Harnessing digital to fast-track recovery

Paco A. Pangalangan, Executive Director, Stratbase ADR Institute

No doubt, this Christmas season will be less jolly for many Filipino families that are reeling from the economic hit the country has taken due to the COVID-19 pandemic.

According to the Social Weather Stations, almost half of Filipino families consider themselves poor. SWS’ recently release survey on self-rated poverty showed that at least 48% of Filipino families rated themselves poor, 36% said they were borderline poor and only 16% felt they were not poor.

These results should come as no surprise as the Philippine economy is among the world’s worst hit by this pandemic. In the second quarter of 2020, our economy entered a technical recession, contracting by a record-low of 16.9%. By the end of 2020, the International Monetary Fund predicts that the Philippine economy will have fallen by an average of at least 8.3%.

And the economic scars aren’t expected to go away anytime soon. According to a comparison made by The Economist that factors in gross domestic product growth, economic imbalances, labor market vulnerability, health-related belief, economic structure and policy offsets, the Philippines is the most vulnerable country to COVID-19’s long-term effects.

For many businesses in the Philippines, the pandemic has led to closing-up shop or laying off employees. Based on an Asian Development Bank Study, over 70% of micro, small, and medium enterprises in the Philippines were forced to temporarily close due to the outbreak.

For many businesses, keeping the lights on has meant adapting to their customers’ changing behavior and needs. Adopting digital technologies is one way they have done that.

During the Stratbase ADR Institute’s recently held Pilipinas Conference, Ayala Corp. Chairman Jaime Augusto Zobel de Ayala said, “We realized tremendous number of products and services will have to ride on a digital infrastructure.”

In a world heavily reliant on digital technologies, having the right digital infrastructure is key to the country’s economic recovery. Beyond internet connectivity, with the country sorely in need of attracting investments, having reliable digital infrastructure will be essential to attracting foreign investments and keeping up with global value chains.

Take the Philippine business process outsourcing industry, for instance. Long considered one of the country’s sunshine industries, it employs over a million Filipinos and, as a sector, is one of the largest contributors to the country’s GDP. However, the pandemic has forced BPOs to adjust to new working practices, with many asking employees to work from home.

If BPOs are expected to stay open and if further investments into the sector are expected to come in, then work-from-home setups need to be dependable. In terms of digital infrastructure, this means that we will need not only reliable internet in our central business districts but also in residential areas outside of these traditional business hubs.

A bright spot in our otherwise gloomy outlook is the improvements that have been made in terms of improving digital infrastructure and services in the country. The third quarter Mobile Network Experience Report from Opensignal, an independent mobile analytics firm, showed that the Philippines saw significant internet service improvements over the last ten quarters in terms of improving video experience, download speed experience, latency experience and 4G availability.

It showed Globe Telecom’s mobile data average download speeds reportedly improved by 80.9% from 4.7 Mbps to 8.5 Mbps. While Mobile 4G availability rose by 19.5 percentage points from 63.7% to 83.3%, nearing global average of 86.3%.

Opensignal’s December 2020 report stated that “both Smart and Globe have engineered their networks to the point that our users can rely on mobile connections even during the busiest times of the day for most tasks.

During a recent public briefing with presidential spokesperson Harry Roque, Smart Communications shared that it invested P260 billion for service improvements over the last five years. Globe Telecom also announced that it would spend P70 billion to build 2,000 cell sites next year.

The National Telecommunications Commission also confirmed that the country’s telco services had improved significantly over the past months, partly due to the government addressing the delays in the permitting process for the construction of new cell sites. All this even led Roque to issuing a rare public thank you to the two telcos for the improvements in their service.

This now brings us back to a point I’ve harped on before: our economic recovery relies on our capacity to adapt and go digital, but its success is in the nexus of public-private collaboration.

In the same Pilipinas Conference Session, Edgar Chua, chairman of Makati Business Club, said, “Business activities themselves support national development, thru production or provision of food, water, housing, power, telco, transport, education, banking and finance, healthcare and other services. Yes, business makes money from these, but they are essential to national development, to improving standards of living.”

“Government should provide the enabling environment and the needed regulation to ensure laws and contracts are obeyed, both those that restrict businesses and those that protect them,” he added.

Rizalina Mantaring, former president and current chair of the Committee on National Issues, Management Association of the Philippines, also said, “We will see more partnership with government because the magnitude of the issues we see today requires a whole of society approach.”

Our road to recovery is long, and while digital infrastructure may pave the way, public-private collaboration is the fuel that will thrust us forward.

This article was originally published in philstar.com.

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