A digital readiness blueprint for the Philippines
FILIPINO WORLDVIEW - Roberto R. Romulo (The Philippine Star) - November 9, 2018 - 12:00am

A whole-of-government approach, with the participation of the private sector, is the way to get the Philippines ready for the coming ‘digital tsunami’ that will transform our lives. That is the major conclusion of the conference on digital future organized by the Carlos P. Romulo Foundation which was held on Wednesday. Two hundred participants and 30 speakers were in attendance. DOST Secretary Fortunato de la Peña and Secretary Ernesto Pernia of NEDA presented the government perspective. Unfortunately, that was the extent of senior government participation.  Here are some of the important takeaways from the conference. 

First, there was total agreement among participants that digital technology will benefit the Philippine economy, its society and the lives of individuals in many profound ways that are still continuously evolving. AI, IoT, Big Data, Cloud Computing and Block Chain will drive what one of our speakers called as the ‘digital tsunami,’ referring to its transformative impact on all aspects of human endeavor. If managed properly in the Philippine context, digitization can contribute to achieving a more inclusive and sustainable society and enable us to bypass legacy barriers to growth. Attaining the promise of the digital future, however, will not happen as a matter of course. It will require deliberate and coordinated steps to get there.  

Second, the country needs to address the digital infrastructure gap. Infrastructure is the foundation of a digital society, which without the right level will make it difficult for countries to advance in their digital journey. While there have been significant strides made in availability and reliability, large swaths of our population still have no access to the internet.

One deflating statistic is the fact that 74 percent of our secondary schools do not have internet access. Affordability – particularly fixed broadband – and speed are still of major concern.

Security is a growing concern particularly as more and more financial transactions go online.  Our policies and regulations, which were designed for the analog era, will need to be upgraded to the digital age in order to lower operator costs, to remove barriers to greater investments, foster competition, facilitate more efficient utilization of digital resources, and spur innovation and technology adoption.

Third, while digital technology can accelerate and differentiate a country’s ability to achieve progress, lack of adequate digital skills can limit its potential to digitize and grow economically. Transitioning to the jobs of the future presents a major challenge in dealing with the disruptions it will bring. On the one hand there is the challenge of managing jobs displacement and, on the other, of reorienting and upgrading our legacy education and training resources in order to produce future ready workforce. This will require not only significant investments, but also a retooling in teaching methods and closer collaboration with the business community to ensure effective matching of training with skills requirement.    

Fourth, the pace of technology development is taking place at quantum speed that it requires an agile legal, regulatory, and policy ecosystem to ensure that it will foster rather than hinder technology adoption, attract and not repel new market participants whether home grown or foreign, encourage  and not discourage new business models, and spur, not block innovative entrepreneurship. These actions include facilitating and liberalizing investments; addressing ease of doing business concerns including red tape, rule of law, logistics, among others; and providing a nurturing environment for start-ups to develop, and to encourage existing MSME’s to utilize digital technology.

New rule-making processes will have to be developed, particularly in dealing with the disruption arising from fast developing new business models. These include such issues as in taxation, fiduciary supervision and labor rights. Applying analog rules on digital business like Uber, which owns no cars and employ drivers or to fintechs that have no tellers, would lead to the unintended consequence of disrupting the disrupters.     

None of these issues are being heard for the first time. Nor has government stood pat. There are initiatives underway to address these issues. But they are only beginning to scratch the surface. There are ongoing conversations and no doubt many more to come. The purpose of the conference was to contribute to that conversation.

I think the key message is that getting to the digital economy nirvana given its multifaceted nature, would require a whole-of-government approach and not a piecemeal effort; and definitely not without the active collaboration of the business sector and the various community stakeholders.  In effect a whole-of-society approach. 

We clamored in the past for a DICT. It is here now, but we see that its mandate is either too broad as to be ineffective in one sense, or too narrow on the other given its preoccupation with the 3rd telco. I think we can learn from the experience of our Singaporean friends, as well as others in ASEAN – Malaysia and Indonesia in particular. In their experience, an independent commission led by government working hand-in-glove with the private sector.  Perhaps we can consider creating a similar commission tasked with firstly, preparing a checklist of what needs to be done to make the country digital ready, and secondly, from that developing a blueprint on how we get to full digital readiness. It will probably require a number of legislative actions to effect regulatory reforms. It may require some institutional reform and even creation of new ones. That commission, in turn, will report to a Cabinet level council, ideally chaired by NEDA given what I mentioned earlier about the digital economy’s multi-faceted dimension.        

The other reason why it should be NEDA is the fact that we believe that we should change our treatment of the digital economy as a subsector of the entire economy. Everything now is part of the digital economy or has the potential to be.

What is disheartening is that these messages were being directed to government, but there was a dearth of participation from the concerned agencies despite repeated appeals on my part. The private sector is very much engaged in this endeavor to prepare the country for the digital future, but they cannot do it alone. The government must step up to create the enabling environment or we risk being left behind.    

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