PEZA: POGOs are not BPOs

by Louella Desiderio (The Philippine Star), 04 May 2020

MANILA, Philippines — While the government has allowed Philippine offshore gaming operators to reopen after classifying them as business process outsourcing firms, the Philippine Economic Zone Authority (PEZA) clarified that POGOs are not considered or counted as BPOs.

In a Viber message yesterday, PEZA director general Charito Plaza said online gaming is not included in the PEZA and the Department of Trade and Industry (DTI)’s list of BPOs.

“BPO is the delegation of service-type business processes to a third-party service provider. The BPO in the Philippines is classified into the following sectors: contact centers, back office services, data transcription, animation, software development, engineering development and game development,” Plaza said.

She added that as POGOs are not considered BPOs, the PEZA does not allow such firms to register with the agency.

Asked if POGOs are BPOs, Trade Secretary Ramon Lopez told reporters, through a Viber message, that POGOs are “online gaming.”

“There are similarities with BPOs in terms of the use of IT and online platform in their business models, not brick and mortar, no physical interaction with clients and customers, so they could impose the required minimum health protocol standard,” Lopez said.

BPOs register with either the Board of Investments or the PEZA, both of which are under the DTI.

POGOs, meanwhile, are registered with the Philippine Amusement and Gaming Corp.

During the Laging Handa program last Saturday, presidential spokesman Harry Roque Jr. said a POGO is a BPO and should be allowed to reopen whether in areas under enhanced community quarantine (ECQ) or general community quarantine (GCQ).

The government has allowed BPOs to continue operations in areas both under ECQ and GCQ.

Earlier, the Information Technology and Business Process Association of the Philippines (IBPAP), which groups information technology and business process management (IT-BPM) firms in the country, had dissociated itself from POGOs.

“The IBPAP would like to have it clarified that as far as the IT-BPM industry is concerned, POGOs… cannot be considered BPO,” the group said.

Apart from being registered with different government agencies, the IBPAP said reasons also differ why BPO firms and POGOs are doing business in the country.

POGOs, on one hand, primarily do so as they are allegedly unable to practice their betting or gambling functions in their respective shores.

BPOs, on the other hand, are in the Philippines given the country’s available talent pool with strong English and technical skills, customer service orientation, hospitality and ability to adapt to foreign cultures.

The IBPAP said IT-enabled jobs created by BPO companies are also of much higher value as such require a range of technical, domain and soft skills.

“This is also very different from the work done by the game development sector which is sometimes mistaken as having similarities due to the gaming notion,” IBPAP said.

As for POGOs, most of their staff are foreigners coming to the country.

In addition, the IBPAP said POGOs are not included in the IT-BPM industry’s headcount and revenue report released annually.

The country’s IT-BPM industry had 1.3 million direct employees and generated $26.3 billion worth of revenue last year.

‘Tax POGOs to the fullest’

Meanwhile, Albay Rep. Joey Salceda yesterday expressed support for the reopening of POGOs, provided that the government collect their tax dues to the “fullest.”

“(POGO reopening) could be a source of revenues for health, if we enforce tax laws to the fullest,” Salceda, chairman of the House committee on ways and means, said.

As per Salceda’s estimates, this can “generate as much as P45 billion on its first year alone, compared with last year’s revenue of about P6 billion.”

“If they will open, they should be taxed,” he said, apparently referring to previous reports of P50 billion in foregone revenues.

“China, the principal market, is beginning to recover from COVID-19, so there is definitely a resumption of demand. That’s free money to fund health care. But Pagcor and BIR have to be diligent in actually getting the government’s fair share of the revenues,” he added, as he also stressed that POGOs have to follow minimum health standards such as social distancing.

POGOs could be a source of much-needed funds for testing and hospitalization for COVID-19, provided that there is adequate enforcement of tax laws and regulations, according to the senior administration lawmaker.

Salceda said the monthly tax take from POGOs could reach as high as P2 billion if POGOs are allowed to resume. – With Delon Porcalla, Ding Cervantes