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Delay in PEZA accreditation of office buildings to hurt IT-BPM sector expansion

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THE SLOW PACE of Philippine Economic Zone Authority (PEZA) accreditation of office buildings remains a challenge for information technology and business process management (IT-BPM) companies looking to expand this year, according to several real estate consultancy firms.

Jones Lang LaSalle (Philippines), Inc. (JLL) Head of Research and Consulting Janlo de los Reyes said office space demand this year will be driven by IT-BPM and offshore gaming companies, but the former’s expansion is being hampered by the continued delays in PEZA accreditation of office spaces.

PEZA grants tax perks to locators in accredited office buildings.

“For (IT-BPM companies), maybe the incentives are really a big factor in their decision. For some… maybe they can accommodate a bit of risk… they can scale it and see better returns. So, it’s really a matter of that profile, but overall it’s still positive,” Mr. de los Reyes told BusinessWorld in an interview on Jan. 11.

Pronove Tai International Property Consultants said the IT-BPM companies’ take-up of office space in 2018 would have been better without the delay in PEZA proclamations.

“We did have the strongest… take-up in 2018 compared to all other years, but it could have been better. It could have been better without the delays in PEZA proclamations, which was actually worse than 2017,” Monique Cornelio-Pronove, chief executive officer of Pronove Tai International Property Consultants, said during a media briefing on Jan. 9.

Citing PEZA data as of end-December 2018, Pronove Tai noted the agency only approved six IT Center and Park proclamations out of 62 pending applications. In 2017, PEZA approved 26 IT Center and Park proclamations out of 81 total applications.

“In 2016, the approval time was 4 months… In 2017, it lengthened to about 6 months. In 2018, it was worse at 14 months, so if you have applications for PEZA on the desk of the President, it sat there for an average of 14 months. So, if this continues to happen and this was one of the reasons why in 2017, we did not see… IT-BPM grow… We still have corporations that want to grow but cannot grow because PEZA buildings are important,” Ms. Pronove said.

In a separate report, Colliers International Philippines said only 36 out of 78 PEZA IT Center and Park applications have been approved, with an approval rate of 46% since President Rodrigo R. Duterte started his term in 2016.

“Colliers encourages the government to expedite the approval of PEZA applications,” it said, noting the PEZA accreditation will boost pre-leasing of office space due to be completed in 2019 and 2020. — Vincent Mariel P. Galang