On Malaya Business Insight: More job losses seen on IT zone moratorium

On July 18, 2019, Ruelle Castro wrote an article covering Pronove Tai International Property Consultants’ Metro Manila Office Market Overview of the second quarter. Read below via the link: https://www.malaya.com.ph/business-news/business/more-job-losses-seen-it-zone-moratorium

A property consultancy has warned of more job losses  as a result of the moratorium on the establishment of information technology (IT) parks and buildings in Metro Manila.

Monique Pronove, president of Pronove Tai, said jobs will also be lost in allied sectors of the IT-business process management (BPM) which will be directly hit by the ban.

Twenty-two 22 pending applications for declaration as IT zones, if not approved,  could shed 40,000 to  50,000 jobs in the ITBPM sector.

Pronove said Administrative Order (AO) 18 limits the growth of the IT-BPM sector as their operations anchor on the incentivized office space to be profitable. It will also result to “decrease in peripheral services.”

Michael Munoz, Pronove Tai research manager,  noted the AO’s impact on companies that do fit-out for IT-BPM companies.

“Before one starts an operation, you have to put in the carpets, the tiles, etc. And normally these are done by Filipino firms. So coupled with the loss of opportunities for the IT-BPM sector is the loss of opportunities for these companies,” said Munoz.

Munoz noted that while the slack in office space demand is somewhat taken by other sectors like the Philippine offshore gaming operators (POGOs)   which are mostly Chinese companies, these firms tap their own Chinese counterparts to the same job  previously done by Filipino companies.

Pronove Tai said the  22 IT zone applications pending at the Office of the President will add  285,000 square meters of pipeline PEZA spaces for Metro Manila.

There are  131 applications approved by PEZA but have yet to be endorsed to the Office of the President for proclamation..

Munoz said if the 22 IT areas are not proclaimed on time, the slowdown in the performance of the IT-BPM sector will be felt as early as this year.

Munoz’ concurred with the statement of the  IT and Business Process Association of the Philippines (IBPAP). hich said the moratorium  could result to “as much as 40,000-50,000 job loss in the industry.”

The freeze will also “further result to a significant increase in rental rates thereby affecting the competitiveness of the Philippines for future expansions.”

IBPAP said that PEZA-accredited space has gone down considerably, “thereby risking insufficient supply to meet industry demand.”

“It is estimated that there are only 126,940 square meters of PEZA-accredited office space versus the forecasted annual demand of 450,000 square meters,”

it said, as it urged for the facilitation of proclamation of pending applications.

For the first half of the year, the IT-BPM transacted 187,000 sq.m., of new leases down 8 percent from the prior year’s 204,000, Pronove Tai said.

Of the 703,000 sq.m., office space transactions recorded in Metro Manila in the first half, 315,000 was cornered by POGO, a 216 percent increase in take up compared to 99,000 sq.m., last year.

Pronove Tai said the figure is a 7 percent increase from the sector’s 229,000 sq.m., full-year take up last year.

Image credit: Malaya Business Insight website screenshot