ICT growth hanging in the balance amid elections – IDC

Chrisee Dela Paz
ICT growth hanging in the balance amid elections – IDC
Elections in the Philippines are both a boon and a bane for the country's information and communications technology sector

MANILA, Philippines – There’s only a week left before the 2016 elections, and the Philippines’ information and communications technology (ICT) growth is hanging in the balance, research firm International Data Corporation (IDC) said.

Elections in the Philippines have been a boon and a bane for the country’s ICT sector, providing opportunities to vendors during the campaign period but putting major projects in limbo due to a wait-and-see attitude. 

IDC said that while there is an election ban for major projects, ICT vendors and service providers can make the most of campaign-related expenditures. (READ: #PHVote: Businesses winning, losing in 2016 elections)

The research firm said elections normally drive end-users, particularly the enterprise sector, to a wait-and-see attitude toward spending – with some forced to downgrade or scrap any major ICT-related expenditure due to uncertainty.

In the past two presidential elections, IDC noted that the country’s ICT spending experiences differed.

During the time of former president Gloria Macapagal Arroyo in 2004, IDC said ICT spending grew at 12%. But in the following years, it reached a plateau of 5% to 7%, with 2008 seeing a high of 15% growth.

In 2010, President Benigno Aquino III put a stop to most government projects to implement various checks and balances, resulting to an ICT spending growth of only 5%.

After a similar 5%–9% growth in the following two years, IDC said 2013 saw 27% growth on the back of government-led projects and fiscal reforms. This then led to improvements in the country’s international ratings and rankings.

“This year, IDC sees that the total ICT spending growth in the country will hover between 8% and 10%,” IDC Philippines country head Jubert Alberto said.

Barring any major wildcard events such as natural disasters, a worldwide recession, or a political revolution, Alberto said IDC believes the Philippines’ ICT sector is headed towards a positive outlook at the end of 2016 and beyond. 

“Although there may be short-term uncertainties, the country’s momentum towards ICT adoption is well on its upward track, brought on by the rise of millennials, disruptive technologies, the impact of the business process outsourcing (BPO) industry, demands from small and medium-sized enterprises (SMEs), and the impact of next-wave cities,” Alberto added.

IDC, however, cautions that such an ICT growth “may be dwarfed by short-sighted and drastic strategies” that look only at 6 to 8 months after the elections. 

Ill-planned strategies can make the economy even more vulnerable to external shocks, and “rocking the boat” too much with radical policies and questionable methods may result to instability and hurt domestic viability and investor confidence, said the research firm.

With these, IDC underscores the following key areas which the next administration should focus on to boost the ICT sector further:

Prioritize Department of Information and Communications Technology (DICT)

REVOLUTION. ICT is among the most profitable divisions of the Philippine economy. It is projected to contribute $50 billion revenue in 2016. Photo by Rappler

Sean Paul Agapito, associate market analyst at IDC, said the establishment of DICT is important if the government wants to secure ICT growth in the coming years.

He added that ICT is among the most profitable divisions of the Philippine economy. It is projected to contribute $50 billion revenue in 2016.

“If created, the DICT will be the primary government entity to plan, promote, and help develop the country’s ICT sector and address issues concerning Internet connectivity, communications services, data privacy, cybersecurity, and cybercrime – functions that are currently divided among several disparate agencies,” Agapito said.

Develop large-scale ICT initiatives

Compared with other Association of Southeast Asian Nations (ASEAN) countries, IDC said there are no large-scale initiatives that could greatly impact the Philippines’ ICT market. 

“However, iGovPhil and Medium-Term Information & Communications Technology Harmonization Initiative (MITHI) are good ways to start,” said Alon Anthony Rejano, associate market analyst at IDC.

According to Rejano, what the government can do is to help local ICT vendors gain a strong foothold in local, regional, and global scenes as well as support ICT adoption in non-IT industries such as resources and agriculture.

“However, this should be done gradually. What’s important is that there is a collaboration between the public sector and service providers,” Rejano added.

Address PH’s connectivity problem

It is high time for the government to enforce regulations on speeding up the Internet connection in the Philippines, Rejano said, adding the need to increase fines for telcos which do not provide the promised service.

He also said that the government should welcome foreign players in the Philippine telco market to spur competition. (READ: New Internet speed minimum throwback to ’90s?)

“This will ultimately give consumers better services at lower cost. But in the same vein, the government should endeavor to shorten the process of starting a business in the country and cut red tape surrounding the establishment of telco infrastructures, such as cell sites and fiber builds,” Rejano added.

Take cybersecurity more seriously

WAKE-UP CALL. The Commission on Elections (Comelec) data breach should be a wake-up call for the incoming government. Photo by Rappler

The massive Commission on Elections (Comelec) data breach, which saw sensitive information of millions of Filipino voters leaked online, highlights how the Philippines is severely lacking in terms of cybersecurity, IDC’s Agapito said.

“This should be a wake-up call to the incoming government that it should look at this matter in earnest,” he added.

“The looming threat of cyberattacks could potentially jeopardize the Philippine’s e-government initiatives, such as iGovPhil and MITHI, especially those that involve the use or submission of personal/sensitive data.”

IDC pointed out that cyberattacks have negative implications on the suitability of the country as an ICT hub.

Provide greater support for Smart City initiatives

IDC highlighted the need for greater support from the next administration on Smart City initiatives in the country.

“Although it’s good to see a number of Smart City initiatives, such as Cauayan City’s electronic government application system (eGAPS), most of the projects in other areas are still stuck at pilot testing stage,” IDC Philippines market analyst Jerome Dominguez said.

Dominguez added that a key roadblock to implementation is budget constraint on the part of the local government.

“Greater budget should be allocated by the national government in funding Smart City initiatives to help these projects come to fruition,” he said. “Healthy collaboration among the local government, solution providers, and other government agencies is also key in driving these projects forward.”

Improve peace and order

IDC said the next president should work on addressing the peace and order situation in the Philippines.

With the continuing unrest in parts of Mindanao, IDC said the negative perception that the country is unsafe also persists.

“Mindanao is a fast-growing region in terms of population, which is projected to grow faster than the national average… Foreign investors are already eyeing Mindanao as the next area on which to focus their investments, making the resolution to the conflict highly critical,” the research firm said.

Put ICT at the forefront of the agenda

IDC said it strongly encourages the next administration to put ICT usage and adoption at the forefront of its operations.

“Optimized system performance and digitization of records in the education sector as well as eHealth innovations in the Philippines bolster ICT usage, as local hospitals continue to adopt electronic medical record/electronic health record, as well as mobile health applications,” it added.

Deep-dive adoption of cloud-based services for various government transactions is important, according to IDC.

“Digital transformation in the Philippine government does not only improve the delivery of government services but also democratizes the public’s access to national affairs. Greater ICT adoption by the next administration will help the country keep its growth momentum moving forward,” Alberto said. – Rappler.com

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