Collabing, the key to digital-driven economic recovery

During a virtual event earlier this week, National Economic and Development Authority (NEDA) Secretary Karl Kendrick Chua talked about the need for government and private sector collaboration to improve the country’s economic recovery prospects.

Secretary Chua said that in the remaining months of his term, he would focus on pushing three top priorities for public-private cooperation, the top one being to continue the country’s recovery from the COVID-19 pandemic. 

He said that he thinks the key to economic recovery is a change in mindset from a pandemic mindset to a more endemic one, where we can balance the crucial needs of the people to protect themselves from COVID-19 and to protect themselves from all other diseases problems of hunger, joblessness, and the need for income to support also other development objectives.

I agree with Secretary Chua, public-private cooperation is vital to changing our mindset as much as it is to addressing Filipinos’ socio-economic concerns. I agree with him because much of what he is saying is actually supported by our institute’s data.

In particular, surveys by top polling firms Social Weather Stations and Pulse Asia, both commissioned by Stratbase ADR Institute, highlight that Filipinos believe that the private sector plays a crucial role in the country’s socio-economic improvements. 

In October, the Social Weather Stations found that at least eight in 10 Filipinos believed that the growth of the Philippine economy would be accelerated if the government collaborated more actively with the private sector.

The same survey also found that many Filipinos think the private sector can help boost the economy by creating jobs (65%), expanding livelihood opportunities (57%), and helping lift the lives of Filipinos out of poverty (46%).

Similar survey questions were rerun two months later with Pulse Asia Research, with similar outcomes. In this later survey, the majority of respondents again thought the private sector could help create jobs (58%), lift Filipinos out of poverty (57%), and expand livelihood opportunities (52%).

In fact, 81% of the respondents agreed that the government should engage the private sector to invest in public infrastructures such as roads, bridges, and airports to save government funds for COVID-19 response.

In addition to calling for more public-private collaboration, the NEDA also proposed 10-point policy agenda to accelerate the country’s recovery. The 10 points included healthcare, mobility, and education. But one agenda point, in particular, caught my interest— digital transformation. 

Obviously, the pandemic has accelerated the role of technology and digital tools in our everyday and economic lives, and this shift is reflected in the government’s data and independent global reports.

For instance, according to Bangko Sentral ng Pilipinas data, the volume of digital payments shot up to 20% in 2020 from only 14% in 2019. In a report from Google, Temasek, and Bain & Co., the Philippines was identified as the fastest-growing internet economy in Southeast Asia. While Department of Trade and Industry also sees the country’s digital economy to continue growing and expects e-commerce revenue to hit 5.5% of GDP and e-commerce businesses to hit one million within the year.

However, in addition to the pandemic-catalyzed digital shift, NEDA’s highlighting of digital transformation also caught my eye since it’s a sector that is much in need of public-private collaboration. 

This is especially true for connectivity infrastructures, such as cell towers, fiber optic, and undersea cables. Here in the Philippines, private telecommunications companies develop practically all the infrastructure that brings the internet to our homes and mobile devices. They invest billions every year in expanding and upgrading infrastructure. In other countries, the governments themselves invest aggressively in infrastructure, not just in backbone networks but up to last-mile connectivity for rural areas.

With about 40% of Filipinos still do not have access to the internet, we now see the economic potential that public-private collaboration in the digital space can unlock. 

One way public-private collaboration can help in this space is by government and telecommunications companies coordinating closely on where government should invest in parallel with the ongoing expansion and upgrades of the private telcos to increase internet speeds to meet surging consumer demand. If the government allocates enough resources to fully implement the National Broadband Plan, telcos can channel more resources to expanding last-mile wired and wireless broadband services.

Furthermore, public-private collaboration can also help identify policy bottlenecks that slow digital transformation. For instance, lengthy and inconsistent permitting processes that have long been the bane of the industry were addressed with the enforcement of the DICT-led inter-agency directive that drastically cut permitting requirements and timelines. More responsive policies could be put in place to address these sorts of on-the-ground issues permanently.

The government could also fully implement policies such as the Philippine Innovation Act, improving the country’s performance in global innovation indexes, attracting more private sector investment, and encouraging more research, development, and adaptation of new technologies.

In a previous event Secretary Chua said that innovation is not simply about cutting-edge technology; instead, at its core, innovation is about working together to find the best solutions to our most pressing problems.

Indeed, fully embracing public-private collaboration may be an innovation in itself and perhaps demand a paradigm shift of its own. However, by now, the pandemic should have already given us enough reason to realize that working together on digital transformation will be an all-sector enabler for faster economic recovery.

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