A digital new normal

As constantly pointed out by government economic managers, the Philippines entered the COVID-19 crisis in a position of relative economic strength. But there’s one crucial matter in which we came in falling short: our digital connectivity. This has impacted on our ability to respond to and manage the pandemic, and will affect how we will come out of it and rise from the economic decline that the virus brought upon us.

Economic strength was seen in how prices had stabilized to a 2.2 percent inflation rate after having spiked in 2018, the joblessness rate at 5.3 percent was at a historical low, and the economy sustained a GDP growth of at least 6 percent since 2012. Government’s debt position was good, with debt-to-GDP ratio down to 41 (from a peak of 75) percent. Government revenues were solid, thanks to tax reforms enacted by Congress and still underway. The Economist has ranked the Philippines 6th of 66 emerging economies on financial strength, in the good company of strong economies like Taiwan, South Korea, and Russia. We all had a foretaste of the emerging post-COVID-19 society, particularly on how digital technology promises to dominate our daily lives, in commerce, education, business, entertainment, social activities, and much more. Those of us living in urban and semi-urban areas have quickly learned to rely more on online purchases of various goods spanning the range of consumer durables; household, school and office supplies; clothing; other everyday necessities; and even fresh farm produce.

In our own barangay in Laguna—and I imagine in similar communities around the country—an online marketplace for fresh farm produce sprouted, set up by a group of enterprising producers and suppliers who deliver their goods to their buyers’ doorsteps. Local governments have already announced large-scale procurements of digital tablets to equip their schoolchildren and students for the coming era of online learning.

Businesses, government offices, and other organizations have discovered that their employees and officers can be no less (and possibly more) productive working from home, and holding online rather than face-to-face meetings—a change likely to persist long after COVID-19 blows over.

People have taken to getting their entertainment from online streaming services for movies, music, podcasts, and more. I’ve seen and participated in “Zoom parties” and even “Zoom drinking sessions,” and my wife and I are in the midst of an online daily novena prayer with friends and relatives spanning both sides of the Pacific.

It has become quite clear that access to digital connectivity will spell the well-being of every Filipino as we move forward, and such access or lack of it will define the divides in our society and economy. As I indicated at the outset, it is in digital connectivity where we came into the crisis weak—in fact, weakest among our peers. This matter is so important that the World Bank chose to highlight it in its latest Philippines Economic Update, and the comparative regional statistics on digital connectivity that it provides paint a disturbing and embarrassing picture. We’re well below our Asean peers in access to fixed broadband, trailing below all of our Asean neighbors except Indonesia in mobile download speeds, and even below Laos in fixed download speeds. Even so, the price of our mobile broadband services is 43 percent higher than the Asean average, and the bulk of our population can access only 3G connections at best.

To the World Bank, the imperative is clear: There must be more competition in the provision of telecommunication services in the country. It lists concrete policy directions and measures to achieve this, particularly to ease or eliminate barriers to entry rooted in legal or policy restrictions. Infrastructure sharing (e.g., of cell towers) is becoming global best practice in the industry, but its adoption here continues to be dogged by strong resistance. There is wide scope to improve management and allocation of the frequency spectrum for a more level playing field.

The agenda for reform in the sector is a rich one, but political will could still well be our toughest hurdle.

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