THE Fiscal Incentives Review Board (FIRB) thumbed down the appeal by the Philippine Economic Zone Authority (Peza) to base the work-from-home arrangements (WFH) on locators’ gross revenues instead of its work force.
The fiscal incentives regulator’s decision was issued as companies in the information technology-business process management (IT-BPM) industry, many of which are regulated by the Peza, see employees spending less time working in offices.
Finance Assistant Secretary and FIRB Secretariat Head Juvy C. Danofrata said Peza’s request was not granted as this is “not consistent with the economic strategy of the government to gradually and safely reopen the economy.”
“The members believed that the resolution issued by the FIRB regarding the WFH arrangement for the IT-BPM sector is already a reasonable one, considering that activities registered with Peza or any other economic zones should actually be conducted within their ecozones,” Danofrata said.
The FIRB has approved the extension until March 31, 2022, of work-from-home arrangements for up to 90 percent of employees in the IT-BPM sector.
Business model
Celeste Ilagan, a member of the board of trustees of the IT and Business Process Association of the Philippines (Ibpap), said the industry is grateful for this extension as well as the original ruling.
Ilagan recalled that the “work-from-home business model was sort of forced upon us by the pandemic.”
“And our partners in government responded quickly to our needs by allowing us to be able to take out our equipment from office and putting a policy that allows us to work 90 percent from home and 10 percent in the centers,” she added. However, Ilagan said “this may not be the right ratio” and cited the need to have “a continuation of this type of policy.”
“There should be an agreement between the industry and government as to what the best balance is,” she said. “But certainly, legislation that will sort of institutionalize the Philippines’s response to this global working trend is necessary.”
“There are existing laws that can be amended to specifically address the work-from-home vision of our industry for the long term, not just during the pandemic,” she said.
No comfort
THE Peza has appealed to the FIRB to base the threshold of WFH arrangements on the locator’s gross revenues instead of work force to help enterprises recover and lower the risks of employees getting infected with Covid-19.
The Peza maintained their proposal would allow IT-BPM enterprises to have a 100-percent WFH arrangement for their work force but only 90 percent of the revenues of the activity will be subject to incentives. The Peza law states that to avail of incentives, all activities of registered locators must be within the ecozone. The Peza, however, said IT-BPM businesses are still fretting over the FIRB resolution that 10 percent of the enterprise’s work force should be onsite.
Employees are worried amid the surge in Covid-19 cases and high hospital utilization rate, the Peza said, echoing employers’ concerns.
Tweaking laws
ILAGAN emphasized it is crucial for the IT-BPM sector to continue working remote even after the pandemic. She pointed to certain laws that can be tweaked to meet this need.
Ilagan said that a portion of the Corporate Recovery and Tax Incentives for Enterprises Act (Republic Act 11534) can be amended to allow them to “liberally work from home” while enjoying the incentives as exporters.
“Another law that can probably [be tweaked to] help the industry is the Telecommuting Act [RA 11165],” said Ilagan, who is also senior vice-president of SPi Global Holdings Inc.
“The pandemic proved that it [work-from-home arrangement] can be implemented well and safeguards can be put into data privacy and all previous concerns by clients,” she added.
Positively-cautious
THIS year, Ibpap Chairman Benedict C. Hernandez said the sector is “cautiously optimistic” in hitting a “high” single-digit growth.
In terms of employment, the IT-BPM industry projects an 8-percent growth with 1.43 million workers by the end of the year. Revenues, meanwhile, are expected to rise by 8 percent to $28.8 billion in 2021.
“With this optimistic forecast, we still need to keep in mind that the sector still needs to navigate the future through certain key strategic initiatives, strategic imperatives, including navigating digitization, the needs for talent up-skilling, the need for the right policy frameworks to support us amidst what is all happening,” he said. The employment in the industry grew by 1.8 percent to 1.32 million while revenues rose by 1.4 percent to $26.7 billion last year.
Meanwhile, Hernandez said they are currently working on the new IT-BPM road map as the current one being followed is set to expire next year. He said the new road map will be introduced by early next year.