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Invest in our digital potential

"Government investments in strategic telecommunications infrastructure will promote an economic revival."

 

The safety restrictions on children and seniors in hotels, resorts and restaurants were a real holiday bummer. My family—and I am sure millions of families—had to adjust by doing online reunions. Thanks to technology, we managed to virtually connect and exchange Christmas and New Year greetings with loved ones and friends.

Come to think of it, I am able to reach a record number of friends and relatives in my Facebook and other messaging accounts compared to my more analog years. All my transactions are done online. I venture out only for medical tests, healthy walks, and a few meal dates with my wife.

This is the new reality that many experts predict will permanently transform human life. The big question is: Are we ready for a highly digital world economy?

According to the IMD World Digital Competitiveness Ranking (WDCR) 2020, which measures the capacity and readiness of 63 economies to adopt and explore digital technologies as a key driver for economic transformation in business, government and wider society, the Philippines is on the bottom 10 falling two ranks to 57th. In the Asia-Pacific, the report places the Philippines second to the last out of 14 countries, less than 7 points over Mongolia.

Until we reach herd immunity, work-from-home and online transactions will be the default mode of working for many businesses and will greatly increase demand and pressure for more investments in upgrading digital infrastructure and smart mobile technologies to support productivity. With 3.8 million people unemployed (Philippine Statistics Authority’s October 2020 numbers) many have resorted to e-commerce for income. Schools shifting to e-Education platforms, and health services are going online. All these need dependable broadband services.

The lead author of the World Bank report “A Better Normal Under Covid-19: Digitalizing the Philippine Economy Now,” economist Kevin Chua, said that increasing digital adoption by the government, businesses, and citizens is critical, not only to help the Philippines adapt to the post-COVID-19 world, but also to achieve its vision of becoming a society free of poverty by 2040.

Chua stated that, the government can take the lead in a society-wide digital transformation by accelerating “e-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 enhance security.”

Leading by example is one thing but the digital infrastructure needed to deliver nationwide access to broadband services requires huge investments fostered in a conducive and enabling policy environment.

For example, the unprecedented $900 billion coronavirus relief package signed recently by outgoing US President Donald Trump allocates $7 billion to help millions of affected individuals pay for broadband services during the pandemic. $3.2 billion is for emergency broadband benefits for low-income Americans. Eligible households will also be given a $50-$75 monthly discount from broadband internet services to address the digital divide in underserved communities.

ASEAN governments that beat us in the digital competitiveness rankings are aggressively investing. Malaysia is boosting broadband speed and coverage budgeted at $233 million, Thailand is connecting thousands of villages spending $343 million, and Vietnam invested in a 23,000-kilometer submarine cable system worth $820 million.

At the level of the developed economies, China’s reported investment in the past four years was at $289 billion, Japan’s annual spend averages US$162 billion, while South Korea public internet backbone will have more upgrades at $24 billion. Note that these countries already have coverage and bandwidth speeds that we are still dreaming of.

In the Philippines, investments in telecommunications infrastructure are being driven by the two telcos—Globe Telecom and Smart Communications. Fitch Ratings projected that they would accelerate capital expenditures by 20 to 25 percent in the next years and rated the Philippines as having one of the highest capex/revenue ratios in the Asia-Pacific region. The two telco giants’ investments up to 2019 have likewise earned a place for them in the World Bank’s top ten ranking.

The Department of Information and Communications proposed P18 billion to implement the National Broadband Plan. This would have been a great start, but according to the recently released 2021 General Appropriations Act, the capital outlay allocated for this critical program is only less than P1.5 billion, a paltry sum compared to our ASEAN neighbors. This is a missed opportunity to address the 50 thousand telco tower backlog and operationalize an existing nationwide fiber optic backbone that we desperately need to improve and expand broadband services.

It is clear that our recovery from this crisis depends on how quickly we can transform our human resource potential into a highly competitive digital force ready to engage the world of e-commerce and innovative cloud solutions. Government investments in strategic telecommunications infrastructure will promote an economic revival that will unleash the country’s digital potential to become a key player in a digitized global economy.

Topics: IMD World Digital Competitiveness Ranking , global economy , Philippine Statistics Authority , World Bank , COVID-19 , digital world economy
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