THE digital economy of the Philippines may reach P5 trillion by 2030 but it needs to address roadblocks to fully take advantage of the opportunities, a global strategy and economic advisory firm said.
Fraser Thompson, AlphaBeta founder and managing director, said in a virtual briefing on Tuesday that shifting to digital is a must to make the country resilient not only during the pandemic, but after as well, as it seeks economic recovery.
“Digital transformation can unlock up to P5 trillion worth of economic value in the Philippines by 2030,” he said. This is equivalent to 27 percent of the country’s gross domestic products (GDP) last year.
Nearly a quarter of this forecast, or P1.22 trillion, will be driven by the consumer, retail and hospitality sectors, he noted.
This is followed by the education and training sector; agriculture and food; and the government with P607.1 billion, P576.7 billion and 550.2 billion, respectively.
Contributions from the health sector, transport services and financial services are pegged at P416.1 billion, P364.3 billion and P355.7 billion, respectively. Resources and infrastructure, meanwhile, are expected to contribute P245.4 billion and P204.6 billion, respectively.
“Of that total digital opportunity, 69 percent or P3.5 trillion is driven by technologies that can help mitigate the impacts of Covid-19,” Thompson shared.
Broken down, bulk or P1.78 trillion of the P3.5 trillion are for technologies facilitating customer interactions, transactions and marketing through digital platforms. These include digital retail sales and marketing channels, online food and beverage delivery platforms, e-career centers and digital platforms, online retraining programs and telehealth applications.
This is followed by tools needed in enforcing hybrid work arrangements as part of a business continuity plan with P1.33 trillion. Examples of these are remote patient monitoring; automation and artificial intelligence (AI) customer service in hotels; and automation and robotics in the manufacturing sector.
The remainder, P334.2 billion, is for digitizing supply chains amid the prolonged global delays. Some of the technology applications for this are Internet of Things-enabled supply chain management in the agriculture and manufacturing sectors; and smart ports.
Google Philippines commissioned AlphaBeta to conduct the study.
The report also revealed that Google’s products and services in the Philippines translate to P363.4 billion in annual benefits to businesses and P214.5 billion in annual benefits to consumers.
“By enabling businesses to unlock new revenue streams and expand their businesses through the use of Google Ads, AdSense, and YouTube, Google indirectly supports over 110,000 jobs in the Philippines,” the study added.
Challenges
The AlphaBeta official said the Philippines has low digital adoption, in addition to lack of awareness about the digitalization on the part of the micro, small and medium enterprises (MSMEs).
He noted that over 50 percent of the companies in a 2020 survey did not have any web presence. This, as only 26 percent of the MSMEs have knowledge about the digitalization programs.
Apart from these, he pointed out that only 32 percent of the households in the National Capital Region have Internet access. The figure is lower at 5 percent in predominantly rural regions like Bicol province, he said.
“The Philippines lags its neighbors on equipping skills for the future work force,” he added.
As such, Thompson stressed the need to improve the digital skills training and education, in addition to accelerating the digital adoption and innovation.
“Digital adoption is crucial for the Philippines to unlock new opportunities and gain resilience in the post-pandemic future,” Google Philippines Country Director Bernadette Nacario said.
“By providing businesses access to global markets, equipping businesses with digital capabilities to conduct electronic transactions, and facilitating remote work, technology can help businesses manage the long-term economic implications of the Covid-19 pandemic and while staying resilient against future similar events,” she added.
Meanwhile, Thompson added it is also crucial to promote digital trade opportunities.
DTI’s part
The Department of Trade and Industry (DTI), for its part, said the report can help the country’s bid to boost digital capabilities.
“However, to fully unlock this potential, we need to overcome certain barriers such as the challenges surrounding our digital adoption and digital infrastructure,” he admitted.
As such, Lopez said the DTI is always pushing for partnerships between the public and private sectors.
Since last year, the trade official said the DTI and Google have trained over 46,000 small business owners and employees to inform them about digital transformation.
“The road ahead of us may be steep, but this pandemic only made us realize that no obstacles can stop us with our collective effort and shared mission,” he said.
The DTI earlier this year said it aims to boost the contribution of the e-commerce industry to P1.2 trillion by 2022, which is equivalent to 5.5 percent of the country’s GDP.
Image courtesy of Nonie Reyes