogue,” he said.
Meanwhile, the Bay area had the highest office take-up in 2019 at 468,000 sqm, 75 percent of which were POGO firms. Quezon City followed with 253,000 sqm of take-up dominated by the IT-BPM sector at 69 percent.
Rental and renewal rates are also seen peaking in the coming years due to the POGO growth and the scarcity of PEZA buildings.