Philippines remains a starter in digital transformation

By Arjay L. Balinbin, Senior Reporter

THE Philippines ranked 59^th out of 79 countries in the 2020 Global Connectivity Index (GCI) report by Chinese technology firm Huawei Technologies Co.,Ltd., suggesting that the country remains a “starter” when it comes to digital transformation.

The Philippines had an average score of 38 out of 120 based on the four pillars used by the index, namely: levels of supply of information and communications technology (ICT) products and services, demand for connectivity, connectivity experience, and potential for future development of the digital economy.

The ranking of the Philippines was unchanged, although its latest GCI score was one point higher than 37 in the 2019 index report.

Under the four pillars used by the report, which analyzed the changes of each country’s GCI score since 2015, 40 indicators were used to track the impact of ICT on the country’s economy, digital competitiveness, and future growth. The indicators include ICT laws, mobile broadband subscriptions, e-government services, and ICT influencing new business models.

Four technology enablers were also determined, such as broadband, cloud, artificial intelligence (AI), and the Internet of Things (IoT). The Philippines got its highest score in the availability of broadband technology (45), three points higher than its score in 2019. Its scores lowered three points for cloud (33), and increased three points each for AI (27) and IoT (27).

The index grouped nations into three clusters: starters (ranks 58 to 79), adopters (21 to 57) , and frontrunners (1 to 20).

The Philippines and Indonesia (58^th) were the only Southeast Asian countries in the list of starters, with scores of 38 and 39, respectively. Ethiopia, which scored 23, was the worst of them.

Among the Southeast Asian adopters were Malaysia (34^th), Thailand (46^th), and Vietnam (55^th), with scores of 52, 46, and 41, respectively.

Singapore, which scored 81, was the second frontrunner after the United States whose GCI score was 87.

“The digital transformation of economic sectors will help economies develop ‘higher-order’ productivity to spur economic recovery and future competitiveness,” the report said.

It proposed five key stages for the digital transformation of economic sectors, namely: task efficiency, function efficiency, system efficiency, organizational efficiency and agility, and ecosystem efficiency and resilience.

ICT industry observer and expert Eliseo M. Rio, Jr., a former undersecretary at the Department of Information and Communications Technology, attributed the Philippines’ performance to the “lack of telecommunication infrastructure.”

“We are far behind our neighboring countries in terms of telco infrastructure. Vietnam has 70,000 towers as against our 24,000 towers, for example,” Mr. Rio said in a phone message on Friday.

He said the country’s digital services will only improve if it has sufficient infrastructure reaching the underserved and unserved areas.

“The aggressive rollout (of cell towers) will definitely improve our next ranking, especially when the third telco starts its commercial operations by March this year. Dito Telecommunity Corp. contributed around 3,000 additional towers. But even at this rate, it will take around seven more years if the government will not make telco infrastructure as important as its other Build, Build, Build programs,” he explained.

Infrawatch PH convenor Terry L. Ridon said the path towards full digital transformation is still “far and long.”

“Digital competitiveness between telecoms providers remain unchallenged, as the duopoly still corners a vast majority of the market despite the emergence of a new major player. On the other hand, lesser competitors cannot cope with consistency of service amid limited infrastructure and capital expenditures,” he said in an e-mailed reply to questions on Friday.

Mr. Ridon noted that several e-government services “have not been fully integrated nor intuitive” to public needs.

He pointed out that driver’s license databases are not fully integrated with vehicle information and other databases.

“Cloud services are now slowly being integrated in both government and industry, with Amazon Web Services establishing its foothold in the country. Competition in this field should be encouraged to reduce costs and ensure wider usage,” he noted.

The country is expected to continue being a “starter” nation in the medium term, as it still has limited investments in AI and IoT. “There is a bright spot in the financial technology sector with the new round of investments in GCash by foreign investors, as the current valuation may raise the company to the level of one of Southeast Asia’s valuation unicorns, those with market valuations of more than $1 billion.”

“There is also no shortage in emerging ICT influencing new business models, as various consumer service apps get launched almost every month, especially during the coronavirus pandemic. Their main challenge however is how to compete in an already crowded field of consumer service apps dominated by already established tech firms. Another challenge is how to build these apps for use not only in the Philippines, but in other parts of the world,” Mr. Ridon said.

To encourage growth and raise the level of domestic and foreign investments in the ICT sector, the government should remove bureaucratic roadblocks, he said.

The government should “allow the sector a wide latitude to innovate,” he also said, noting that government financial institutions “can even set aside investment funding to support nascent domestic tech initiatives, for as long as there is a clear proof of concept and plan of growth.”