[FEATURING] GCash President & CEO Martha Sazon and Paymaya President Shailesh Baidwan at the BusinessWorld Economic Forum 2021.
THE PHILIPPINES should continue to develop digital infrastructure in order to drive economic recovery, as the coronavirus disease 2019 (COVID-19) pandemic helped accelerate digital transformation initiatives for both the public and private sector.
“COVID-19 did more for digital transformation than executives did for their organizations,” Ayala Corp. President and Chief Executive Officer Fernando Zobel de Ayala said in a keynote speech at the BusinessWorld Economic Forum on Wednesday. “Organizations should digitally transform themselves to remain relevant.”
Mr. Zobel noted the Philippines’ “persistent challenge” is to make sure there is widespread and equitable access to digital infrastructure and the internet, adding that only 67% of the population has internet access as of January 2021.
“It is, thus, imperative for us to continue expanding our digital infrastructure to some of the densest parts of the country, while adopting more of these impactful technologies,” Mr. Zobel said, noting this will complement the establishment of the National ID system.
“Digital transformation, which combines technology and a firm understanding of stakeholder needs, is indeed the way forward towards a more resilient, progressive, and equitable country. As we build a digital economy, founded on reliable infrastructure, digital identity and access to services, and airtight cybersecurity, we all have much to contribute,” he added.
Martha Sazon, president and chief executive officer of Mynt — the operator of GCash, said the pandemic highlighted the need for safe and convenient access to digital payments. GCash currently has over 40 million registered users as of April 2021, up from 33 million as of end-2020.
“Because of the change in the conditions that we’ve seen, people are forced to reimagine the business in a way that will service the customers, in a way that will reach the customers even better,” Ms. Sazon said.
This was echoed by Boston Consulting Group Managing Director and Senior Partner Anthony Oundjian, who said that digital transformation, in the first place, does not start with technology.
“I would say it starts with the consumer pain-points and the design of simple solutions to address these pain-points,” Mr. Oundjian said.
BusinessWorld President and CEO Miguel G. Belmonte said digital transformation is “an urgent component in accelerating the country’s recovery and [to] create a stronger and more resilient and sustainable economy.”
The need for easier and more convenient transactions became more pronounced during the lockdown, but not all businesses are able to cope with the sudden need to accelerate digitalization.
“What I find the biggest challenge for a lot would be translating their historical activities to these existing channels,” Miko B. David, president and co-founder of David & Golyat, said. “The options that they should utilize for their executions on digital is not always translating as well.”
As more firms go digital, this highlighted the need for faster decision making to keep pace with the playing field, here and abroad.
“It’s important that in this digital age that we should be mindful of all the types of disruptions out there. It’s important to know what the trends are whether locally and globally,” Ms. Sazon said, adding that GCash is looking into allowing cryptocurrency.
Proper regulations are needed to make sure consumers remain protected under these new digital systems.
“This pandemic has shown all the different fissures or gaps that consumers have experienced,” Mr. David said. “There’s still going to be a lot more improvement that will happen.”
The rise in electronic payments in the Philippines during the pandemic could be an indicator that the digital divide in the country has narrowed, a World Bank economist said.
“The digital divide may have narrowed in the Philippines, as seen in increase in digital payments, but there is a lot of catching up by aggressively breaking the barriers and through greater participation and investment,” World Bank Senior Economist Kevin C. Chua said at the BusinessWorld Virtual Economic Forum.
Mr. Chua said stakeholders should “make efforts to make tools and connections more available and affordable and support the young and working age population.”
Microsoft Philippines Country General Manager Andres Ortola said at the same forum that addressing the digital divide means “building coalitions, partnerships, and initiatives.”
“The technology is here, but the challenge is to drive innovation pervasively. We should make use of what we have,” he noted.
PayMaya President Shailesh Baidwan said digital payment platforms are enabling businesses, including the small ones, to create more jobs despite the public health crisis.
“By promoting digital payments, we get to promote financial services and realize financial inclusion… The opportunity to include more Filipinos into the financial system is here and now. There’s an opportunity to narrow and break the digital divide with financial solutions,” Mr. Baidwan added.
Meanwhile, National Economic and Development Authority Undersecretary Rosemarie G. Edillon said the Philippines should loosen up its restrictions to foreign players in the telecommunications industry and make it easier for investors to do business to help the digital sector grow faster.
Fostering competition in telecommunications sector could boost internet connectivity and lower costs, Ms. Edillon said, which will give Filipinos more access to the internet.
“The policies we have now actually restrict entry into the sector that’s why for the longest time, we only have two players. So, we want to come up with this institutional reform so that we were able to bring in more players. After that, you address all these regulatory barriers, so many permits that they need to get just to pull up a sell-side,” she said.
The NEDA has been pushing Congress to pass amendments to the Foreign Investments Act, the Public Service Act and the Retail Trade Liberalization, which would ease barriers to the entry of foreign investors.
The country is suffering from a digital divide with only 17.7% of Filipino households having their own internet access at home, and less than a quarter having communal cellphones and computers, based on the 2019 National Information and Communications Technology Household survey.
For the next year’s survey, Ms. Edillon said they expect improvements after more digital infrastructure was built and regulatory processes streamlined.
“We also want to find out how this is affecting the rest of the economy as well, with respect to the forward and backward linkages, because we want a dynamic economy still. We want this digital economy to be situated alongside all the other aspects of the economy so that we have that nice, dynamic economic activity happening,” she added. — Keren Concepcion G. Valmonte, Beatrice M. Laforga and Arjay L. Balinbin