ON July 23, President Ferdinand Marcos Jr. issued Administrative Order (AO) 45, lifting a seven-year moratorium on the development of new information technology (IT) parks and IT centers as economic zones under the Philippine Economic Zone Authority (PEZA) within the National Capital Region (NCR). This was a sound decision by the president, as it addresses several problems currently facing the country’s IT industry, which is increasingly under threat from the rapid development of artificial intelligence (AI), as well as a nagging downturn in the property sector in the NCR.
The moratorium on IT-based ecozones, which include developments ranging in size from parts of office buildings to entire commercial estates, was imposed by former president Rodrigo Duterte in 2019 with the issuance of AO 18. The intent of that earlier AO was to encourage more development outside Metro Manila, which was a sensible objective, and did result in substantial growth in locations such as Cebu, Iloilo and cities in Mindanao. In recognition of the value of that objective, President Marcos’ recent AO only partially lifted the moratoriums on ecozone development set forth in AO 18, which covered other industrial development apart from the IT industry. Apart from IT developments, the earlier restrictions remain in place.
According to a statement from the Department of Trade and Industry hailing the president’s order, the policy aims to attract more investments, generate high-quality jobs, unlock new real estate opportunities and strengthen Metro Manila’s position as the country’s leading information and communications technology hub. While information technology-business process management (IT-BPM) firms are bullish on the business environment they have found in areas outside Metro Manila, there is still a strongly expressed demand for locations with larger talent pools, mature infrastructure and strong transport connectivity. While IT-BPM firms are sometimes reluctant to state it for the record, from their perspective, the best place to locate is in the NCR; other parts of the country may present workable circumstances, but none is considered superior.
There are a couple of reasons AO 45 matters to the IT sector and the broader economy. First, the current environment of the IT sector generally is challenging. The Philippines, along with India, has been identified by numerous analyses as being the most at risk in terms of jobs and economic contribution from the growth of AI, and consequently, the most at need for a retooling of their respective IT-BPM industries to keep up with the pace of change and prevent a collapse of an important economic sector.
The companies that make up our IT-BPM industry — which recently surpassed remittances from overseas workers as the biggest contributor to the overall economy — obviously do not want to see their own businesses downscaled because of AI, and are eager to pursue the organizational and business shifts necessary to keep up with the times. From the businesses’ point of view, now is not the time to complicate that challenge with concerns over basic infrastructure, energy supply, digital connectivity or physical space. While many areas outside Metro Manila are indeed established IT centers and are still growing, none are as “ready-made” as Metro Manila.
The second and less-obvious problem that AO 45 addresses is a near-crisis in the real estate market in Metro Manila, a problem that was in large part created by the past administration’s ill-advised encouragement of the now widely condemned Philippine offshore gaming operations (POGO) industry. The ejection of the POGOs left a significant supply mismatch in Metro Manila’s office market, with much space currently unoccupied, most of it in areas outside the popular Fort Bonifacio, Makati central business district and C5 corridor zones.
In terms of capacity, according to data from the real estate consultancy firm Collier’s, there are already about 607,000 square meters of PEZA-accredited office supply in the pipeline between 2026 and 2030, with another 604,000 square meters’ worth potentially qualifiable under the new policy set out by AO 45. Like it or not, if this more than 1.2 million square meters of office is not occupied, the knock-on effects to the economy in Metro Manila, and by extension, the national economy, would be severe. The new revised guidelines under AO 45 simply make putting that office space supply to good use more likely.
AO 45 is a targeted exemption that adjusts but does not in any way reverse the government’s countryside development strategy. It recognizes the reality that Metro Manila still has a leading role as the country’s technology and business hub, and puts development of the IT and tech sectors back on a faster track.
