Playing technology catch-up

In my last column, I cited a recent report from Google, Temasek and Bain & Company that found that the Philippines—with 12 million new digital consumers since the start of the pandemic and a projected $40 billion valuation by 2025—is the fastest-growing internet economy in Southeast Asia. 

The report was, however, double-edged. It also revealed that, despite the country’s rapid growth, the Philippines’ digital economy also has the lowest penetration in the region, with only 68% of internet users consuming digital services. So, while the Philippines’ rapidly expanding digital economy is promising, broadening technology adoption remains a critical factor in realizing its digital economic potential.

Now it just so happens that the results of a survey commissioned by our institute, Stratbase ADRi, were released earlier this week. The findings emphasize the critical link we are drawing between technology and the economy.

The nationwide survey conducted by the Social Weather Stations in October of this year asked respondents if they agreed with the statement that “The benefits of digital technology such as strong cell phone signals, fast e-banking, and social media can greatly help create jobs and businesses.” 

According to the survey results, 89% or approximately nine out of ten Filipinos agreed that digital technology helps create jobs and businesses. Only 3% of the respondents disagreed.

Frankly, this sentiment should come as no surprise. After all, since the start of the COVID-19 pandemic in 2020, much of the country has been under community quarantine. The government’s generous definition of “community” aside, the nationwide reach of the lockdowns has had catastrophic economic consequences for many Filipino families and businesses.

Fortunately, because of the internet, COVID-19 did not bring the economy to a complete halt. Most industries shifted to work-from-home setups and turned to e-commerce to stay connected with their customers. 39% of digital merchants in the Philippines said that they believed they would not have made it through the pandemic if not for digital platforms.

But with the country’s digital economy lagging in the region, it is clear that the Philippines has much catching up to do in terms of broadening access to digital technology and encouraging participation in the digital economy. For instance, in terms of internet penetration, the number of Filipino households with access to the internet is anywhere between 60% to as low as 44%. This is a gap that must be bridged.

Playing technology catch-up, however, is complex and involves a lot of moving parts. Central to this process are the roles of industries, universities, and the government.

When it comes to the role of industries in driving technology adoption, industries must continue to remain innovative and continue investing in technology development. Here in the Philippines, we see this happening, for instance, in the telecommunications sector. In addition to aggressively updating and expanding its networks, they are also heavily investing and expanding their footprint in fintech, healthcare, entertainment, ad tech, e-commerce, manpower, IT services and venture capital. 

By continuously evolving their services through technology, industries also effectively create demand for universities to conduct innovative research and development and produce a higher-skilled workforce. This close interaction between industries and universities ultimately leads to a more collaborative environment where the academe and industry can leverage each other’s strengths to develop and adopt technological innovations.

Government, of course, also plays a vital role in the country’s technology catch-up efforts. For instance, as the country’s largest employer, increasing the use of technology by the government in its day-to-day functioning and the delivery of public services will have a cascading effect on broader technology adoption across the country. 

It is also essential that the government create a policy environment that enables the development of innovation and does not stifle the growth of newly emerged technologies and business processes. Moreover, it is also imperative that the government’s policies prioritize programs and projects that technology catch-up. 

In terms of broadening technology adoption and the penetration of the internet economy, public investment into connecting underserved and unserved Filipinos to the world wide web must be a top priority. 

The survey commissioned by our institute also found that some 92% of Filipinos agreed with the statement that the “Government should build, upgrade and extensively expand the country’s digital infrastructure to improve speed, reliability, and access to the internet nationwide.” 

The results of our institute’s two survey questions show that Filipinos recognize the economic benefits of technology and believe that government plays a central role in ensuring that these benefits are within their reach.

For this reason, the government must respond to the clamor of its citizens. In addition to setting up more government-funded cell towers and working with the Telecommunications industry stakeholder to reform and speed up the permit process for cell tower development, the government must also prioritize the activation of a national fiber optic backbone. A vital component of the DICT’s national broadband plan, the program would allow even more Filipinos to participate in the internet economy and reap the benefits of innovation.

The Philippines’ internet economy is full of potential, but the country is still playing technology catch-up, and continuous innovation is vital to realizing these projected digital economic benefits. However, innovation isn’t a standalone entity; it’s an ecosystem. And the reality is that this ecosystem needs the effort of industry, university, and government to work.
 

Paco Pangalangan is the executive director of think tank Stratbase ADR Institute.