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Filipino Workers Are 'Key' to the Growing BPO Industry

by: Mary Christine Galang

Friday, July 14, 2017 | Outsourcing News |

The "key" to expanding the ever-growing business process outsourcing (BPO) sector in the Philippines is its young, English-speaking population, according to real estate consultancy firm Santos Knight Frank.

This is despite the House of Representatives approving the measure on May 31, which includes the first measure of the Duterte Administration-proposed tax reform. The substitute bill, House Bill 5636 or the Tax Reform for Acceleration and Inclusion, proposes lower income tax rates and lifting exemptions in various benefits like the 13th month pay.

However, it also seeks to lift VAT exemptions in different sectors and adjust excise taxes on fuel and automobile, as well as to remove tax incentives of BPO firms. If enacted into law, a 12% VAT would be imposed on the BPO companies' gross receipts.

Demographics make the Philippines an attractive outsourcing destination

Santos Knight Frank Chairman and CEO Rick Santos remains confident of the Philippines as an investment destination and said there are plenty of factors that make the country attractive to investors.

"I think the demographics are key. The Philippines has the people which are the secret sauce to the growth of BPOs," he said.

"It really comes down to skills, the English, the age of the workforce ... Those are the imperatives for the BPO firms," Santos added.

"The BPO industry is the biggest private sector employer today, with 1.5 million direct and 3.7 million indirect employees. The sector also contributed 8 percent to GDP (gross domestic product), with export revenues close to $25 billion," he added.

However, Santos maintains that the removal of tax incentives of BPO firms and its impact on the sector should be carefully studied and an open, continuous dialogue with the government is important in securing a beneficial future for both parties.

"We see fiscal incentives are important to encouraging the growth of BPO investments in the country," he said.

"Incentives are great drivers for growth in that sector. I think that is important to their expansion agenda," he added.

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