Philippine economy

Digital reforms can boost virus-hit Philippine economy – World Bank, NEDA

Aika Rey
The World Bank points out that the Philippines needs to upgrade its digital infrastructure to improve delivery of social services and revive the economy

Harnessing digital technologies would help the Philippines bounce back faster from the effects of the coronavirus pandemic, a report by the World Bank found.

Launched on Monday, October 5, the report laid out immediate to long-term recommendations on improving the country’s digital infrastructure, widening the online payments base, lowering logistics costs, and making businesses more competitive.

The report was done in coordination with the National Economic and Development Authority (NEDA).

Ndiamé Diop, World Bank country director for Brunei, Malaysia, Thailand, and the Philippines, said the digital divide in the Philippines remains large, with at least 60% of Filipino households having limited internet access.

The report noted that the Philippines needs to boost internet connectivity, as it is a requirement for a digital economy.

“Internet connectivity – the foundation of the digital economy – is limited in rural areas, and where they are available, services are relatively expensive and of weak quality,” said Diop.

“Upgrading digital infrastructure all over the country will introduce fundamental changes that can improve social service delivery, enhance resilience against shocks, and create more economic opportunities for all Filipinos,” he added.

The report noted that the cost of internet in the Philippines is still high and speeds offered are relatively slower than that of its Southeast Asian neighbors.

The World Bank cited a 2019 Ookla report, which tagged the Philippines as a “speed lagger,” as the country’s average mobile broadband speed was only a little over half of the global average of 32.01 megabits per second (Mbps) at 16.76 Mbps.

The report pointed out that efforts to improve the digital infrastructure in the country are hindered by lack of competition, as well as the cap on foreign ownerships given that telecommunications is considered a public utility.

According to the report, now is the perfect time to introduce digital reforms in a bid to achieve a poverty-free society under the government’s Ambisyon Natin 2040 dream, piggybacking on the gains made as the country was forced to shift to digital during the pandemic.

“As we are now living with the new normal, the use of digital technology and digital transformation have become important for Filipinos in coping with the present crisis, moving towards economic recovery, and getting us back on track towards our long-term aspirations,” said NEDA Undersecretary Rosemarie Edillon.

Closing the digital divide

The Department of Information and Communications Technology (DICT) said on Monday that a higher budget for 2021 would help it achieve its targets for the first phase of the National Broadband Program (NBP).

The NBP is the blueprint for building and enhancing existing ICT infrastructure to make internet accessible in underserved areas and more affordable.

The first phase of the NBP includes firing up stations around the country, linked through the fiber optic backbone of the National Grid Corporation of the Philippines from the station in Baler, Aurora.

The DICT is asking Congress for a P17-billion budget for the NBP, much higher than the allocation of P296.5 million approved by the budget department.

The World Bank, meanwhile, said more participation from the private sector could help improve the digital divide by bringing in the capital as well as technical needs.

“This is not just the government…. We need to invite more private sector participation into the industry,” said World Bank economist Kevin Chua.

The World Bank is also pushing for the amendment of the 83-year-old Public Service Act, particularly in lifting the restrictions on foreign ownership of telcos.

Chua also suggested the removal of congressional franchise requirements for telcos, and instead have regulatory bodies issue licenses.

‘Lead by example’

In adopting digital reforms, the World Bank recommended that the government lead by example, through fast-tracking e-governance projects such as the national ID system and moving business registration online.

Edillon said pre-registration for the national ID will start on October 12. The government is targeting to have 9 million pre-registered – of that, at least 5 million should have their biometrics captured by the end of 2020.

The Department of Trade and Industry, meanwhile, said there was a “surge” in business registrations when online processing started.

Finance Secretary Carlos Dominguez III, in a separate webinar on Monday, urged local government units (LGUs) to embrace digital technologies to improve revenue generation.

“As we anticipate a new economy in the post-pandemic era, we strongly encourage our LGUs to adopt digital technologies to efficiently deliver frontline services,” he told local officials.

Dominguez said business registration and the collection of taxes through digital means would make revenue generation more efficient.

“Investments in information technology will not only make for more responsive governance, it will improve revenue generation of our LGUs,” he added. – Rappler.com

Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.