POGO Operations Suspended
The Philippine Amusement and Gaming Corporation (PAGCOR) has suspended the operations of all Philippine Offshore Gaming Operators (POGOs) due to the enhanced community quarantine imposed in Luzon. Meanwhile, POGO sites outside Luzon are reminded to abide by the community quarantine guidelines implemented by local government units where they are operating in. Aside from POGOs, PAGCOR has also suspended the operations of all integrated casinos, bingo, poker, sports betting and slot machine clubs.
The suspension of POGO operations in Metro Manila is likely to result in delayed expansion among these companies. Colliers initially projected an office space take-up of more than 300,000 sq meters (3.2 million sq feet) from POGO firms in Metro Manila in 2020. This represents about a third of the 900,000 sq meters (9.7 million sq feet) of office space take-up Colliers initially estimated for the year. The expansion of POGOs could be constricted by the travel ban due to the COVID-19 pandemic and the imposition of the enhanced community quarantine (ECQ) in Luzon. Depending on the duration of the ECQ, we believe that the traditional and outsourcing firms could bridge the demand gap left by POGOs once market sentiment improves in H2 2020.
Outsourcing Firms Told to Prepare Flexible Work Schemes Amid Virus
The Information Technology and Business Process Association of the Philippines (IBPAP) has advised outsourcing companies to implement flexible work arrangements to prevent the further spread of the coronavirus disease (COVID-19). IBPAP is closely working with the government and health agencies to further prevent the spread of the COVID-19 as well as ensure the safety of employees in the outsourcing sector. Meanwhile, the Philippine Economic Zone Authority (PEZA) has allowed information technology enterprises to adopt work-from-home arrangements without prior approval from PEZA.
The enhanced community quarantine (ECQ) imposed by the government due to the COVID-19 has compelled several businesses to revisit their business continuity plans (BCP). Colliers believes that having alternative work arrangements during this time of crisis would embolden traditional and outsourcing companies to accelerate adoption of technology. We also believe that these companies should further explore implementing flex and core strategies that comprise a mix of traditional office and flexible workspace. With all these considerations, occupiers should also prioritize wellness certification as it is important to health of employees, including those from the outsourcing sector.
Economic growth may fall below 5% this year
Moody’s Analytics has adjusted its economic growth forecast for the Philippines to 4.9% from 6.7% in January 2020. The credit rating firm factored in the pandemic’s impact on tourism and export sectors. In 2019, the Philippine economy grew by 5.9%. Moody’s Analytics said the economic cost will likely hinge on the duration of the COVID-19 pandemic. Other credit rating agencies have also lowered their economic growth projection for the Philippines in 2020.
The Luzon-wide lockdown has caused several businesses to close or deploy a skeleton workforce. This has affected several industries resulting in downward revision of gross domestic product (GDP) growth projections. The Luzon region, which is under an enhanced community quarantine (ECQ), accounts for about 73% of the country’s GDP. Colliers believes that a coordinated policy and monetary response from the government and central bank is likely to instill confidence in the economy which should benefit the property market before the end of 2020. Meanwhile, office landlords should strengthen property management capabilities as it is crucial to the safety and health of buildings and tenants.