ICT sector in the Philippines

The 2016 Presidential Election plays vital role in Philippine Information and Communications Technology sector’s (ICT) growth. IDC Philippines says that with the unfolding of every presidentiable’s political fate, factors that may lead into the growth of country’s ICT also hangs in the balance.

Going back over the past presidential elections in 2004 and 2010, IDC identified that projects and efforts to expand the ICT sector experienced inconsistent support in terms of funds depending on who was seated in Malacañang.

According to an article by Eden Estopace, ICT spending grew by 12 percent during Gloria Macapagal-Arroyo’s presidency. The following years, however, reached a plateau of 5-7 percent on ICT spending growth and increased by 15 percent in the next four years. By 2010, during Nonoy Aquino’s term, many projects were discontinued which resulted in an ICT spending growth of 5 percent at the end of 2010. After a similar 5-9 percent growth in the following two years, 2013 observed a 27 percent which led to improvements in our international ratings and rankings.

Business World Today says that ICT is a valuable tool that can be used for the economic development of the country. And in a region where other countries are already ahead in using ICT to their benefit, we are still struggling to make effective used of it. This is quite an ironic situation though. Considering the rapid growth of the BPO sector which basically works hand in hand with the ICT sector.

In the same article, IDC cited some points that they would recommend the government to focus on to aid the ICT sector. The following are the points IDC cited:

  • Prioritize the establishment of the Department of Information and Communications Technology (DICT)– Sean Paul Agapito, Associate Market Analyst, IDC Philippines, said the DICT will be the primary government entity to plan, promote, and help develop the country’s ICT sector and address issues concerning Internet connectivity, communications services, data privacy, cybersecurity, and cybercrime — functions that are currently divided among several disparate agencies.

“This move is crucial for the government to ensure the ICT sector, which is among the most profitable divisions of the Philippine economy (projected to contribute $50 billion in revenue in 2016) and one of the top drivers of employment growth, will be secure in the upcoming years,” Sean Paul Agapito says.

  • Develop large-scale ICT initiatives.Compared to other ASEAN countries, the Philippines is still waiting for large-scale initiatives that could greatly impact the ICT market. Alon Anthony Rejano, Associate Market Analyst, IDC Philippines, said the government should also support ICT adoption in non-IT industries such as resources and agriculture, but the collaboration between the public sector and service providers will be the most important stage right now.
  • Address the country’s connectivity problem on a major scale. The government must impose the new regulations to accelerate the internet connection development in the country. The government with its authority need to penalize telcos who are unable to deliver internet speeds as promised.

“This action will ultimately give consumers better services at lower cost. But in the same vein, the government should endeavor to shorten the starting business process in the country and cut red tape surrounding the establishment of telco infrastructures such as cell sites and fiber builds,” Rejano emphasized.

  • Take cybersecurity more seriously.The online leakage by hackers of the confidential information of Filipino voter’s highlight how the Philippines is lacking in terms of cyber security. This case should be a wake-up alert for the upcoming government to look at this matter in earnest. Digitalization sector becomes more pervasive to ensure the confidential data that people send online is secure.
  • Place a bigger focus on the BPO industry in the country.The BPO industry is expected to surpass the gross domestic product (GDP) contribution of OFWs. With the gradual change from traditional voice services to higher-valued services (e.g., knowledge process outsourcing), the government must address the shortage of skilled labor and professionalize the industry. There must be a collaboration with education agencies such as the Department of Education (DepEd) and the Commission on Higher Education (CHED) to align the curriculum with the demands and requirements of the IT sector.
  • Provide greater support to Smart City initiatives.In connection with the greater support on BPOs, there is also a need for even greater support from the next administration on Smart City initiatives in the country. Although it’s good to see a number of Smart City initiatives, such as Cauayan City’s electronic government application system (eGAPS), most of the projects in other areas are still stuck at the pilot testing stage.

“A key roadblock to implementation is a budget constraint on the part of the local government. Greater budget should be allocated by the national government in funding Smart City initiatives to help these projects come to fruition. Through Smart Cities, the improvement of the quality of life and better delivery of government services will be achieved. Healthy collaboration among the local government, solution providers, and other government agencies is also key in driving these projects forward,” said Jerome Dominguez, Market Analyst, IDC Philippines.

  • Drive growth toward the SME sector.People are still waiting for the government initiatives to develop SMEs in the ICT market. The SME ecosystems, including start-ups and micro enterprises of developed markets in other ASEAN country like Singapore, are more solid than the Philippines’ SME sector because the government of Singapore takes a part to support their actions. There should be effective government funding to contribute to the success of our own start-ups, with the new administration crafting a pro-business and start-up-friendly nation.
  • Improve peace and order in the country.The next president also needs to work on addressing the peace and order situation in the country. With the continuing unrest in certain parts of Mindanao, the negative perception of the country as a safe haven also persists. Mindanao is a fast-growing region in terms of population (projected to grow faster than the national average) and economy (driven by the booming manufacturing and BPO sectors). Foreign investors are already eyeing Mindanao as their next focus area of investments.
  • ICT on the forefront of the agenda.IDC strongly encourages the next administration to bring ICT usage and adoption at the forefront of its operations moving forward. Optimized system performance and digitization of records in the education sector, as well as eHealth innovations in the Philippines, bolster ICT usage, as local hospitals continue to adopt electronic medical record/electronic health record (EMR/EHR) and mobile health applications. Deep-dive adoption of cloud-based services for various government transactions is essential. “Digital transformation (DX) in the Philippine government does not only improve the delivery of government services but also democratizes the public’s access to national affairs.

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