Fueling Cagayan de Oro’s Economic Boom: The Case for Tax Breaks in IT and FinTech

Cagayan de Oro, the City of Golden Friendship, has long been a hub of trade and commerce in Northern Mindanao. With its strategic location, skilled workforce, and growing infrastructure, the city is primed to become a center for technological innovation and financial technology (FinTech) investments. However, to unlock its full economic potential and attract more investors, local policymakers should consider offering tax breaks or exemptions for specific industries, particularly in IT and FinTech.

The Power of Tax Incentives

Tax incentives have proven to be a game-changer in fostering economic growth. Many cities and countries worldwide have successfully used tax breaks to encourage businesses to set up operations, resulting in increased employment, technological advancements, and a more dynamic economy. For Cagayan de Oro, implementing strategic tax breaks for IT and FinTech companies could accelerate growth by making the city a more attractive destination for investors.

Why IT and FinTech?

1. Job Creation & Workforce Development IT and FinTech sectors generate high-paying jobs that require skilled professionals, providing opportunities for local graduates and professionals to stay and build careers in Cagayan de Oro rather than migrating to Metro Manila or abroad. Encouraging these industries will help sustain the city’s talent pool and prevent brain drain.

2. Technology-Driven Economic Growth The global economy is shifting towards digitalization, and cities that adapt to this trend thrive. By supporting IT and FinTech firms, Cagayan de Oro can position itself as a technological hub in Mindanao, drawing in companies that specialize in software development, digital payment solutions, and blockchain innovations.

3. Increased Business Investments Providing tax incentives will attract not only local entrepreneurs but also multinational corporations looking for a business-friendly environment. More businesses mean higher demand for office spaces, commercial properties, and support services, which will, in turn, boost the real estate and retail industries.

4. Enhanced Financial Inclusion FinTech companies can drive financial inclusion by providing digital banking, payment platforms, and microfinance solutions, especially to underserved communities. A thriving FinTech sector in CDO can enhance financial literacy and economic participation, benefiting small businesses and informal entrepreneurs.

The Underutilization of Uptown CDO’s IT Park

Currently, the designated IT Park in Uptown CDO has never been utilized for the IT industry. Instead of becoming a hub for high-rise IT company office buildings, it has transformed into a food avenue, with food parks, cafes, and restaurants sprouting instead. This missed opportunity highlights the need for stronger government incentives and policies to ensure that areas designated for IT development fulfill their intended purpose. Proper implementation of tax breaks and investment-friendly policies can encourage IT firms to actually establish operations in designated IT zones, preventing commercial shifts that deviate from the city's long-term economic goals.

Short-Term Political Gimmicks vs. Long-Term Economic Growth

One of the significant roadblocks to achieving sustainable economic growth in Cagayan de Oro is the current political climate. Local government leaders are more focused on building their political images, positioning themselves as helpful leaders by offering short-term solutions to poverty, such as distributing goods, providing free services, officiating mass weddings, and covering hospitalization bills. While these initiatives provide temporary relief to the people, they fail to address the root causes of economic stagnation.

Instead of prioritizing band-aid solutions, policymakers should focus on long-term economic strategies, such as improving health policies, enhancing public infrastructure, and implementing investment-friendly policies. If local leaders shift their attention from image-building efforts to creating sustainable economic policies, Cagayan de Oro could experience lasting progress that benefits all sectors of society.

Proposed Tax Breaks and Incentives

To make this vision a reality, the city government can explore the following tax incentives:

• Corporate Income Tax Exemption: Offer a 3-5 year income tax holiday for newly established IT and FinTech companies, similar to incentives provided in special economic zones.
• Reduced Business Permit Fees: Lowering startup costs will encourage more entrepreneurs to set up businesses in CDO.
• Tax Deductions for Training and Development: Companies investing in employee upskilling should receive deductions or subsidies to ensure a competent local workforce.
• Property Tax Discounts: Tech firms setting up offices within designated IT parks or innovation zones should receive property tax incentives.
• Support for Startups: Provide grants or tax credits for homegrown startups to encourage innovation and sustainability.

Conclusion

Cagayan de Oro has the potential to be a leading economic powerhouse in Mindanao. By implementing tax breaks and incentives for IT and FinTech businesses, the city can attract major investments, create high-value jobs, and foster an innovation-driven economy. Policymakers, business leaders, and stakeholders must work together to craft policies that will position CDO as a smart city ready for the digital future. If executed effectively, this move will not only boost the local economy but also establish Cagayan de Oro as a key player in the Philippines’ growing tech landscape.