Digitalization could unlock P5 trillion of annual economic impact in PH
In the study commissioned by Google, research firm Alpha Beta found that digital technologies could unlock P5 trillion (equivalent to about 27% of the country’s GDP in 2020) in annual economic value in the Philippines by 2030. This is one of the findings from Google’s report “The Growing Digital Economy in the Philippines: Opportunities, Challenges, and Google’s Contribution.”
“The value P3.5 trillion or 69% could come from technologies that help businesses mitigate the economic impacts of the pandemic and future similar events,” said Fraser Thompson, founder and managing director of research firm AlphaBeta, which was commissioned by Google to conduct the study.
“Digital adoption is crucial for the Philippines to unlock new opportunities and gain resilience in the post-pandemic future,” said Bernadette Nacario, country director, Google Philippines.
However, the low digital adoption among small and medium-sized enterprises (MSMEs) poses significant challenges in achieving this projection. The report noted that these small businesses, which is touted to be the backbone of Philippine economy, lack awareness of existing programs and policies available. Other challenges include gaps in access to digital tools and a digital skills gap in the workforce.
Fraser emphasized that digitalization is not limited to ICT and that out of the total digital economic opportunity, other applications are poised to contribute to the projection.
Among the applications the report saw are e-commerce and mobile applications for the retail industry which can facilitate digital transactions and interactions, reduce labor requirements, promote inventory efficiencies, and cut real estate costs, offering productivity gains ranging from 6% to 15%.
The consumer, retail, and hospitality sector is projected to be technology’s largest economic beneficiary in the Philippines accounting for about P1.22 trillion or almost a quarter of the country’s total digital opportunity. Other top sector beneficiaries include education and training (P607.1 billion), agriculture and food (P576.7 billion), government (P550.2 billion), and manufacturing (P465.9 billion).
The eight key technologies that can provide transformative potential for the Philippines include mobile internet, cloud computing, big data, artificial intelligence (AI), fintech, Internet of Things, advanced robotics, and additive manufacturing.
The report underscored Google’s products and services in the Philippines are worth PHP363.4 billion in annual economic benefits to businesses and P214.5 billion in annual economic benefits to consumers. These estimates pertain to Google Search, Google Ads, AdSense, YouTube, Google Play, Google Maps, Google Drive, and Google Docs, Sheets and Photos.
“For businesses, economic benefits come in the form of increased revenue,” the report said.
The estimates are of Google’s annual economic impact based on the latest available data at the time of research in 2020. Estimates are based on AlphaBeta analysis using a range of original and third-party sources. See Appendix for more details.
Google has partnered with the Department of Trade and Industry to equip MSMEs with digital tools and take their businesses to the next level through digital means. The technology company’s Business Profile (previously known as Google My Business) has been helping businesses boost visibility that help them realize their global ambitions.
Google’s efforts are guided by the three pillars: Enhance digital skills training and education; Accelerate digital adoption and innovation; and Promote digital trade opportunities.
“Beyond its immediate economic impacts, the COVID-19 pandemic is likely to have long-term implications in three aspects of the Philippine economy, namely: the emergence of a hybrid workplace that supports digital freelancing; accelerating the shift towards digital payments, and severe disruptions to the business operations of small enterprises,” Nacario said.
“By providing businesses access to global markets, equipping businesses with digital capabilities to conduct electronic transactions, and facilitating remote work, technology can help businesses manage the long-term economic implications of the COVID-19 pandemic and while staying resilient against future similar events.”