Philippines digital economy: Left behind

Last Tuesday I had the opportunity to hear the views of the top executives of some of the country’s leading tech disruptors on the current state of our preparedness to take full advantage of the benefits of the digital economy. This was a follow-up of the conference recently organized by the Carlos P. Romulo Foundation on digital future during which the imperative to address the broadband infrastructure requirements was one of the major conclusions.

What I heard was frankly quite dismaying. While they were all able to function within the confines of the current state of our digital infrastructure, it comes at significant costs and at less than the intended quality of service. More industries are increasing their reliance on the internet, but connectivity issues hamper advancement.

A good illustration is the current banking system. ATMs depend on reliable connectivity and the frequent outages mean outright disruption of service, or of banks deploying backup systems and bulking up their help desks, all of which contribute to higher operating costs.  ATMs themselves are inefficient and costly to maintain – as does handling cash and checks. 

Imagine a world where cash or checks are only used in specific circumstances. There are cities in the world where you can get by without cash—just a connected mobile device is needed to make transactions, fueling the digital economy.

Sweden is already practically cashless and Australia can also be by 2021. They allow payments and invoices to be processed instantly increasing cash-flow from consumers to business across the economy. In China, street musicians have specialized Quick Response (QR) codes which enable passers-by to donate by scanning a printed picture through messaging apps such as WeChat without reaching for their wallet. In fact, most consumer transactions in China are effected through mobile payments and a personal QR code has become one’s valuable asset. Indeed, there are already e-payment including mobile payments providers in the Philippines, but infrastructure and connectivity issues have also contributed to its slow uptake by consumers. The BSP has been very supportive in encouraging a “cash-lite economy” through a regulatory framework –  National Retail Payment System (NRPS) – for online payment platforms, but I understand its implementation is being hampered by conflicting regulations from non-BSP agencies.

NBP: Digong initiative

In his first State of the Nation Address in July 2016, President Duterte directed the newly created DICT to develop a National Broadband Plan (NBP) to accelerate the deployment of fiber optics cables and wireless technologies to improve internet speed. He cited the intended results of free public WiFi access, as well as the improvement of the country’s overall internet speed. “WiFi access shall be provided at no charge in selected public places,” Duterte said. He adds, “O ‘di ba? Happy lahat.”

The NBP was finally released to the public in October 2017 after a period of public comment on a draft made public on March 17, 2017.

The plan is an impressive document and hits all the right buttons. The vision is to have “open, pervasive, inclusive, affordable and trusted internet access.” The plan states that in line with this vision, the government will set policy, regulatory, and infostructural interventions to spur investments and competition in the telecommunications and ICT industry. Significantly, the NBP will lay down approaches in engaging the public and private stakeholders in implementing the NBP.

Implementation and commitment needed

I don’t think we Filipinos – or more specifically our government planners – are lacking in creativity or insular in their thinking, so the plan takes into account all the best practices or exemplars out there. But it is in implementation and commitment that we fail. It has been more than a year and a half since its release and to date the only significant accomplishment was the selection of a third telco. But that doesn’t even begin to address the problem – in fact it can exacerbate it by drawing attention away from the immediate issues plaguing the industry that has created impediments to more investments and raised costs which are ultimately passed on to the consumers. Waiting for the third telco to begin deployment will probably not happen until the end of the Duterte presidency. And once in operation, they will face the same challenges as the incumbents. They are a for profit enterprise in the first place.

The NBP calls for engaging the public and the private sector, but we are still waiting to hear from DICT or whichever agency is tasked to undertake this. Sure, there have been national ICT summits organized by the DICT, but this is more aimed at showcasing various government information and communication technology (ICT). I am sure DICT is in dialogue with the industry, but it lacks an institutional mechanism with clout that a joint public/private commission (or any institution with a finite life like a task force) can provide. This is similar to the approach taken by our ASEAN neighbors to develop their digital economy roadmap.

Potential Duterte legacy

Only the President can provide the why of aggressively implementing a digital economy roadmap. The digital economy fits right into his avowed goal of national and regional economic development and social inclusion. It can accelerate productivity and global competitiveness; facilitate sustainable economic growth; create high skill high-income employment; improve social equity; and, improve access to government services: healthcare, education; and improve gender equality outcomes and social inclusiveness.

He need not look far for inspiration. Davao City has been named among the 100 supercities in the list of global advisory firm Tholons, which looks into innovation, start-up ecosystem, and digital transformation as components to define the Services Globalization Country Index that cites the city government’s digital transformation specifically in public safety, disaster resiliency, quality of life and infrastructure.

In her welcome speech at the 2018 National ICT Summit, Mayor Sara Duterte-Carpio recognized the ICT as an integral tool in good governance, adding that it serves as an access point to economic expansion. “Let this forum elevate us to the realm of e-governance development in both public and private sectors towards combatting system corruption, dissolving digital divide and promoting global competitiveness,” she said.

The President should take the cue and make this a centerpiece of his legacy – as his counterparts in the region have, including Malaysia’s Mahathir and India’s Mohdi. He should appoint a qualified DICT head as soon as possible, vest him with the proper mandate, involve the stakeholders – business and civil society – in the process and most important, to put his personal stamp – given the lack of coordination among overlapping agencies – in the effort to bring the country to the digital age. By doing so, he would have achieved his vision of sustainable and equitable economic growth, social inclusion, and enriching people’s lives.