World Bank: Digital Technologies will help the Philippines recover

According to a report released by the World Bank and the National Economic and Development Authority (NEDA), the rapid adoption of digital technologies can help the Philippines overcome tremendously. Firstly, in navigating the impact of the Covid-19 pandemic. Secondly, digital technology can assist the Philippines in recovery from the crisis. Lastly, it can also help it achieve its vision of becoming a middle-class society free of poverty.

The report is titled “A Better Normal Under Covid-19: Digitalizing the Philippine Economy Now”. The report says that the use of digital technologies such as digital payments, e-commerce, telemedicine, and online education, is rising in the Philippines. It has helped individuals, businesses. It has also helped the government cope with social distancing measures and ensure business continuity. Lastly, it has allowed the government to deliver public services during the pandemic.

NEDA says Digital Transformation will help

“This pandemic has caused substantial disruptions in the domestic economy. This disruption is due to community restrictions limiting the movement of people and reduced business operations nationwide. We are now living with the new normal. The use of digital technology and digital transformation has become important for Filipinos in coping with the present crisis. It allows us to move towards economic recovery. Finally, it is getting us back on track towards our long-term aspirations,” NEDA Undersecretary Rosemarie G. Edillon said.

The use of digital technologies in the Philippines, however, is still below its potential. The country’s digital adoption is generally trailing behind many regional neighbours. The “digital divide” between those with and without internet leads to unequal access to social services and life-changing economic opportunities.

“Internet connectivity – the foundation of the digital economy – is limited in rural areas. Even if they are available, services are relatively expensive and of weak quality,” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand. “Upgrading digital infrastructure all over the country will introduce fundamental changes. These can improve social service delivery, enhance resilience against shocks, and create more economic opportunities for all Filipinos.”

Slower speeds in the Philippines

Where internet services are available, Filipino consumers experience slow download speeds. At 16.76 megabytes 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 seven (7) Mbps in the Philippines.

Efforts to enhance digital infrastructure in the Philippines are hindered by a lack of competition. There are also restrictions on investment in the telecommunications markets, according to the report. These restrictions include the public utility designation of telecommunications, which limits foreign ownership. It also places a cap on the rate of return.

Key Issues for the Government

The report also identifies a few other issues. They begin with the low transaction account ownership. Secondly, the lack of a national ID. Thirdly, a nascent payment infrastructure. Lastly, the perceived risk of digital transactions as restricting the broader adoption of digital payments.

Encouraging broader participation in digital payments is best supported by public agencies going digital themselves.  There are two key entry points identified in the report. Firstly, the expansion of the use of e-signatures among government agencies. Secondly, 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 are critical. It will help the Philippines adapt to the post-COVID-19 world. Additionally, it will allow it 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 e-governance projects such as the foundational identification system and the digitization of its processes and procedures will help promote greater inclusion, improve efficiency, and enhance security,” said Chua.  “Moreover, the government can take an active role in fostering policies that reduce the digital divide. This will create a more conducive business environment for the digital economy to flourish.”

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, said the report.

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