Lack of laws on data privacy hinders foreign investments

MANILA, Philippines - The Joint Foreign Chambers of the Philippines (JFC) said on Monday that one of the reasons why foreign investors are not investing in the country is the lack of laws on data privacy.

“The lack of legislation on data privacy is a growing cause of concern for prospective investors and a substantial hindrance to the development of the sector in the Philippines. In the 14th Congress the bill was reported out of committee in the Senate but not in the House,” the letter of JFC to the House of Representatives stated.

In spite of this, English-speaking IT- BPO competitor countries like Malta have legislated data privacy laws. They said there is a real danger of losing investors to countries with a more favorable legislative framework for IT-BPO. The absence of protection against data piracy is a key issue for IT-BPOs’ offshore clients in the US and some European countries that move large amounts of data across borders which must be protected against unlawful access or even being sold for commercial or personal gain. The lack of punishment for violators is of great concern to stakeholders.

Information technology and business process outsourcing (IT-BPO) is the fastest-growing employment sector, and one of the highest revenue generating economic sectors in the Philippines today. The potential remains extremely strong because of its current size, high growth rate, and potential to employ millions of Filipinos.

The Philippines has several clear advantages: a large workforce; a large pool of educated, English-speaking talent with a strong customer-service orientation; 450,000 college graduates annually; highly-reliable low-cost international telecommunications infrastructure; diverse and inexpensive suitable site locations; and strong government support.

These key drivers for success must be sustained and country competitiveness strengthened. There are, however, challenges and reforms needed to realize the country’s high potential for continued growth. One of the challenges is to strengthen the legal framework of the industry.

The JFC and the BPO industry were disappointed that the 14th Philippine Congress failed to approve three new non-fiscal laws important to strengthening the legal framework of the industry: the Cyber Crime Prevention Act, the bill to create a Department of Information and Communications Technology (DICT), and the Data Privacy Act. The first two were approved by the House but had not completed the final stages of consideration in the Senate when the legislative session adjourned.

“In this Congress, we commend the Legislative Branch, in particular the Senate and House committee chairmen, for initiating deliberations on the above vital measures as early as the First Regular Session. The strengthening of data privacy laws, which is now before us, are priority issues that need to be addressed to enhance the competitiveness of the Philippines as a BPO destination,” the group said.