American business processing outsourcing companies expressed concern over the proposed second package of the Tax Reform for Acceleration and Inclusion law that could alter the tax incentives given to them, results of a business survey show.
“Although, nothing is definite yet, a few of them are still sorting how they can rearrange their business because they will still finger push it if it still makes sense,” said PwC Philippines chairman and senior partner Alexander Cabrera during the launch of CEO Survey 2018 that focused on the future of businesses in the age of disruption.
Cabrera said this is one of the reasons the revenue growth confidence among businessmen dropped to 89 percent this year from 97 percent in the 2017 survey.
Aside from BPO and IT executives, other respondents in the survey included representatives from consumer and retail; healthcare, pharmaceutical and life; agriculture, forestry and fisheries; manufacturing of consumer and industrial products; and infrastructure.
Cabrera said the US BPOs came to the Philippines on the promise of tax incentives by the Philippine Economic Zone Authority and on the commitment by the Arroyo administration when it conducted its US roadshow in California a decade ago.
“Decades after, they’re changing it. Some of them [BPOs] have asked for an exit strategy but nobody has left yet,” he said.
Cabrera said some BPO companies halted their expansion programs due to uncertainties.
“They don’t understand the constitution change and based on their experience, it’s not really the economic cost that has great effect on their survival but the political uncertainty in the country. These businesses want predictability. If it is a bit predictable, they can work around it,” Cabrera said.
Results of the survey showed that most companies expected to continue to experience growth despite economic and political uncertainties.
About 76 percent of the respondents believed that growth would be organic, while 59 percent said new strategic alliance and partnership would drive company growth. About 45 percent said cost reduction would help grow the business and 20 percent vouched that outsourcing of certain company processes would drive company growth.
The survey also underscored the contribution of technological disruption to Philippine companies as 94 percent of respondents believed that disruptive innovations changed their industry over the past ten years.
