Carmen Reyes – A Look into PEZA and Non-PEZA Offices in the Philippines

Hi and welcome to episode number 47 of Outsource Accelerator. My name is Derek Gallimore. And today I am joined by Carmen Reyes. She is an architect and she’s just a wealth of information about all things office and architectural. Now, so the reason this is a little bit left of field and the reason why I’m chatting to Carmen is because of the insight she can give us in terms of various aspects of managing an office. Okay, so that is all of it is a little bit different in the Philippines and there’s little nuggets of information that are relevant to you if you’re interested in outsourcing specifically if you are looking to outsource outside of the supported environment of BPOs and outsource service providers. So, a lot to learn here. Today we specifically discuss the differences between PEZA certified offices and normal offices. Okay. If you haven’t heard PEZA then stay tuned. It is an economic authority it’s effectively a government incentive scheme and we discuss more about that here. So again, if you are outsourcing or interested in outsourcing this is good in terms of more technical structuring approach. Hope you enjoy.

Derek: Hi everyone and welcome back to another episode of Outsource Accelerator. I’m joined again with Carmen Reyes of Core Design. And if you haven’t listened to the previous episode please with Carmen please do. We’re here, so Carmen is an architect and has great experience within the Philippines and Manila environment. And today I wanna talk to Carmen about the difference in office space provision specifically and this might be a little bit of a niche interest but specifically BPOs that are either PEZA certified or non PEZA certified. Now maybe Carmen can you actually help explain the significant difference in PEZA or non PEZA. And then we can actually get into the differences of the office environments.

Carmen: Okay. PEZA is the Philippine Economic Zone Authority and from my understanding it’s a, how do you say it, it’s a trade distinction that they’re offering to different companies who are interested in. Who are like operating in a certain category and it’s just a way of allegedly easing.

Derek: Foreign companies, yeah.

Carmen: Yeah, as, easing in the process of having foreign companies operate in here.

Derek: Yeah.

Carmen: And of course..

Derek: Yeah that’s right. And obviously it is meant to be effectively an incentivization and of the foreign companies come in, isn’t it?

Carmen: Yes.

Derek: And it’s again meant to simplify things. And there’s also significant tax advantages in certain circumstances. So, in theory it’s quite a good system, isn’t it?

Carmen: Yes. And then, however there are the requirements for applying for PEZA and the actual process of going through that it’s actually it’s more things to do for the company because apart from for example if a company is about to start operational there are certain permits you need to get. There are certain plans etcetera, etcetera. With PEZA It’s taken to another level and they’re very, very strict with the requirements.

Derek: Yeah. And so, you know people in our audience are listening if you are looking to incorporate if you are looking to build out an office environment and this is very relevant. But also, this conversation is relevant in that if you are looking to outsource then it highlights going with an established BPO as a great option because you can actually just sidestep a lot of this hassle initially but having said that, it’s a lot of people that do start outsourcing. This is often a point they come to at a certain level of maturation. Maybe if you have an office of 30, 40, 50 staff you look to move out on your own. So. there is a lot of value in discussing this. And again, for context carmen, the PEZA I believe was established you know as a supportive innovative kind of move to encourage more outsourcing and BPOs over into the Philippines. And it started out as a streamlining. But I think now it’s got sort of kind of increasingly bureaucratic over the years, is that?

Carmen: Yeah just like any government run agency. Yes, there is that tendency unfortunately.

Derek: Right, right. And then so how I mean there’s you know a lot of detail in this but as a broad overview I mean in our last episode we discussed the conditions and standards of offices specifically within BPOs and outsourcing. And how does that differ then maybe to, how does PEZA office differ to a standard office? And then maybe again how does it differ to an office in the west?

Carmen: Okay. I can’t speak for offices in the West but for maybe a standard office here. What I’ve noted is that PEZA office densities are a lot lower. So the number of employees you can fit in any one workspace needs to be fewer than the regular office space.

Derek: Right.

Carmen: So, there’s a lower density that they’re requiring. I think it may also be the rate that the fire code. That’s the most, that’s something that struck me the most because I recall during our project we had to reduce a lot of your staff there is, there’s a big cut down in yeah. So, that was something very significant. So that’s the first thing.

Derek: Yeah. I say I think I do try and again because it’s focused on foreign investors and outsourcing again I think they’re just trying to ensure the best standards possible for the labor pool, aren’t they? Which is a good ambition.

Carmen: Absolutely. Correct, correct. But yeah, for example if you need to have so many employees and turns out your space is quite limited and you can only, based on the PEZA standards you can only fit in so many. Then there’s going to be an issue, you would have to either find a space or you know just find ways to add onto existing space. And then there’s the lease contract that would have to be reconfigured so coming in and that would be actually a good idea to have the PEZA standards reviewed so that you know what to expect from the get-go. And it helps you make decisions in terms of the space that you end up getting.

Derek: Yeah. And I think now a lot of people are being advised to really. Before I think it was say a default to just register and become PEZA registered but now I think a lot of people are being advised to properly assess whether PEZA is the right thing for your company because of the increased paperwork and bureaucracy.

Carmen: Correct.

Derek: And the increased cost of the lower staff density. And what is also significant as well as it is actually a zone authority so it’s almost, it’s like quasi-freeport I think. And the actual space has to be registered with PEZA which is I think a process unto itself. But that then brings. There’s a lot of PEZA registered buildings, aren’t there? They have entire buildings that are built for PEZA purpose. Are you, have you been involved in that at all?

Carmen: No, no, not, not, I haven’t been involved in those buildings myself although I know that there are developments like not just the buildings but an entire compound of buildings for better PEZA registered. Yeah. That would make things a little bit easier for other interested parties who’d like to operate here. That if they’re able to get to space that is already pre-registered for PEZA then it does make life a lot easier.

Derek: Thank you for your time Carmen.

Carmen: Welcome.

Derek:  And if people want to get in touch with you if people are interested in building their offices here or even just exploring the pros and cons of incorporating versus using a BPO from an office fit out kind of point of view. How would they get in touch with you?

Carmen: Yeah, I may be reached through email its [email protected].

Derek: Great. Thank you Carmen and we’ll put all of that in the show notes as well. Thanks very much.

Okay. Hope you learnt a lot about PEZA there. It’s a little bit of a dry topic but there’s a lot of information to take in. If you do want to branch out on your own and it’s good just to have an awareness of this because the Philippines can work a little bit differently. So, if you do want to get in touch with Carmen or want to know anything we discussed go to our show notes and you can find this episode at outsourceaccelerator.com/podcast/episode47. And if you want to ask us anything please do just drop us an email. You can do that at [email protected].