PEZA: Less applicants seek ecozone status

by Louella Desiderio (The Philippine Star) – Jul 15, 2019

MANILA, Philippines — The Philippine Economic Zone Authority (PEZA) expects less than half of the 131 ecozone applications in Metro Manila to vie for ecozone status even if the office of the President (OP) decides to give them a longer period of six months on the moratorium imposed on new economic zones in the National Capital Region (NCR).

Teodoro Panga, deputy director general for policy and planning at PEZA, said the agency only expects less than 50 percent of the 131 applications to proceed even if the OP decides to grant the six-month transition period being requested by the agency.

“We expect less than 50 percent (of 131) will probably vie for ecozone status even if these IT (information technology) ecozone developers are given three months to six months grace period to comply with the requirements for the Presidential Proclamation. Please note that PEZA does not grant incentives to IT ecozone developers for Metro Manila and Cebu City locations,” he said.

Panga said some might not proceed with their ecozone applications as they are already earning from leasing out their buildings even without being declared as a PEZA zone.

“Some of these buildings could be fully occupied already,” he said.

While the PEZA does not have data on how many of the 131 ecozone applications are already occupied, he said the latest real estate survey has shown 96 to 98 percent occupancy rate in Metro Manila IT buildings.

The OP imposed a 30-day ban on new ecozones in Metro Manila through the issuance of Administrative Order (AO) 18 last June 17.

However, PEZA director general Charito Plaza wrote a letter to Executive Secretary Salvador Medialdea last July 1 to request for a longer transition period of six months for pending economic zone applications in NCR.

Apart from the 131 applications for ecozone developments in Metro Manila which have a total project cost of P159.435 billion approved by PEZA but yet to be endorsed to the OP, there are currently 22 ecozone applications in Metro Manila worth P34.24 billion awaiting Presidential Proclamation.

In her letter, Plaza said the agency is requesting for at least six-months transition period to allow ecozone developers with pending applications to fully complete requirements to secure a PEZA status for their IT buildings in Metro Manila.

She said the latest IT industry report has shown a tight supply in available IT building spaces under PEZA given the forecasted IT office space take-up of 450,000-square meters (sqm) this year against the available 214,000 sqm in Metro Manila.

“These limited office spaces are up for grabs by IT and online gaming companies, which sectors account for the biggest office space take-up in the metropolis,” she said.

In her letter, she also asked the OP to exclude Manila, San Juan, Marikina, Las Piñas, Malabon, Caloocan, Pateros and Valenzuela from being covered by AO 18 as these cities either host just one IT park or center or none at all.

She said the exclusion of the eight cities from the coverage of AO 18 would allow these areas to have the opportunity to host IT companies and create employment.

Asked if the Department of Trade and Industry (DTI) would also be writing a letter to the OP to ask for a longer transition period on the moratorium, Trade Secretary Ramon Lopez said yesterday he is no longer asking for an extension even if he previously favored the three-month transition period.

“I did not ask anymore for extension after being informed that there were earlier stakeholders’ consultation on the policy; considering also that there’s good wisdom on the policy to urge companies to locate outside Metro Manila (if they want incentives) and then we should do it early as we can (to note that the companies can still locate in Metro Manila but without incentives),” he said.

He also said provinces located close to Metro Manila such as Cavite, Batangas and Bulacan, as well as some key areas in the Visayas and Mindanao, are also good sites for companies to set up offices.

“So, it makes good logic to implement the policy soon,” Lopez said.

Earlier, the Information Technology and Business Process Association of the Philippines (IBPAP) called on the OP to proclaim pending ecozone applications in Metro Manila, warning of much as 40,000 to 50,000 foregone potential new jobs from a shortage in ecozone space for information technology and business process management (IT-BPM) firms with the moratorium on processing of ecozone applications in NCR.

While IBPAP supports AO 18’s objective of promoting growth and development in the countryside, the group said firms still face challenge in terms of talent availability in areas outside of Metro Manila.

“While some IT-BPM has been successful in expanding to provinces, these are primarily driven by voice services. However, as the industry pivots to digital, talent availability for mid to high complexity work has predominantly limited to metro cities such as Manila and Cebu,” IBPAP said.

Last year, the IT-BPM sector’s revenues reached up to $24.8 billion, while it had 1.23 million direct employees.