Digital infrastructure seen crucial in boosting competitiveness

THE Philippines must improve its digital infrastructure to boost competitiveness while also increasing its resilience to crises like the pandemic, a National Economic and Development Authority (NEDA) official said.

An online panel assembled by the Asian Institute of Management Thursday was tackling the ranking of 45th out of 63 economies assigned to the Philippines by the Institute for Management Development (IMD) 2020 World Competitiveness Report, and how competitiveness can be addressed during the coronavirus disease 2019 (COVID-19) pandemic.

The ranking was one notch higher from the previous year, but was 13th place out of 14 Asia-Pacific economies.

The Philippines in the IMD report ranked 40th in both the use of digital tools and digital transformation in companies and 52nd in digital skills.

NEDA OIC-Director of Trade, Services, and Industry Bien Ganapin said that the Philippines must further develop information communications technology (ICT), saying that the government must scale up its use of digital transactions and signatures.

“We need to further develop ICT and financial technology,” he said.

“In terms of digital adoption, the country fares poorly compared to our regional, middle-income peers… aside from the need for additional investment in critical ICT infrastructure, policies and measures to protect consumers engaging in online transactions — we need to also establish that. For MSMEs and vulnerable economic sectors, we need to encourage them to take advantage of new and emerging technologies to allow them to recover from their losses.”

He also said that the country must reduce barriers to entrepreneurship, improve the regulatory environment for business, and encourage pro-competitive collaboration among firms.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the country is shifting to a contactless economy.

“We’re now involving ourselves in social distancing… a lot of services will just go online and you’ll be seeing much of that… with that type of emerging economic theme of being contactless or low touch types of businesses, I think we really need to be innovative.”

Trade Undersecretary Rafaelita M. Aldaba said there should be more emphasis on innovation, and a shift in manufacturing to health products critical to responding to the crisis.

“There was a need for us to shift towards digital transformation, but I think with the crisis, now it has become more urgent,” she said.

IMD World Competitiveness Center Senior Economist José Caballero said in an e-mail that the Philippines’ lack of improvement in the four factors studied in the report was caused by the negative impact of a downturn in the resilience of the economy, mixed performance in business efficiency due to improved productivity but a decline in attitudes and values, and a stagnation in infrastructure, among others.

“The Philippines’ slight improvement is mainly due to an increase in international trade and a steady performance of its labor market. The improvement also reflects an increase in overall productivity and efficiency,” he said.

American Chamber of Commerce of the Philippines Senior Advisor John Forbes said it is difficult for the Philippines to move up in ranking among the ASEAN 5, falling behind Indonesia, Malaysia, Singapore, and Thailand.

“The Philippines has been stuck roughly in the same range for more than a decade. If it can really cut red tape, return to 6%+ GDP growth, and keep infrastructure spending above 5% we expect it can catch up with Indonesia and be among the top half of the select group of (63) economies ranked.” — Jenina P. Ibañez