Impasse over WFH scheme may hurt PHL’s position as IT-BPM destination

THE STALEMATE over the work-from-home (WFH) arrangement of registered information technology and business process management (IT-BPM) firms may damage the Philippines’ position as an investment destination, according to the head of an industry group.

IT and Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Jack Madrid on Tuesday said he found it “perplexing” that the Fiscal Incentives Review Board (FIRB) continues to insist that the extension of the 30% WFH arrangement for IT-BPM firms has no legal basis.

In a statement, he said the FIRB’s stand is “short-sighted and inconsistent with the objective of attracting and retaining investors in the country’s biggest job-generating industry and contributor of foreign exchange revenue.”

“The long-standing impasse with the FIRB and its very public exchanges with PEZA (Philippine Economic Zone Authority) on the matter of WFH/hybrid work is not only detrimental to our narrative of industry agility, innovation and resilience, but also to our positioning of the Philippines as the IT-BPM investment destination of choice,” Mr. Madrid said.

PEZA earlier approved in principle the extension of the arrangement that allows IT-BPM companies to have 30% of its employees work from home and continue to enjoy fiscal incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

Registered business enterprises (RBEs) are mandated to conduct their business within ecozones in order to avail themselves of tax incentives.

The FIRB, which is in charge of granting tax incentives to RBEs, has maintained there is no legal basis to extend the scheme until March 2023. It reiterated the WFH arrangement for IT-BPM firms is allowed only until Sept. 12, 2022.

“The IBPAP stands by the PEZA and its power to enable hybrid work for RBEs. This long-standing policy is irrefutable legal basis for the continuance of the 30% WFH arrangement for IT-BPM companies and the provisions of the PEZA law,” Mr. Madrid said.

He noted the public spat between the FIRB and PEZA has detracted industry players from creating more jobs and generating much-needed foreign exchange revenues.

“This has been a recurring problem that has negatively impacted the ease of doing business in the country, as well as the confidence level of our principals and potential clients,” Mr. Madrid said.

“Considering that this issue is between and among government agencies, we hope that the FIRB threshes this out internally so as not to give the impression to investors of an unstable policy environment, which affects the country’s image. If this continues, IT-BPM’s potential to provide 1.1 million new jobs by 2028 will be seriously imperiled,” he added.

Mr. Madrid said the industry’s push for WFH/hybrid work arrangements is not just part of their business continuity plans amid the pandemic.

“This is more to adopt to global work trends for business flexibility that investors look for and to strengthen our country’s competitiveness in retaining existing and attracting new IT-BPM investors,” he said.

The clamor for WFH arrangement should make the government’s decision even more compelling.

“The least FIRB could do is to explore all possible means by which it can support the continued growth of the industry with all its contribution to the retention and creation of jobs, the generation of significant forex revenue in the two years of the pandemic, including how the industry fuels the recovery and growth of other major industries,” Mr. Madrid said.   

According to the IBPAP, the local IT-BPM industry generated $29.49 billion in revenues in 2021, up by 10.6% from 2020 figures, while total headcount surged by 9.1% to 1.44 million. — Revin Mikhael D. Ochave