Commentary: Why digital transformation needs the private sector’s spirit

The Stratbase ADR Institute recently launched a quarterly virtual roundtable discussion series highlighting the business sector's role in addressing economic insecurity brought upon by the pandemic. Kicked-off last month, the inaugural session brought together thought leaders from the country's most prominent business groups to talk about how the private sector is a reliable partner for economic recovery.

Not surprisingly, one of the key points discussed during the event was the country's digital transformation. Stratbase ADR Institute Chairman Amb. Albert del Rosario, in his remarks, said, "public and private institutions can no longer cling to their old ways and must now step up their digital transformation to deliver their services and products efficiently and extensively. This reality is palpably evident in the surging volume of online transactions and demand for broadband services."

Del Rosario further discussed how cloud-based technologies could help Business-to-Consumer and Business-to-Business transactions by ensuring the sustainability of supply chains and distribution networks. And how a “digitally revitalized ecosystem” can streamline public sector processes and improve public services. 

"The governments of neighboring economies and other developing nations have long seen this and have been investing heavily in building strategic digital infrastructure to harness the benefits of a digitally enabled and connected population," Del Rosario added.

As alluded by Del Rosario, unlike in countries like Malaysia, Thailand and Vietnam, where governments have spent billions on improving digital infrastructure to connect their citizens, here in the Philippines, that is simply not the case. 

The best example is perhaps the National Broadband Plan of the Department of Information and Communications Technology (DICT). The DICT had initially requested 18 billion pesos in funding to build essential connective infrastructure in underserved and unserved areas; however, Congress allocated less than a tenth of that amount when the 2021 National Budget was finalized.

The truth is, here in the Philippines, digital transformation is driven by the private sector. In terms of digital infrastructure, with the government's underfunded National Broadband Plan, the local telecommunications sector has no choice but to lead the development of the country's mobile and fixed line networks. 

According to an IMD Global Competitiveness ranking, the country is currently already top-10 globally in terms of private sector-led investments in this area, and by the looks of it, the private sector has no plans of slowing down.

That said, in addition to the continued development of our digital infrastructure, there are more than a few other reasons why the private sector's role in our digital transformation is so vital.

One reason, as highlighted by Stratbase ADR Institute President Prof. Dindo Manhit, is that "the private sector can help address inequality, ensure livelihood by creating jobs. We have seen the importance of digital technology, so digital acceleration is key, and we need to reduce the digital divide."

According to the Department of Trade and Industry, Small and Medium Enterprises (SMEs) alone employ 60% of the Philippines' workforce. Though many have had to close or scale back operations, many Filipino entrepreneurs were able to sustain their operations by shifting to digital platforms. 

The demand for e-commerce has really grown over the past year. Under a perpetual state of lockdown, 87.8% of Filipinos said they have visited an online retail site and 80.2% said they've purchased a product online in the past year. 

The private sector's agility to make this abrupt shift and to up-skill along the way has become essential to meeting Filipino’s demand for e-commerce and to ensuring that our economy continues to function during this pandemic.  

As Del Rosario pointed out, another reason why the private sector plays such a crucial role, is that digital transformation is a "realm wherein nimbleness, innovation, expertise, and mobility of resources is needed, attributes that are native to the developmental spirit of the private sector."

Indeed, the private sector is often recognized for attracting the brightest minds and incubating innovative ideas. It brings to mind the country's biggest 5G Hackathon competition organized by the De La Salle University's Animo Labs in partnership with Globe Telecom. 

The ongoing competition brings together students and professionals to focus on the use of 5G technology in three key areas: education, health care and livelihood to improve health response, address learning gaps, and enhance ways of working; retail, manufacturing, logistics and e-commerce, through the use of AI and IoT to improve services; and disaster risk management, sustainability, asset and resource management, and transportation to solve urban planning and disaster risks through real-time information. 

Initiatives such as this, that bring together bright and innovative minds and reward them for exploring the multi-sectoral use of technology to improve the Philippine economy and society, is indeed a reflection of the private sectors developmental spirit.

Finally, the private sector plays a critical role in our digital transformation because of the collaborative approach that it brings to the table. 

According to Ayala Corp. Chairman Jaime Augusto Zobel de Ayala, to further demonstrate that it is a reliable partner for economic recovery, the private sector can come up with common measurable commitments to increase the Philippines' competitiveness by supporting SMEs digital enablement, data security, entrepreneurship, education and job creation. 

Furthermore, he said that the private sector's ingenuity, energy and performance management discipline could also help augment the government's massive machinery and co-develop new ways to support Filipinos. 

“I sincerely believe that the private sector is a force for growth and a force for good.  And if we continue to put our collective resources and determination to task, we will be able to force multiply the growth and the good that we contribute to nation-building.,” Zobel de Ayala said.

The private sector’s innovative spirit, efficiency, nimbleness, and openness to collaboration make it a reliable partner, not only for enabling the Philippines’ digital transformation, but our economic recovery as well.
 

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