Metro ecozone ban seen to benefit India

Available office space not enough to meet forecast demand

Malacañang’s ban on new economic zones in Metro Manila will ultimately benefit India since the business process outsourcing (BPO) industry in the Philippines will not have enough office space to support any increase in new investments, the country’s top real estate adviser said.

The argument relied on the premise that before investing in the countryside, BPO firms would rather expand or set up shop in the capital since this is deemed the “least risky proposition,” according to David Leechiu, CEO of Leechiu Property Consultants, Inc.

However, since the second half of last year, Malacañang has banned any new economic zone from being put up in Metro Manila. The ban under Administrative Order No. 18 was meant to encourage more BPOS to set up shop in the provinces, although critics warned that a ban was not necessarily an effective measure to drive investors to the countryside.

These economic zones in essence are office buildings registered under the Philippine Economic Zone Authority. Without being located in these ecozones, BPOS could not get any tax break, which would make the cost of doing business more expensive.

Leechiu estimated that there were only 200,000 to 300,000 square meters (sq m) of available Peza-registered office space in the country. This limited space would only drive BPOS to India, a formidable competitor in the global BPO industry.

“If things work out right and the demand for office space from the BPO sector is the same as last year, which is 600,000 sq m, and we only have 200,000 sq m [available] today in the entire country, then, how are we going to get these jobs into the Philippines?” he said in a media launch.

“So actually, the biggest beneficiary of this constriction of Peza space in the Philippines is India because we cannot get any space here,” he added.

He said this during the press launch of the Next Wave Cities, which announced 25 locations in the countryside that have high potential to become BPO hubs in 2025.

He said more jobs would be made here in the Philippines because of the recession, which he previously said would prompt companies to do more BPO outsourcing to cut on costs.

“That’s why it’s so important that in the middle of all this mayhem, you have to do everything you can to nurture the BPO sector and ensure the growth of this industry,” he said.

“The only way they’re going to grow in the countryside is if we help them grow in Manila,” he added.

There were 22 proposals worth around P34 billion that managed to reach Malacañang before President Duterte imposed an indefinite ban on new ecozones in Metro Manila. However, there were 131 proposals worth nearly P160 billion that failed to reach Malacañang before the ban. These are still with the Peza since their proponents had to complete some requirements.

While around 60 percent of the 278 IT parks and centers across the country are in Metro Manila, Peza had said that there were eight cities that either had just one or no ecozone at all and could therefore be exempted from the ban.

These cities are Manila, San Juan, Marikina, Las Piñas, Malabon, Caloocan, Pateros and Valenzuela.

The battle for space was exacerbated by the proliferation of Chinese offshore gaming operators.

You have to do everything you can to nurture the BPO sector and ensure the growth of this industry David Leechiu CEO, Leechiu Property Consultants, Inc