Philippine Standard Time - Friday, December 2, 2022,

PEZA allows 30% WFH for registered IT-BPOs and RBEs until September 2022

Friday, April 8, 2022

Pasay City – Philippine Economic Zone Authority (PEZA) Director General Charito B. Plaza has announced that the agency is accepting applications from PEZA-registered IT-BPOs and Registered Business Enterprises (RBEs) for the hybrid work arrangement.

PEZA-registered IT-BPOs and RBEs that cannot immediately return to office (RTO) even after 01 April can request a Letter of Authority (LOA) from PEZA with the needed requirements.

The PEZA Chief said, “Now that pabalik na tayo sa normal, gusto ng ating gobyerno na [maging] normal narin ang takbo ng ating ekonomiya at ito ang solusyon ni PEZA, ang 70-30.

PEZA has been issuing Letter of Authorities (LOAs) to its interested registered enterprises applying for a hybrid operation prior to the COVID-19 pandemic.

Implementing the 70-30 work scheme

According to the PEZA Director General, this hybrid work setup is until 12 September 2022 only, the declared end of the state of (the COVID-19) calamity by President Rodrigo Duterte.

IT-BPO companies and RBEs intending to avail this work arrangement shall individually apply by sending their applications to PEZA.

PEZA Chief Plaza noted that “PEZA’s work from home (WFH) scheme for its registered IT-BPOs and RBEs has been conceptualized even before the passage of Republic Act No. 11165 also known as the Telecommuting Act in 20 December 2018.”

Plaza mentioned, “PEZA, therefore, is just restoring back to the regular ratio of not more than 30% domestic sales allowance and WFH work ratio. PEZA is giving the institutionalization of the hybrid work scheme to include DOLE’s protection, safety, and security of tenure of workers engaged in the virtual or WFH schemes to the next administration.”

Further, Plaza highlighted, “Since 2020 when pandemic began, one of PEZA’s Bayanihan business assistance and reprieves was the temporary increase of WFH arrangements which was the 90% WFH and 10% onsite. But starting 01 April 2022, PEZA-registered IT-BPOs are now going back to our regular policy ratio of 70-30 on sales allowance and not more than 30% of WFH.”

Meanwhile, Deputy Director General (DDG) for Policy and Planning Tereso O. Panga shared, “On the provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, it does not prohibit PEZA-registered RBEs [and IT-BPOs] from conducting remote work or performing a portion of their activity outside the economic zones.”

DDG Panga also added, “As long as our ecozone locators doing hybrid work are complying with the minimum 70% export sales and minimum 70% on-site report by their workers, they are [and should be] entitled to enjoy our tax incentives.”

He explained that “The 30% work from home is a permissible activity under PEZA, CREATE and Telecommuting laws.”

Meanwhile, Plaza underlined that even prior to the pandemic, the hybrid work model is also being practiced worldwide specifically in India, the Philippines’ top competitor in the IT-BPO sector. Thus, recognizing and adapting to this global trend is needed to maintain the country’s competitiveness and flexibility in the ‘new normal’.

IT-BPOs’ continued PEZA registration

On the alleged claims that some IT-BPOs and RBEs will withdraw from PEZA if the hybrid work model cannot be continued in the economic zones, Director General Plaza said, “There is no truth that our registered IT-BPOs and RBEs have left our ecozones. Despite having the same fiscal incentives as the BOI, it is not easy to cancel an operation. We also have a protocol that prohibits an enterprise for double registration.”

This has been seconded by DDG Panga who said, “Moving out of our economic zones can be tedious and costly. IT center developers will be greatly affected by the sudden loss of rental revenues from exiting IT locators.”

Panga assured that “PEZA is working closely with BOI on institutionalizing the WFH in the Strategic Investment Priority Plan (SIPP) to further promote the growth of the IT sector and to ensure regulatory coherence, especially on the WFH policy”.

IT-BPOs performance amidst pandemic and hybrid work

As of December 2021, PEZA has 1,274 IT locator companies operating in 297 IT centers/parks and providing 1,017,559 jobs nationwide with exports of US$ 15.797 Billion.

The IT-BPO industry has been one of the major contributors and frontliners in keeping the nation’s economy afloat. The WFH arrangement is proven effective and working as seen in the performance of the IT-BPO in these continuing crises hitting the country and the world.

PEZA Director General Plaza noted, “With the pandemic still not over and with the ongoing Russian-Ukraine war causing high cost of transportation and goods, there is a need for a whole-government approach towards securing the welfare, health, and carefully addressing the plight of our Filipino workers.”

“I hope we can stop the agony suffered by our locators and workers. A hybrid scheme must be institutionalized by the next administration as we need to harmonize our laws and policies on this matter,” Plaza added.

Prior to the pandemic, the IT-BPO sector is already performing well. Despite the global recession in 2020, IT-BPO sector in the Philippines grew by 1.8% in 2020, creating 23,000 jobs. This brought the total industry headcount in the country to 1.32 million. The sector also recorded revenues amounting to $26.7 billion—a 1.4% jump from 2019.

Last year, this sector has even displayed more resurgence despite the increased cases of COVID variants, Delta and Omicron, in 2021. IT-BPOs grew between 7 to 8% in terms of headcount and between 8 to 13% for revenues. This brings the estimated total industry headcount in the sector to 1.4 million and revenues generated from the industry at $28.8 billion.

Now in 2022, implementing a hybrid work setup is beneficial to ensure the country’s unhampered economic and employment growth which will also encourage more IT-BPO companies and other enterprises to invest in the country. #