BPOs to next administration: Prioritize DICT, retain fiscal perks

Companies belonging to the business-process outsourcing (BPO) sector are hopeful that the next administration would prioritize the creation of the Department of Information and Communication Technology (DICT) and retain the current fiscal incentives scheme.

Jose Mari Mercado, president of the Information Technology and Business Process Management Association of the Philippines (IBPAP) made this statement as the country gears up for the national elections slated in May next year.

“If the DICT doesn’t happen in this administration, I hope whoever steps in next year would prioritize it,” Mercado said in an interview during the Philippine Software Industry Association’s delegate conference, Softcon.Ph.

The envisioned DICT is a Cabinet-level agency that is solely responsible for the information- technology (IT) sector. Currently, the ICT Office under the Department of Science and Technology handles the concerns of the BPO sector.

The creation of a new department for the IT sector has been backed not just by BPOs but also by the Joint Foreign Chambers and local business groups. The DICT, business groups said, could improve e-governance, raise broadband quality, strengthen cybersecurity, and further prop up the booming BPO/knowledge-process outsourcing (KPO) sector.

The measure will also rationalize the functions of the different government offices with ICT functions such as the Department of Transporation and Communications, the National Computer Center and the Telecommunications Office.

A measure creating the DICT has already gotten the nod of the House of Representatives and the Senate but its provisions have yet to be consolidated by the bicameral committee.

As for the bill that seeks to rationalize fiscal incentives given by investment-promotion agencies (IPAs), Mercado said he supports Philippine Economic Zone Authority (Peza) Director General Lilia de Lima who called for a status quo on the grant of fiscal perks.

“As long as it’s not broken, don’t fix it. It’s been successful in attracting investors. Investors are worried about instability. If we are the investors, we want to come in knowing that the incentives we were presented will stay and won’t change,” he said.

Fiscal and nonfiscal perks, such as income tax holidays of up to eight years and a preferential rate on gross income earned, are given by Peza and other IPAs to encourage investors to put their money in the Philippines.

The BPO sector, considered a key contributor to the country’s economic growth, has benefited from the grant of fiscal incentives. The industry’s output is treated as exports.

IBPAP has earlier warned that changing the form of fiscal and non-fiscal perks will reduce the competitiveness of the IT sector as multinational firms will be forced to relocate.