The National Economic and Development Authority (NEDA) said the rapid adoption of digital technologies can help the Philippines overcome the impact of the Covid-19 pandemic, recover from the crisis, and achieve its vision of becoming a middle-class society free of poverty.
NEDA undersecretary Rosemarie Edillon said pandemic has caused substantial disruptions in the domestic economy as community restrictions have limited movement of people and reduced business operations nationwide.
“As we are now living with the new normal, the use of digital technology and digital transformation have become important for Filipinos in coping with the present crisis, moving towards economic recovery, and getting us back on track towards our long-term aspirations,” said Edillon.
A report released by NEDA and the World Bank titled, “A Better Normal Under Covid-19: Digitalizing the Philippine Economy,” said that the use of digital technologies such as digital payments, e-commerce, telemedicine, and online education, is rising in the Philippines and has helped individuals, businesses, and the government cope with social distancing measures, ensure business continuity, and deliver public services during the pandemic.
The report noted that use of digital technologies in the Philippines is still below its potential with the country’s digital adoption generally trailing behind many regional neighbors. The “digital divide” between those with and without internet leads to unequal access to social services and life-changing economic opportunities.
Ndiame Diop, World Bank country director for Brunei, Malaysia, the Philippines, and Thailand, noted that Internet connectivity – the foundation of the digital economy – is limited in rural areas, and where they are available, services are relatively expensive and of weak quality.
“Upgrading digital infrastructure all over the country will introduce fundamental changes that can improve social service delivery, enhance resilience against shocks, and create more economic opportunities for all Filipinos,” said Diop.
Where Internet services are available, Filipino consumers experience slow download speeds. At 16.76 megabits per second (Mbps), the Philippines’s mobile broadband speed is much lower than the global average of 32.01 Mbps. In the region, the 3G/4G mobile average download speed stands at 13.26 Mbps compared to only 7 Mbps in the Philippines.
Efforts to enhance digital infrastructure in the Philippines are hindered by a lack of competition as well as restrictions on investment in the telecommunications markets, according to the report.
These restrictions include the public utility designation of telecommunications, which limits foreign ownership and places a cap on the rate of return.
The report also identifies the low transaction account ownership, the lack of a national ID, nascent payment infrastructure, and the perceived risk of digital transactions as restricting the wider adoption of digital payments.
Encouraging wider participation on digital payments is best supported by public agencies going digital themselves. Two key entry points identified in the report are expanding the use of e-signatures among government agencies and mandating the acceptance of e-invoices and e-receipts in government transactions.
According to World Bank economist Kevin Chua, lead author of the report, increasing digital adoption by the government, businesses, and citizens is critical, not only to help the Philippines adapt to the post-Covid-19 world, but also to achieve its vision of becoming a society free of poverty by 2040.
“In this society-wide digital transformation, the government can take the lead by speeding up e-governance projects, such as the foundational identification system and the digitization of its processes and procedures, which will help promote greater inclusion, improve efficiency, and enhance security,” said Chua.
“The Philippine government can take an active role in fostering policies that reduce the digital divide and create a more conducive business environment for the digital economy to flourish,” Chua added.
Fostering innovation and improving the business environment in the country will be critical in supporting the digital economy. Recent government efforts to speed up the rollout of mobile network infrastructure through a common tower policy are steps towards the right direction, the report added.
