New ‘digital cities’ seen to attract P70B in investments

A partnership between the government and private sector identified 25 new cities for outsourcing development, as part of efforts to redirect opportunities towards the countryside.

The so-called “digital cities” hope to attract an estimated P70 billion in investments from business process outsourcing companies in the next few years.

The Digital Cities 2025 program was launched online on Tuesday by the Department of Information and Communications Technology (DICT), Information Technology and Business Process Association of the Philippines (IBPAP), and Leechiu Property Consultants, Inc. (LPC).

Within the five-year program, the identified cities will be prioritized for internet connectivity and digital education for the talent pool.

“We will go to these 25 cities and understand, kumusta ba ang coverage ng fixed broadband and also mobile internet in these locations? So we can bring in the major telcos into a forum to understand what they need from an infrastructure perspective dun sa lugar na ’yun. Government will be able to help them ease restrictions or self-imposed regulatory burdens so they can expand rapidly, quickly this year,” DICT Assistant Secretary Emmanuel R. Caintic said.

Mr. Caintic said they will also focus reskilling efforts in these areas so graduates may join the outsourcing workforce.

IBPAP, in turn, will help market and promote the locations to potential investors and locators, as well as boost career awareness in the area.

“If we are looking at growing by anywhere between 70,000 to 80,000 new jobs every year and just direct employment, if we can hit anywhere between 30-50% of that happening in the countryside, I think that’s a significant take-up that I think will benefit many in these different locations we have identified,” IBPAP President and Chief Executive Officer Rey C. Untal said.

The program is an extension or rebranding of DICT’s Next Wave Cities.

LPC Chief Executive Officer David T. Leechiu said he expects P70 billion in outsourcing investment to flow into these “digital cities.”

“How much money is gonna go into these provinces? My estimate would be about P70 billion in the next five years because the provinces will start to attract 40% of all BPOs (business process outsourcing companies) that happen to expand in each of these years in the country,” Mr. Leechiu said.

“The more developed each of these provinces are, the more likely the BPOs will go to those locations. And when they go into these locations, the locations will transform because of the amount of employment that will be generated in each,” he added.

The 25 areas are: Balanga City, Batangas City, Cabanatuan City, Dagupan City, General Santos City, Iligan City, Iriga City, Laguna Cluster (San Pablo, Calamba, and Los Baños), Laoag City, Legazpi City, Malolos City, Metro Cavite (Bacoor City, Imus, and General Trias), Metro Rizal (Taytay, Cainta, and Antipolo City), Olongapo City, Puerto Princesa City, Roxas City, San Fernando City (La Union), San Fernando City (Pampanga), San Jose Del Monte City, Tacloban City, Tagbilaran City, Tarlac City, Tuguegarao City, Urdaneta City, and Zamboanga City.

The cities were chosen based on parameters identified as priorities for investors, including talent availability, infrastructure, cost, and business environment.

IBPAP is scaling down its pilot program to upskill employees this year due to disruptions caused by the pandemic. Funded by DICT, the industry group will be training a thousand employees this year, down from an initial target of 4,000 to 5,000 participants.

The P5-billion annual funding for a skills upgrade program included in an earlier tax reform proposal is no longer in the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill which is still pending at the Senate.

“Some iteration of this can be part of the stimulus plan, but given how much more favorable in terms of tax benefits CREATE has become, as part of our efforts to secure better COVID-19 terms, this might not be the highest priority,” House Ways and Means Committee Chairperson and Albay 2nd District Representative Jose Ma. Clemente S. Salceda said in a mobile message on Thursday.

“In principle, we can also tailor-fit training programs with the BPO sector and with other high-skill sectors via TESDA. If it is reintroduced, I will not oppose it, in principle, although the amount and iteration may need to be rethought,” he added.

The government last year placed a moratorium on economic zone approval in Metro Manila to encourage more countryside development.

“If you want to bring jobs to the Philippines, we really have to push the BPO sector throughout the country. But we have to acknowledge one part and that is the only way they’re gonna grow in the countryside is if you help them grow in Manila also,” Mr. Leechiu said.

“Many companies are already very largely placed in Manila and only after that have they decided to go and expand in the countryside.” By Jenina P. Ibañez, Reporter|BusinessWorld

Source: Peso Economics