POGOs pullout to affect real estate sector—PEZA

The Philippine Economic Zone Authority warned over the weekend about a possible real estate vacuum in Metro Manila once Philippine offshore gaming operators mainly led by Chinese nationals pull out of the country.

PEZA director-general Charito Plaza said the closure of the online gaming establishments would directly hit the office and residential buildings that house POGOs and their employees. The Finance Department earlier estimated that 138,000 individuals, mostly Chinese nationals, were working in the POGO industry.

“Should China close POGO [establishments], this will create vacancies of buildings. That’s why the Office of the President and the Finance Department should consider lifting the moratorium inhibiting BPOs from locating in Metro Manila, so these buildings can be occupied back soon,” Plaza said.

PEZA earlier asked the government to reconsider the moratorium on opening new ecozones in Metro Manila.

President Rodrigo Duterte issued Administrative Order No. 18 in May to halt the processing of applications for ecozones in Metro Manila as a way to decongest the metropolis and allow for the development of alternative provincial sites as hubs for business process outsourcing.

Data showed that 61 POGOs were operating in 18 PEZA-accredited buildings.

The rise of POGOs made it difficult for new BPOs to get space in IT parks and buildings as building owners developed a preference for POGOs that were willing to pay higher rents, said Plaza.

Meanwhile, PEZA welcomed President Rodrigo Duterte’s announcement of support for the retention of gross income earnings of business or companies as the tax base. 

The president said the GIE was more advantageous for tax collection than gross revenues as the tax base because data processing via GIE made it difficult to cheat or engage in corruption.

PEZA pushes or the retention of GIE as tax incentives to export-based industries in the Philippines.

Under the proposed second package of the Comprehensive Tax Reform Program, the 5-percent tax on GIE paid by ecozone developers, operators, and enterprises or locators in lieu of all local and national taxes would be removed.

The Finance Department wants to replace GIE with a reduced corporate tax rate.

The House ways and means committee already approved the proposed Comprehensive Income Tax and Incentive Rationalization Act to overhaul the tax incentive system.

Plaza said the removal of the 5-percent tax on GIE under the CITIRA bill would discourage ecozone developers and locators.

Topics: Philippine offshore gaming operators , POGOs , real estate sector , Philippine Economic Zone Authority , PEZA
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