The COVID-19 pandemic has accelerated the shift to a digital economy and the Philippines should take advantage of it, according to the chief of an international bank during a recent webinar organised by the Philippine Institute for Development Studies (PIDS) and the bank.
The bank opined that the world might see an economic boom that will fuel the digital economy as countries transition to the so-called ‘new normal’ once the pandemic starts to recede. Part of this ‘new normal’ is seeing major platform players fight over market share and move more of their market focus.
They believe that there is going to be more flexibility in terms of where digital jobs can be located. The Philippines already has an advantage with 1.2 million BPO (business process outsourcing) workers and a strong start-up ecosystem where there is already a good digital talent pool. This, the bank added, presents an opportunity for the country, saying that now is the time to position the Philippines to be an attractive place for start-ups to relocate or for those who want to have flexibility.
At present, major businesses in the country have already shifted to digital platforms to reach their target market. These businesses are saying that COVID-19 opened opportunities for its stores to go online as people are already doing it. One company said that it was able to come up with several innovations, including online grocery and payment applications, cash-recycling automated teller machines in select branches, and an upcoming initiative connecting farmers to buyers via online shopping.
Meanwhile, as the digital economy continues to grow in the country, the bank felt there is a need to address the existing digital divide by building infrastructure and providing better internet access so that the digital economy can benefit more people at the bottom of the pyramid and not cause more inequality. Unfortunately, this is something that platform companies are not doing directly. They are still relying on public investment to build the pipes to get people connected.
Accordingly, as per reports from the World Bank and the National Economic and Development Authority (NEDA), 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.
The report says 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 use of digital technologies in the Philippines, however, is still below its potential, with the country’s digital adoption generally trailing behind many regional neighbours. The digital divide between those with and without the internet leads to unequal access to social services and life-changing economic opportunities.
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.
According to the World Bank, increasing digital adoption by the government, businesses, and citizens are 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.
