BPO expansions on hold as investors seek clarity on US policy — PEZA

by Roy Stephen C. Canivel, Businessworld, Jan. 26, 2017

BUSINESS process outsourcing (BPO) firms here are putting their expansion plans on hold in the Philippines as they await any US moves towards greater protectionism.

Call center employees sit at computer terminals at a BPO solutions company in Mandaluyong city.

Charito B. Plaza, director-general of the Philippine Economic Zone Authority (PEZA), told reporters on Tuesday that US moves towards protectionism are generally the concern among US BPO firms.

While putting a stop on expansion plans normally translates to lower investment pledges, Ms. Plaza said that PEZA doesn’t expect the pledges to dip as much as they did in 2016.

“They’re worried. They are on a hold because they’d like to see what are [President Donald J. Trump’s] other pronouncements,” she told reporters in a chance interview.

“During elections period, investments under PEZA fall because everyone takes a wait and see position on the new government’s policy. Just like in America now, Mr. Trump is very expressive about business.”

Investment pledges registered with PEZA fell 26% to P218 billion in 2016. Ms. Plaza attributed this mainly to the political uncertainty generated by the Philippine and US presidential elections.

When asked if she expects a similar dip in the first quarter, she said that US BPOs only account for a small portion of PEZA’s overall investment pledges.

US locators, including BPO firms, were the third-largest investors in PEZA, she said. She estimates that they cover somewhere between 12% to 16%, while firms from Japan and the Philippines take the first and second place.

To offset any possible drop in US activity, Ms. Plaza said PEZA is turning to alternative markets.

“We expect more investments from Japan, China, South Korea and Taiwan,” she said.

Ms. Plaza wants to either “triple or quadruple” pledges in 2017.

An official from Information Technology and Business Process Association of the Philippines (IBPAP), however, said that they have not been notified that any member company is holding back investment because of Mr. Trump’s inclination to protect US jobs.

“We don’t have the number of BPOs postponing their expansion plans. We haven’t received any report lately from members that have taken this position,” Genny Inocencio-Marcial, executive director for External Affairs and Membership of IBPAP, said in a text message yesterday. —