THE thriving e-commerce market is leading more international fashion and sports brands to expand in the Philippines, according to Zalora Group, a Singapore-based fashion and lifestyle e-commerce platform.

“The Philippines remains a rapidly growing e-commerce market,” Zalora Group Regional Director of Platform Services Matej Urban told BusinessWorld in an e-mail.

“Compared to advanced markets like China and the US, the country still has a lot of potential to grow, with global brands entering and scaling in the market, as well as local brands evolving into regional brands through Zalora,” he said.

Mr. Urban said that more brands are looking into entering the Philippines, pushing e-commerce platforms such as Zalora to in turn scale their platform services.

“Today, we are working with top global fashion and sports brands to enable their entry into and operations within the Philippines,” he said.

“We see growing demand from brands to have a presence in the Philippine market, and our fulfillment and operations services will continue to scale in this market,” he added.

According to a report by Google, Temasek Holdings and Bain & Co., the Philippine digital economy is expected to grow to between $80 billion and $150 billion in gross merchandise value by 2030.

“While the macroeconomic situation will influence the growth of brands and the e-commerce market in the Philippines and the wider Southeast Asian market, Zalora is equipped to scale its platform services at any time and make continuous improvements in its technology and processes, especially with the help of artificial intelligence,” Mr. Urban said.

Zalora said that business-to-business platform services and e-commerce solutions will be the company’s focus areas for expansion, calling these segments bright spots in Southeast Asia despite current macroeconomic conditions.

“Platform services are a key growth driver across our Southeast Asian markets. Notably in the Philippines, we’ve established the country’s largest e-fulfilment center exclusively for fashion e-commerce, situated in Muntinlupa City and inaugurated in 2020,” Mr. Urban said.

“At present, the center boasts a warehouse storage capacity of 1.8 million items, accompanied by 10,000 square meters of mezzanine storage space, with plans for future expansion,” he added.

Zalora has three fulfillment centers across Southeast Asia and has a customer base of approximately 8.3 million in Singapore, Indonesia, Malaysia, Hong Kong, Taiwan and the Philippines. — Justine Irish D. Tabile

AMBIGUITIES in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act are serving as a brake on investment, with amendments to the law expected to clear up any uncertainties for investors, property consultancy Colliers said.

“The government must respond immediately… as maintaining the status quo may result in forgone billions of pesos in revenue and economic opportunity losses,” Colliers said in a report.

Colliers expressed its support for amendments proposed in the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill.

“Colliers supports… streamlining the tax incentives systems and making it more responsive to the global market,” it said.

“Through this regulatory development, the Philippines will be able to sustain its attractiveness as well as allay uncertainties in the market,” it added.

CREATE MORE proposes to return to investment promotion agencies the power to grant tax incentives and redefine the Fiscal Incentives Review Board’s function as an “oversight body.”

Colliers, quoting House Ways and Means Chairman and Albay Rep. Jose Ma. Clemente S. Salceda, said the current system “requires multiple stages of submission and is causing delays in the arrival of new investors.”

It added that investors and industry groups still want clarification of the value-added tax zero-rating guidelines two years since CREATE was implemented in 2021.

If the salient amendments are signed into law, Colliers said the Philippines can expect the entry of more established foreign enterprises and growth in export-oriented industries, thereby creating more jobs.

“Colliers sees this development to benefit major exporting industries, such as the IT-BPM (information technology and business process management) sector,” it said.

“Clarity on tax incentives schemes and allowing flexibility through institutionalizing the work-from-home or hybrid work setup will be key in sustaining the competitiveness of the IT-BPM industry,” it added.

One of the amendments proposed under CREATE MORE is extending the grant of incentives to IT-BPM enterprises even if they implement hybrid working arrangements as long as they comply with on-site work quotas set by the investment promotion agency they are registered with.

“The bill seeks to include a clause that ‘carves out’ the IT-BPM sector from the prohibition on conducting registered projects or activities outside the geographical boundaries of their freeports or economic zones,” Colliers said.

However, Colliers said that the bill will also affect the office market through continued rationalization of office space especially from large occupiers.

“While this may be a short-term trade-off, Colliers believes that a more favorable investment climate will eventually spur office space demand in the long run,” it said.

“Given this flexibility, companies may ‘test the waters’ to find the optimal working setup for their respective operations,” it added. 

Colliers projects office utilization to settle at 70-80% calling physical offices a vital platform for collaboration and developing corporate culture. — Justine Irish D. Tabile