News: Subsidy to the Rescue! P8B BPO Support Fund in the Works!

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But is it enough?

The Information Technology and Business Process Association of the Philippines (IBPAP) is currently coordinating with the Department of Finance (DOF). The Goal? To see if this is an equitable exchange:

An P8B/year education subsidy for BPO’s

 

– VERSUS –

 

The removal of BPO tax perks

According to DOF Undersecretary Karl Chua, the money is supposed to go towards a “national skills upgrading program.”

Karl Chua/DOF

 

“They claimed that we should help create the next or future talent pool. They said we need to fund training and scholarships so they proposed P8 billion per year.”

The Catch!

Yes, it’s a this of that deal.

Karl Chua/DOF

 

“We told them, ‘So long as you agree to our proposal (RE: TRAIN 2), then we can consider your counterproposal… It cannot be in addition to the current (arrangement) because we’re already giving incentives indefinitely.”

Currently, companies registered with the Philippine Economic Zone Authority (Peza) pay a 5-percent gross income earned (GIE) tax in lieu of taxes. This set up has made the Philippines an attractive destination for BPO operators. However, TRAIN 2 seeks to:

  • “Rationalize” tax incentives (Rationalize is a fancy word for “remove”)
  • Then lower local corporate income taxes

BPO locators consider Philippine tax perks before setting up shop locally, and once they do – they invest again on employee training. pushAUX.com

Deal or No Deal?

The DOF has officially declared that they would rather issue subsidies rather than providing indefinite incentives.

Will IBPAP bite? Are education subsidies enough to entice foreign investors to put up job generating BPO’s in the Philippines, an industry that is widely considered as the biggest private sector employer in the country?

Spotlight on the Importance of Training!

Contact centers have been known to heavily invest in training which may span up to two weeks before new hires become production ready. Current stats show an employability rate of only 8-10% these past few years.

Let’s see where this goes.

As per the DOF, it was IBPAP president and CEO Rey Untal, and IBPAP chair of the board of trustees Lito Tayag, who broached the skills program.

Charlene Chan, IBPAP Director for Talent Development

 

“The National Upskilling Program is just one of the many programs of IBPAP and is still in the early stages of development. Initial consultations are underway and updates on its progress (are due) in two months’ time.”

The DOF seems to deal in absolutes. P8B in exchange of tax perks. We sure hope that the IBPAP knows what they are doing and who they are dealing with.