The Covid-19 pandemic has accelerated the process of digital transformation that is fundamentally upending traditional business models. The exponential growth in digital transactions placed greater demand on network infrastructure that needed to be strengthened and enhanced. Never before has the country seen an increased reliance on online services than during the long lockdown period, especially in Metro Manila.
The pandemic unleashed the value of connectivity, which made the digital economy explode. The “new normal” of increased online business activities transformed the world of our entrepreneurs into an infinite marketplace where conducting business has become more convenient and efficient for both sellers and buyers. However, in the field of online education, there were a lot more misses than hits, which showed our school system was not prepared for the shift.
The surge in online business transactions prompted the Bureau of Internal Revenue to issue Revenue Memorandum Circular 60-2020, dubbed “Obligations of Persons Conducting Business Transactions Through any Forms of Electronic Media and Notice to Unregistered Businesses.” The Circular mandated all business owners who are engaged in an online business platform in any form to register their businesses with the BIR and pay taxes on their sales.
To find out how information and communication technology can boost the country’s economic development and innovation, Google Philippines commissioned AlphaBeta, a global strategy and economic advisory firm, to conduct a country study. Fraser Thompson, AlphaBeta founder and managing director, said “digital transformation can unlock up to P5 trillion worth of economic value in the Philippines by 2030, but the country needs to address roadblocks to fully take advantage of the opportunities.” (See, PHL digital economy may ‘unlock’ P5 trillion by 2030, in the BusinessMirror, October 19, 2021).
The study said nearly a quarter of the forecast amount, or P1.22 trillion, will be driven by the consumer, retail and hospitality sectors. 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.
The report said 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 seen contributing P245.4 billion and P204.6 billion, respectively. “Of that total digital opportunity, 69 percent or P3.5 trillion will be driven by technologies that can help mitigate the impacts of Covid-19,” Thompson said.
The AlphaBeta report 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. Thompson 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 some provinces.
The Philippines lags behind its Asean peers on equipping its current and future workforce with technology skills, Thompson said, stressing theneed to improve the digital skills training and education, in addition to accelerating the country’s digital adoption and innovation.
Trade Secretary Ramon Lopez said the AlphaBeta report can help in the country’s bid to boost its 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 said.
The AlphaBeta report exposed a vital issue we can’t afford to overlook—the existence of a digital divide that contributes to unequal access to services that are delivered via the Internet. For example, if “only 32 percent of the households in the National Capital Region have Internet access,” what do we do with the 68 percent that can’t afford to buy gadgets and pay for connectivity? We have a complicated problem, and we can’t accelerate our push towards a digital economy if we leave millions of our countrymen behind. This is a big challenge for the next administration.