By Jestoni A. Olivo, Policy Research Officer at the Philippine Competition Commission
With robust growth momentum gained during the COVID-19 pandemic, the Philippine digital economy is expected to sustain a double-digit climb toward USD 35 billion in 2025, making it one of the fastest-growing digital economies in Southeast Asia. The pandemic has left a long-term legacy of increased reliance on digital technologies, and industrial growth substantially depends on companies’ ability to adopt and invest in these innovations. According to an IMF Study, digitalisation helped shield productivity from the pandemic, with the most digitalised industries experiencing significantly smaller losses.
While digital technologies provide innovative means for consumption and production, they also pose challenging issues that prompt governments to rethink their regulations. From the promises and threats of big data to the convenience of and security concerns in using digital payments, new regulations are born to address emerging issues. This transformation is evident in the Philippines, where, in almost 25 years, the regulatory regime has gradually transformed, adopting new policies of consumer protection and competition since the passage of the E-Commerce Act in 2000. This article provides a glimpse of the progressive development and future of tech regulation in the Philippines, particularly in telecommunications, transportation, and digital commerce.
Regulatory Developments in Telecommunications
Similar to other countries in Southeast Asia, the Philippines is not immune to disruptions in tech regulation. In the telecommunications sector, the global rollout of 5G technology challenged the country’s readiness to take advantage of its supposed benefits. Despite being one of the earlier countries to roll out 5G in mid-2019, the Philippines lags behind some Southeast Asian comparators in terms of speed and coverage. In an Ookla research tracking the development of 5G deployment in the first half of 2023, the Philippines has a median download speed of 133.47 Mbps, whereas Malaysia boasts 512.10 Mbps. Although performing relatively well among Asia Pacific countries, Ookla finds that Filipinos only enjoy 19.8% coverage compared to 26.8% in Thailand.
In response to the current limitations in speed and coverage, the government pushed for reforms to alleviate connectivity issues. The Mobile Number Portability (MNP) Act of 2019 presents an opportunity to rebalance the relationship between mobile service providers (MSPs) and subscribers by allowing the latter to change their MSP without abandoning their mobile number. Coupled with the entry of the third major telco player, DITO Telecommunity, in 2021, the MNP Act not only offers an immediate remedy for subscribers but is also expected to intensify the rivalry among players in their bid to retain and expand the current consumer base.
The government and other keen observers are also on the lookout for developments in the Open Access in Data Transmission (OADT) Act, still pending legislation. The OADT contains novel provisions encouraging the sharing of data transmission infrastructure and removing barriers to competition in data transmission services. Supporting its fastidious enactment, the National Economic and Development Authority advocates a series of strategic and complementary reforms in a policy note. For example, the OADT allows passive and active infrastructure sharing among operators, consistent with international practices. Effective implementation can lead to a more efficient use of network resources and facilitate the entry of new players.
Regulatory Developments in Transportation
In the transportation sector, the popularity of ride-hailing apps for 4-wheeled vehicles and the pending legal recognition of similar digital platforms for 2-wheeled vehicles (e.g., motorcycle taxis) stimulated the government to readjust regulations and competition analysis standards traditionally applicable to public utility vehicles.
While motorcycle taxis offer commuters an accessible and faster mode of transportation, there is still no law governing the safety and security of the riding public. This prompted the Department of Transportation in 2019 to launch the pilot implementation of motorcycle taxi services offered by three players – Angkas, Joyride, and Move It. The pilot program aims to provide sufficient information for the government to determine whether motorcycles are a viable mode of public transportation. Initial results show a 99.98% safety rating among the three players.
The novelty of these apps also exposed antitrust authorities’ varied standards in competition analysis. The Grab-Uber merger case in 2018 challenged competition agencies’ merger review methods in Southeast Asia. When the acquisition was announced, these agencies independently initiated investigations to determine if the transaction was anti-competitive. This led to contrasting conclusions in different markets, with the Philippines and Singapore deciding that the case was anti-competitive, while Indonesia and Vietnam found the opposite. This stems not only from the complexity of the digital economy but also from the legal and institutional gaps across countries. Ultimately, there is a need to synchronise antitrust actions in Southeast Asia by reducing heterogeneity in competition policies.
Regulatory Developments in E-commerce
In electronic commerce, the passage of the E-Commerce Act in 2000 authorised the Department of Trade and Industry (DTI) to promote e-commerce activities in the country. The appreciation of e-commerce has evolved over time, and a number of policies have been developed to cater to the expanding sector. Fast forward to the 2020s, where numerous products and services are now sold online, various consumer protection issues have emerged, including fake online orders and counterfeit products.
The Internet Transactions Act (ITA) of 2023 serves as a strong disincentive for relevant actors to engage in unfair trading practices. The ITA explicitly aims to protect online consumers and merchants by setting up an online dispute resolution and penalising actors found guilty of deceptive sales or unjustified order cancellation. The law also attaches fresh mandates to the DTI to ensure the robust and dynamic development of the digital commerce sector through the establishment of the E-Commerce Bureau.
A cross-cutting issue in these sectors is the collection, processing, storage, and disposal of personal information. In 2012, the Philippines put into place comprehensive legal protection of personal information through the Data Privacy Act. Consequently, the National Privacy Commission was formed in 2016 to establish a regulatory regime that ensures accountability in the processing of personal data.
In conclusion, the country should sustain the digital economy’s promising growth trajectory by complementing existing reforms with a more responsive regulatory regime. The government may consider the following broad recommendations:
- Reinforce the digital economy with the right mix of competition and regulation. Sector regulation should be infused with a competition lens, and competition policy should be guided by public policy considerations.
- Ensure tech policy coordination. This is crucial among regulators most disrupted by technological innovation. A whole-of-government approach that calls for interagency solutions to broad digital economy issues should be institutionalised. The importance of coordination in tech policy is further echoed by the Tech For Good Institute’s Tech Regulation research, which underscores the need for a responsive regulatory environment.
- Boost and widen the coverage of consumer advocacy programs. Consumer education is vital for them to be informed of their rights and to spot competition issues affecting their consumption amidst the digitalisation of commercial transactions in various sectors.
The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.
About the writer
Jestoni A. Olivo is a Policy Research Officer at the Philippine Competition Commission where he conducts research on competition-related cases and the effects of competition on welfare and development. He is interested in policy issues affecting agriculture, energy, and digital markets.
