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Industry exec says outsourcing firms putting expansion plans on hold

Several business process outsourcing companies have decided to put on hold their expansion plans given the uncertainties surrounding the government’s tax reform plans, the Contact Center Association of the Philippines (CCAP) said Monday.

Foreign companies are now in a wait-and-see mode in relation to the second tax reform package.

“We just don’t hear them talking. But yeah, kaya nga ‘yung growth rate natin maliit na lang,” Uligan told GMA News Online.

The industry earlier expected growth at 9 percent in the short-term, compared with 15 to 16 percent in the previous years.

“In a market like this—with uncertainties—bago tayo [mag-expand], let’s see muna,” Uligan said.

Asked if the number of firms expressing concern is significant, Uligan said “marami-rami rin.”

He declined to identify the companies.

Companies are now waiting for further guidance on the implementation of the second package of tax reforms under the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill, Uligan said.

The bill, which seeks to lower corporate income taxes and rationalize fiscal incentives, is now pending in Congress.

“Kung hindi man sila nagho-hold, they keep on askin, ‘Okay, what’s the update? What's happening?’ ‘Yun ‘yon eh,” Uligan said.

“The fact is that there are members or clients that start to ask questions and it means something to them.”

The outsourcing industry earlier said the planned rationalization of tax incentives could be detrimental to the sector.

“They might probably not tell you that we’re gonna hold our growth or expansion, but if they start to ask questions—'Why?— later on ‘yan na ‘yung next statement nila. We don’t want that to happen,” said Uligan.

The government must consider the timing of rationalizing the incentives in view of industry’s growth.

“Siyempre nasa growth mode tayo and then, at this time, there’s a lot of competition. Parang it’s not the right time ... If we’re a close second to India, we’re fast approaching,” Uligan noted.

“Those are uncertainties, those are challenges,” he said.

The Department of Finance earlier said that better incentives await well-performing foreign investors if the second package of the tax reform program is enacted. —VDS, GMA News