Philippines improves in green finance, digitalization index

MANILA, Philippines — The Philippines saw improvements in its economic readiness on green finance and digitalization, but the domestic ecosystem needs an upgrade as the country continues to lag behind in the region.

Based on the Asia House Annual Outlook 2023 released by the independent think tank and advisory service, the Philippines improved seven notches in the economic readiness index for both green finance and digitalization.

The index covered Asia 8, namely the Philippines, China, Japan, India, Indonesia, Vietnam, Malaysia, and Thailand.

For green finance, the Philippines scored 48 out of the perfect score of 100, an improvement from 41 in 2022. It saw a boost across all factors of financial resilience, financial development, ease of capital measure, and equitable ecosystem.

Despite the increase, the Philippines still lagged in the eight countries, ranking second to the last before India, which scored 47.

In terms of digitalization, the country’s score also went up seven notches to 47 from 40, with improvements in digital facilitation of trade, domestic digital depth, and digital knowledge transfer.

However, its score on expanding industrialization slipped six notches to 26. Still, the Philippines ranked fourth in Asia 8 in digitalization.

“The Philippines will continue to see economic growth, surpassing many of its regional neighbors. Policymakers should use the resilience of the economy to improve the domestic ecosystem for green finance and digitalization, given the lagging readings in our indices for both,” Asia House said.

“Prioritizing economic readiness to tackle both climate change and digitalization will be crucial for the growth transition in 2023 and beyond,” it said.

Asia House noted that the Philippines needs to grow its local green bonds and encourage banks to extend green loans or finance sustainable investments.

It should be noted that the majority of the sustainable bonds issued by Philippine companies are in foreign currencies, with the local currency sustainable bonds accounting for only 4.5 percent of the corporate bond market.

As to digitalization, Asia House maintained that e-commerce is slated to play an important role in the country’s economic development.

The country’s internet economy is growing and expected to reach $35 billion by 2025, with e-commerce taking the lion’s share.

The Department of Trade and Industry already launched an e-commerce roadmap to improve the digital infrastructure and the contribution of e-commerce to the Philippine economy.

But Asia House warned that the country faces several barriers to digital transformation, including low adoption by medium-sized and smaller businesses, a lack of awareness of existing digital policies, and gaps in digital access and digital skills.