Services sector
EUROPE BEAT - Henry J. Schumacher (The Freeman) - February 6, 2015 - 12:00am

Within ASEAN, the services sector accounts for 40 - 70% of each economy's GDP. Education, the upgrading of local skills, infusion of foreign skills (which will lead to mutual technology / knowledge transfer), and overall productivity increases are the cornerstone of a competitive economy.

It is the services sector which can tap new areas of growth and development - especially in creative industries, moving from raw creativity to real innovation.

It is unfortunate that the Creative Industries are undervalued and underestimated in the Philippines. At the moment, the contribution to GDP may only be 5% but that can easily change; the contribution to jobs is 11% (No. 1 out of 45 countries). Many know that there are more than 70,000 Filipinos on 'Elance' offering their creative services, making Pesos 3.1 billion in 2013; everybody knows that a Filipino in the creative industries who has had to leave the country to live elsewhere. What's less known, and unfortunately that includes government offices that could support this import industry, is the sheer size of the domestic market that nurtures such exportable talent. It is high time that the roadmap for this sector be finished, identifying strengths and weaknesses, target markets and strategies to gain access, and outline support needed. Among the leading six ASEAN economies, the Philippines has a great chance to take dominant positions in business process management (we are already No.1 in voice in the world) and in various creative sectors, from animation to game development to digital content and digital designs.

The Tourism Industry is another service sector in ASEAN in which the Philippines could play a major role. Total contribution to GDP is 11%, and 11% total employment. 4.68 million tourists visited the Philippines from abroad in 2013; the target for 2014 stands at 6.8 million. Compared to other ASEAN countries, these numbers are still low for a number of reasons: lack of infrastructure (airports and connectivity in general), lack of competitiveness in hotel rates, lack of international tourism organizations promoting the Philippines. It is good to see that DOT Secretary Jimenez is addressing these issues, convincing everybody that making tourism succeed in this country is in the national interest.

The telecoms industry works best for the economies which it serves if well structured. The desired telecoms industry is well reflected in legislation in most ASEAN economies, but the reality is often different. All operators should be on a level playing field with arms'-length licensing from a single NRA, a wholesale market with mandate access pricing, fair interconnect and competition regulation. The protection of incumbent operators and national champions inevitably hurts users and the wider economy which the industry serves.

ICT as an engine for innovative growth. The vast differences in the state of development and effective use of ICTs across ASEAN are shown in the Networked Readiness Index (see Figure below). But integration forces are reflected in these regional positions and also the aims of the ASEAN ICT Masterplan:

•The telecoms sector needs the right structure; fair and equal treatment, ideally all operators under the same kind of license conditions from a single regulator where foreign investment is encouraged and foreign ownership not limited.

•Modify laws and rules to support the free movement of skilled people and invest more in education and training in ICT areas.

•Modify rules and practices to meet the three dimensions of the national regulator: independent of government direction; independent of any operator; integrity.

•Changes in ITU Regulations to allow for intrusion, censorship etcare not conducive to continuation of the positive contributions of the Internet.

•Data management / data protection legal regimes are needed (in the Philippines we are almost there - the Data Privacy Act is in place, but the Data Privacy Commission has not been created, neither have the IRR; the Cybercrime Prevention Act is 'hanging' in the Supreme Court, illustrating the challenge of potential over-reach: balancing the importance of protection from intrusion with maintaining certain freedoms) ; there are benefits having a regional model which also provides a workable regime for cross border flows.


Networked Readiness Index (2012) published by WEF & INSEAD (Global IT Report. Of 142 countries, the ranking is as follows:


Brunei   54           Myanmar            NA

Cambodia            108         Philippines          86

Indonesia            80           Singapore            7

Laos       NA          Thailand               77

Malaysia              29           Vietnam                               83

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