Heeding our digital competitive rank

The Switzerland-based International Institute for Management Development (IMD) has reported that the Philippines dropped 10 notches in another of its world rankings, this time on digital competitiveness. This shouldn’t come as a surprise.

In the 2018 World Digital Competitive Rankings (WDCR), its second, the Philippines ended 56th out of 63 countries, dropping 10 places from 2017’s 46th spot. Worse, among Asia-Pacific countries, the Philippines finished 12th among 14, one place lower from last year’s 11th place standing.

In an earlier report in May, the IMD came out with its 2018 World Competitiveness Rankings (WCR) where the Philippines was shown to have fallen by nine rungs, from 41st to 50th.

The IMD uses for both rankings both hard and soft data largely culled by its Philippine partner, the Asian Institute of Management. While the WCR elicited disbelief from the current administration’s economic team, the WDCR has earned almost no reaction.

This could very well be a sign that our government puts little importance in knowing how well the country is managing its digital transformation, or perhaps that it just thinks that digital competitiveness is simply about finding the third telecommunications company that would “end” the current duopoly of Smart and Globe.

Preparing for a digital world

Unfortunately, digital competitiveness is so much more than the duopoly and complaints of slow internet speed and expensive rates. To dismiss the challenges that banking industry faces moving forward to a digital age, for example, is akin to not caring about having our ATMs attacked by scammers.

The Philippines must put more effort in knowing how our government, industries and people are using digital technologies to transform our everyday practices. This way, we can sleep better at night knowing that we can be more productive while at the same time safe from cyberattacks.

Whether we like it or not, we are moving into a more digital world. Our local governments and many government agencies have started computerization of records and transactions with the objective of providing better service to their citizens and increasing productivity.

For business, digital technologies are becoming more indispensable in improving productivity and the bottom line. The rise of artificial intelligence is opening even more opportunities that should enhance competitiveness, especially against products made by more developed economies.

We are seeing more online stores that offer goods and services where payment is made by keying in your credit or debit card number. We now have a relatively mature system of remittance payments, where an overseas Filipino can transfer money almost real time to a family member in the Philippines.

The importance of the Philippines fully embracing digital transformation is now already becoming a matter of life or death, especially when we take note of how trade barriers are continuously being eroded and how global competition is becoming more intense.

Low level of digital knowledge

Being 8th to the last of 63 countries in the digital competitiveness ranking tells us we have a lot of work to do.

The WDCR is divided into three areas: knowledge, technology and future readiness. We showed the weakest rankings in the first two areas.

Knowledge measures the knowhow necessary to discover, understand and build new technologies. Sub-factors under knowledge are the availability of talent in a country, the level and quality of education and training, and the production of scientific knowledge.

With regards talent, the WDCR puts management of cities at a 58th rank. This should be a wake-up call for the local chief executive to give more importance to the digital transformation in the city.

On education and training, lowest ranked were public expenditure on education as well as pupil-teacher ratio in tertiary education. Not surprisingly, total expenditure on R&D as well as total R&D personnel per capita similarly got low rankings.

Many graduates of public junior high school in cities have limited exposure in sciences and technology learning, a malady that should be addressed by the city administration together with the Department of Education and the Technical Education and Skills Development Authority.

Poor appreciation of technology

The second factor measured our technology environment, specifically how supportive the regulatory environment is, how advanced the technological framework is, and whether our economy provides capital to invest in technology.

Starting a business and enforcing contracts in the tech industry were ranked 61st, a reflection of the overall weakness of the regulatory environment. This is a perennial problem, one that telcos have been complaining about when getting permits to build cell sites. Something must be done quickly.

The regulatory framework also showed weakness in the development and approval of technology, scientific research legislation, and handling of intellectual property rights. The rankings were 54, 52 and 54, respectively. No wonder we have few inventions.

In ranking the country’s technological framework, alarm bells were rang on the quality of our communications technology (62), wireless broadband (57) and internet bandwidth speed (61).

Our telcos have been boasting how much they have improved their services, as well as how much money they have been putting back to the business by way of introducing new technologies. This competitive ranking should help them think about benchmarking against other countries, not just what they were before.

The allocation of capital for technology experienced a severe drop from 29th to 43rd largely due to a decline in perceptions about the effectiveness of banking and financial services (down 16 spots to 31st) and the availability of venture capital (down 12 places to 48th).

We have to do something before it’s too late.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us at www.facebook.com and follow us at www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.