Philippines may miss out on expected boom in ICT services

By Jenina P. Ibañez
Reporter

THE Philippines may miss out on an expected global boom in the information and communications technology (ICT) sector amid the coronavirus pandemic.

The National ICT Confederation of the Philippines (NICP) President Michael Tiu Lim said in a recent phone interview that many small businesses, especially those in the countryside, are unable to implement work-from-home (WFH)schemes due to a lack of adequate internet infrastructure.

The United Nations Conference on Trade and Development (UNCTAD) in a report last week said that while the pandemic dealt a “severe blow” to the services sector, particularly in tourism, hospitality, and retail, the ICT services sector will see windfall opportunities.

However, rapid growth in ICT services such as teleworking, video streaming, gaming, and e-commerce will mostly be seen in developed countries, the UNCTAD said.

UNCTAD International Trade Director Pamala Coke-Hamilton said the boom in the ICT sector may not compensate for the loss of income from personal service sectors like tourism, especially in developing countries.

NICP’s Mr. Lim said there’s been growth in some ICT companies, such as food delivery apps.

“But on the other side of the coin, there are companies that are service oriented… who are hardest hit,” he said, citing tourism and restaurant mobile applications that have seen reduced demand.

“So it’s a double-edged sword. There are certain sectors in the ICT industry that are doing well, and the others will not be doing well. In the overall balance, I think companies that don’t do well outweigh the companies that do well, unfortunately.”

Mr. Lim said that there are opportunities for ICT companies as more businesses start working from home and make use of their services, noting an increase in demand for online meeting apps.

“But the question is, how ready are our SMEs (small- and medium-sized enterprises) to go to work from home? There are a lot of problems right now with work from home, especially in the countryside. And the main issue is not only the policies of the companies but even the physical connectivity,” he said, adding that many businesses are still geared towards social, in-person activities.

“Some employees don’t even have proper 4G or 3G connectivity at home to enable them to connect to their work.”

TOURISM SLUMP
The Philippine tourism sector continues to suffer as global travel grinds to a near halt.

Tourism Congress of the Philippines (TCP) President Jose C. Clemente III said in a phone interview on Thursday that the industry expects 18-24 months before a return to normal.

“The last ones that will recover (in the tourism industry), based on the sub-sectors, will be tour operators, travel agents, and the MICE (meetings, incentives, conferences, exhibitions) industry,” he said, explaining that those sub-sectors attract mass gatherings.

He said airlines will have to wait and see what travel demand will be like after borders are reopened, noting that tourism will probably not return to normal until a COVID-19 vaccine is developed.

Mr. Clemente noted that part of the hotel industry, especially in Metro Manila, remains in operation due to the demand from outsourcing companies housing their workers and the repatriated overseas Filipino workers.

But he said the industry cannot yet quantify the effect of the pandemic on revenue projections, noting that some companies have already started cutting costs and laying off workers.

“It’s hard to say because a lot of this is foregone travel…which we cannot really quantify anymore.”

The best-case scenario, Mr. Clemente said, would involve a return to a semblance of normalcy after a year. The worst-case scenario — “some companies that were there pre-COVID will not be there after all of this.”

FUTURE OF SERVICES
Mr. Lim said small businesses must put business continuity plans in place as WFH measures become the new norm.

“Improving the ICT infrastructure, yes that is definitely needed. Work-from-home strategies in the countryside are not as effective as here in Metro Manila because certain areas where employees live don’t have decent coverage.”

Mr. Clemente sent recommendations to the tourism department, detailing in a position paper that the industry needs the expedited provision of low or interest-free loans, lower rental rates for offices and event venues, waived participation fees for trade shows, and funding for marketing to the domestic market “as soon as practicable.”

In the medium term, TCP is calling for the waiving of corporate and income taxes for 2020 among accredited tourism stakeholders and incentives such as tax credits, among others.

The Department of Tourism (DoT) in a mobile message said it has incorporated suggestions from the Tourism Congress in its recovery program, which waives participation fees to trade shows, includes a “beefed up” marketing campaign, and develops post-pandemic health protocols.

“(The TCP) has been continually apprised of the efforts undertaken by the Philippine government to mitigate the impact of this global health concern on the country’s tourism stakeholders, such as the expedited provision of low or interest-free loans to DOT-accredited stakeholders, capacity enhancement programs, alternative livelihood training for cooperatives and representation to various government offices on matters relevant to the travel and hospitality sector.”

BusinessWorld reached out to the Department of Information and Communications Technology, but has not yet received a response.