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The use of digital technologies could help the Philippines overcome the effects of the 2019 coronavirus disease (Covid-19) pandemic and accelerate economic recovery, but efforts must be made to improve adoption and connectivity, according to a report by the World Bank and the National Economic Development Authority. (NEDA) said.
Titled “A Better Normal Under Covid-19: Digitizing the Philippine Economy Now,” the report says that the use of digital technologies such as digital payments, e-commerce, telemedicine and online education is increasing in the Philippines and has helped individuals, businesses and The government stands up to social distancing measures, ensures business continuity, and provides public services during the Covid-19 pandemic.
“Since the onset of the pandemic in March, we have witnessed increased momentum of digitization in the Philippines,” the report’s lead author and World Bank economist Kevin Chua said at a briefing on Monday.
“In the world of shocks, digitization will help the Philippines to become efficient and competitive. Digital technology can improve coordination and automate processes to promote efficiency and reduce costs. It can also replace existing factors of production. Digitization will also help the Philippines support business continuity and resilience, ”he added.
Obstacles to digital adoption
However, Chua cited that there are several obstacles to digital adoption.
At $ 6.30 per month for 500 megabits of prepaid, phone-based mobile broadband, the Philippines has the fourth highest cost after Singapore, Brunei and Malaysia.
Chua said that at 16.76 megabits per second (Mbps), the country’s mobile broadband speed is also much lower than the global average of 32.01 Mbps. In the region, the average mobile download speed is third ( 3G) and fourth generation is 13.26 Mbps compared to just 7 Mbps in the Philippines.
Broadband adoption is also low in the country, as 3G remains dominant in the country that Chua described as “the slowest and lowest version of mobile technology.”
“Filipinos connect to the Internet primarily through their phones and not fixed and stable mobile broadband,” he said.
The report highlighted that the use of digital technologies in the country is still below its potential and digital adoption in general lags behind many regional neighbors. The “digital divide” between those who have and do not have internet leads to unequal access to social services and economic opportunities.
The report, which cites data from the World Bank’s Digital Adoption Index, said that while retail contributes about 20 percent of the country’s gross domestic product, e-commerce facilitates only about 0.5 percent of sales. sales.
He added that in 2018, about 40 percent of the Philippines’ total population of 103 million and about 57 percent of the country’s 23 million households did not have internet access.
The report also identifies low transaction account ownership, the lack of a national identification (ID) system, a fledgling payment infrastructure, and the perceived risk of digital transactions as a constraint to the wider adoption of digital payments. .
According to the report, the “digital divide” between those who have and do not have internet leads to unequal access to social services and economic opportunities.
Top priorities for increased digital adoption
Chua said the top priorities for increasing digital adoption in the country include updating digital infrastructure, promoting digital payments, improving the logistics system and fostering an enabling business environment.
He said that efforts to improve digital infrastructure in the Philippines are hampered by a lack of competition, as well as restrictions on investment in telecommunications markets, according to the report.
These restrictions include the designation of public telecommunications services, which limits foreign ownership and places a cap on the rate of return.
Chua said that the approval of the Public Service Law amendment and the Open Access Law Project, and executive broadcasts on the sharing of common infrastructure and spectrum management policy should be done to promote competition and address the environment. regulatory.
He said that implementing the Philippines’ national identification system, requiring the use of digital payments, and expanding the digital signature option among government agencies would also help foster broader participation in digital payments.
“In this digital transformation of the whole society, the government can take the initiative by accelerating electronic governance projects, such as the foundational identification system and the digitization of its processes and procedures, which will help promote greater inclusion, improve efficiency and improve safety . Furthermore, the government can play an active role in promoting policies that bridge the digital divide and create a more conducive business environment for the digital economy to flourish, ”he said.
NEDA Undersecretary Rosemarie Edillon, for her part, said that the use of digital technology and digital transformation have become important for Filipinos to face the current crisis.
“We have to quickly catch up on capital investments, operating expenses and research and development to support the digital economy. We need to lower the barriers to entry of new companies and the entry of businesses and also remove the limitations on entrepreneurship by continually fostering competition and improving the regulatory environment, ”he said.
“We need to work with the private sector in the development of ICT (information and communication technology) infrastructure and the support of digital platforms to expand opportunities for small businesses and MSMEs (micro, small and medium-sized enterprises) to access to financing, marketing and distribution networks. We also need a policy framework that maximizes the benefits generated by the digital economy and is secure enough for Filipinos to place their trust in digital transactions, ”she added.
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