According to the Philippine Statistics Authority, the digital economy contributed around 2.05 trillion pesos (35.2 billion USD) to the Philippine economy in 2023.  This accounts for approximately 8.4 percent of the country’s Gross Domestic Product (GDP). Part of this growth is due to the continued digital transformation of the Filipinos, where 73.6 percent of the population, or 86.98 million people, are online. This growth, however, needs to benefit society equitably and inclusively. In recent years, digital transformation has not only brought enormous benefit but also posed challenges such as cybercrime, misinformation and the rapid need for workforce upskilling.

In partnership with the Ateneo de Manila University and the Makati Business Club, the Tech for Good Institute organised a public seminar the day after implementing rules and regulations of the Philippines Internet Transactions Act (ITA) TA2023 (Republic Act No. 11967) was signed. The seminar aimed to highlight key initiatives towards responding to the pressing challenges while unlocking the potential of the Philippine digital economy in contributing to the nation’s broader development goals.

Speakers and moderator

• Mary Jean Pacheco, Digital Philippines and E-Commerce Lead, Department of Trade and Industry
• Renne Barcelona, Country Leader for Cybersecurity Services, IBM Philippines
• Sherielysse Bonifacio, Director, Public Affairs Philippines, Grab Philippines
• Monchito Ibrahim, Lead Convenor, Alliance of Tech Innovators for the Nation (ATIN)
• John Lagdameo, Chair of the Leadership and Strategy Department, Ateneo de Manila University
• Ming Tan, Founding Executive Director, Tech for Good Institute (Moderator)
• Keith Detros, Programme Lead, Tech for Good Institute

Key takeaways

• Digital ecosystem players, including the government, digital economy companies and academia, play a role in the country’s inclusive development.

As the Philippines continues to advance its digital economy, a whole-of-society approach is needed to ensure inclusive growth. The Philippine government continues its efforts to promote the adoption of digital services while safeguarding consumer welfare. The recent signing of the implementing rules and regulations of the ITA underscores the government’s commitment to foster confidence among consumers and merchants in the digital marketplace.

Furthermore, digital economy companies contribute to digital inclusion in diverse ways. Companies like IBM, for example, remain committed to enabling a secure and resilient digital ecosystem. Similarly, digital platforms such as Grab play a significant role in the economy by generating livelihood opportunities. A recent study by UA&P highlights Grab’s contribution to the Philippine GDP, accounting for approximately 0.07% – 0.3%, and its role in reducing unemployment by 1.1% – 1.6%.

Lastly, academia plays an important role in creating safe haven for entrepreneurial ideas. It also is a key player in promoting research in business models and policy innovation initiatives.  Incorporating emerging technologies such as artificial intelligence and quantum computing at the university-level would help the country develop a future-ready population. It is through the collaborative efforts of various stakeholders in the digital economy that the Philippines can effectively address the challenges of digital transformation.

• Business model and policy innovations are needed to maximise the potential of digital technologies in the Philippines.

Given the huge potential of digital transformation of the Philippine economy and society, fostering an innovative ecosystem is key. This requires not only technology, but also business model innovations.  Business model innovation seeks to create new value by developing fit-for-purpose solutions at scale. For example, given the scale and agility of digital platforms, they can develop new business models that help address societal, environmental, and developmental challenges. New business models in the digital age include telemedicine in health, distance learning in education, ride-hailing in transport, and food and parcel delivery in logistics.

The rapid scale of digital adoption and innovative services, however, requires governance to keep pace in an ever-evolving landscape. Policy innovation is therefore required, with a wide range of practices and tools available to help the government foster innovation and good governance at the same time. Co-regulation between government and digital platforms encourages rather than curtails product innovation, while safeguards to users and markets are designed for efficiency and feasibility of implementation. Through co-regulation, agencies like the Department of Trade and Industry have worked with digital platforms on creating more effective channels for mediation and arbitration, while also refining internal regulations on revenue and electronic signatures for facilitating cross-border e-commerce.

In addition, regulatory sandboxing is another approach that can be adopted in the Philippines. Sandboxes test use-cases of technology and business models in a time-bound manner that limits risk and maximises opportunity for learning. To encourage local innovation, the government can develop sandboxes with lower capital requirements, transparent monitoring and evaluation mechanisms, and active sharing so that even companies not participating in the sandboxes may learn from the exercise. These approaches can be complemented by traditional policymaking, including the development of benchmarks and standards for assessing digital transformation outcomes.

• Coordination among key stakeholders accelerates inclusive digital economy development.

Effective alignment of initiatives among government, the private sector, civil society, academia and the public is crucial in promoting the growth of the Philippine digital economy for national development. Improving the ease of doing business by streamlining requirements and permitting processes will encourage smaller businesses and younger entrepreneurs. Governments can seek inputs from key stakeholders not only in crafting policy, but also in developing fit-for-purpose implementation frameworks, promoting cyber-resilience, and responding to emerging technologies such as artificial intelligence.

With their unique reach across multiple stakeholders, digital platforms can work with the government to protect the safety of their community. Government agencies themselves should invest in upskilling personnel, sharing information across agencies, and increasing enforcement capacities to keep the digital space secure and accessible. Finally, cooperation on a regional level is important in ensuring an interoperable digital economy across ASEAN, facilitating seamless digital transactions and cross-border efforts in cybersecurity.

• Effective governance and a vibrant innovation ecosystem are critical to attracting investment.

Important reforms, combined with regulatory clarity, provide the basis for investor confidence. For example, outdated policies should be updated to address the modern technologies they are meant to govern. As an example, the assignment of spectrum frequencies for mobile internet is governed by the Radio Control Law of 1931 – a pre-World War II era law designed for regulating the use of traditional radio frequencies. A modernised framework for spectrum sharing in the internet age can help increase coverage and access to mobile services, especially in underserved areas, bringing opportunities for citizens as well as investors and entrepreneurs. Institutional capacity-building, such as investments in digital infrastructure and upskilling of the labour force, is also vital to translating the Philippines’ enviable demographic dividend into a sustainable and inclusive digital dividend for the nation.

Catch the Event Day Reel here: