POGOs, BPOs to fight for limited office space in Metro Manila
THE Philippine Offshore Gaming Operators (POGOs) industry is expected to unseat the Information Technology and Business Process Management (IT-BPM) sector as the top office space occupier in Metro Manila by the end of the year, according to Leechiu Property Consultants (LPC).
In a press briefing on Wednesday, Leechiu President and Chief Executive Officer David Leechiu said that the POGO industry is projected to take up 450,000 square meters (sq.m.) of office space in Metro Manila by the end of 2019.
This will be driven by faster site selection process and the effect of Administrative Order No. 18, which noted that applications for office space within Metro Manila with tax incentives for BPOs will no longer be considered.
“We think that the POGO industry will overtake the BPO (Business Process Outsourcing) sector. For the first time in 19 years, the BPO sector is going to be number two,” Mr. Leechiu said.
In the first half of 2019, the IT-BPM still led the demand for office space in Metro Manila at 244,000 sq.m., with POGO take-up at 242,000 sq.m.
“Even with this moratorium in Manila, everyone now is scrambling to fight to lease the last 150,000 sq.m. of PEZA space in the market and right now, especially in Makati, they are competing now… for the same space,” Mr. Leechiu said, identifying the building as Century Diamond Tower owned by Century Properties Group, Inc.
At the current pace that the industry is growing, Mr. Leechiu said demand from the POGO industry is seen to grow at a faster pace compared to BPOs.
POGOs continue to prefer the Bay Area, with 139,000 sq.m. of office space taken up in the first half. These companies also took up office space in Makati City (46,000 sq.m.), Quezon City (40,000 sq.m.), Ortigas (9,000 sq.m.) and Alabang (8,000 sq.m.).
Mr. Leechiu said once supply in the Bay Area is depleted, POGOs are seen to move to Quezon City, competing with IT-BPM industry.
Outside Metro Manila, POGOs have expanded to Laguna, occupying 46,000 sq.m. of space; 37,000 sq.m. in Cebu; 34,000 sq.m. in Clark, Pampanga; and 13,000 sq.m. in Cavite. Total employee count is currently at 354,000, bulk of which are Mainland Chinese.
The increase in Chinese workers has also fueled the leasing demand for residential condominiums in Metro Manila.
““Rental rates have seen an increase of up to 80% from three years ago in the Bay area. Prices of Studio units have increased from P18,000 in 2015 to P32,000 per unit per month in 1H 2019. One bedroom units have gone from P25,000 back in 2015 to P55,000 per unit per month while a two bedroom unit’s price rose from P55,000 to P90,000 per unit per month,” the LPC report stated.
Phillip Anonuevo, LPC executive director for commercial leasing, said they expect the POGO industry to add around 50,000 employees every year — “that is probably 10,000 to 15,000 units of apartments.”
On the POGOs’ growth forecast, Mr. Leechiu said that it will depend on government policies on regulating the industry.
“Depends how fast we allow them to grow here. The problem is not them, the problem is us. We’re the ones slowing them down because we need to regulate, we need to understand what it means, we need to see who they are, who need to know them, but the moment we have this familiarity with them, we will embrace them,” he said.
Only 10 out of 60 POGOs in PHL pay taxes —BIR
The Bureau of Internal Revenue (BIR) collects taxes from only 10 out of 60 registered Philippine Offshore Gaming Operations (POGO) operating in the country, according to a Tuesday report by Victoria Tulad on Quick Response Team.
During the hearing of the House Committee on Ways and Means, it was revealed that 50 of the POGOs are based in other countries though they have employees in the Philippines.
Committee chairperson Joey Salceda cited the Office of the Government Corporate Counsel's (OGCC) report that showed BIR's inability to tax POGOs.
"Sabi po ng OGCC na sila ay non-resident corporation and therefore 'yung operasyon nila ay non-taxable. So hindi natin nagagamit 'yung buwis," Salceda said.
BPO firms among top corporate taxpayers
A wholly-owned subsidiary of Germany-based Deutsche Bank AG and Accenture Inc. have emerged as the new top corporate taxpayers in the countryâ€™s business process outsourcing (BPO) sector, House deputy majority leader and Pasig City Rep. Roman Romulo said yesterday.
Romulo, a strong backer of the BPO sector in Congress, said Deutsche Knowledge Services Pte. Ltd. ranked as the BPO industryâ€™s No. 1 taxpayer, and No. 195 among all Philippine corporate taxpayers with P116.88 million in income tax paid,
Accenture ranked as the industryâ€™s No. 2 taxpayer, and No. 285 among all Philippine corporate taxpayers, with P75.25 million in income tax paid, he said.
Romulo said the rankings were based on the Bureau of Internal Revenueâ€™s new list of the countryâ€™s top 500 non-individual taxpayers for taxable year 2011, which in turn was based on income tax returns filed. The list was made public in April.
â€œWe are crediting all BPO firms and the back offices here of large global corporations not only for gainfully employing thousands of young Filipinos and driving national economic production of high-value services, but also for their significant contributions to the National Treasury,â€ Romulo said.
He said Deutsche Knowledge Services provides a wide variety of global business support services to the Deutsche Bank Group which operates in 72 countries.
Based at The Enterprise Center in Makati City, Deutsche Knowledge Services employs more than 2,300 Filipinos, and last reported P6.419 billion in revenues in 2011.
Accenture is the Philippine subsidiary of Ireland-based Accenture Plc., an independent worldwide provider of management consulting, technology, and BPO services.
With over 25,000 personnel in 13 delivery centers in the Philippines, Accenture last reported P22.256 billion in revenues in 2011, Romulo said.
The other BPO firms and back offices in the countryâ€™s top 500 corporate taxpayers are: Sykes Asia Inc. (No. 343, tax paid at P61.91 million); Hewlett-Packard Asia-Pacific (Hong Kong) Ltd.-Regional Operating Headquarters (No. 354, P60.53 million); Citibank N.A.-Regional Operating Headquarters (No. 408, P49.37 million); and NCR Cebu Development Center Inc. (No. 465, P42.96 million).