Technology has always been a key slingshot for global development. The World Bank study examining developed economies like the United States revealed that 86 percent of labor productivity came from digitally transformed industries.
While the Philippines had been dipping its toes into the use of financial technologies prior to 2020, this year has literally been a “do or die” scenario for our economy. The nation responded with unprecedented acceleration in digital transformation.
Unemployment was dangerously high in April, according to the Department of Labor and Employment’s labor force survey, hitting over 7.2 million Filipinos. But as lockdown restrictions eased and firms adopted technology solutions to digitally empower the remote workforce, as many as 2.6 million jobs were both recovered and created in the span of just three months.
Last September, Trade Secretary Ramon Lopez reported that 73,276 new online businesses had been registered since the pandemic began, a staggering 4180-percent increase from the 1,753 existing online businesses prior to March.
Reverse diaspora
The Philippines owes its digital successes to the pioneering businesses and entrepreneurs who have invested and sacrificed to build the financial and consumer technologies the economy is now using to reshape itself. Quietly leading this charge has been a “reverse diaspora,” a brain gain of the best and brightest from around the world coming into the Philippines to develop digital innovations for this market.
We recently ranked as the number one “Digital Riser” in East Asia and the Pacific in the European Center for Digital Competitiveness’ Digital Riser Report 2020, driven by optimism stemming from government initiatives such as the Innovative Startup Act of 2019, the Startup Venture Fund, the Startup Grant Fund, and the Philippine Startup Development Programme.
Whereas the national health guidelines have been our primary deterrent against COVID-19’s physical dangers, technology has become our weapon against the pandemic’s economic challenges, and our arsenal is quickly growing.
Emerging tech ecosystem
Prior to the pandemic, the Philippines was well on its way to matching its peers as an emerging hub for technology. Developing a strong position in the fintech space, local enterprises had garnered much foreign investment interest.
A majority stake in Coins.ph, a blockchain-powered mobile wallet and cryptocurrency exchange that serves over 10 million Filipinos, was acquired last year by Indonesian unicorn Go-Jek for $72 million. The year before, PLDT-backed Voyager Innovations Inc. sold $175 million in newly issued shares to Kohlberg Kravis Roberts & Co. L.P. and Tencent Holdings Ltd.
Even outside of fintech, foreign direct investment in the Philippines’ information and communication technology (ICT) industry almost doubled between 2019 and 2020, with the Philippine Economic Zone Authority reporting an unprecedented 78-percent growth from P6.6 billion to P11.4 billion in approved foreign investments.
The agriculture sector and the tourism industry were both severely disrupted by the pandemic, leaving ICT enterprises such as business process outsourcing firms as among the few, if not the only, pillars left to support the local economy.The push for technology has found new champions like boxing legend and Sen. Manny Pacquiao who has entered the digital ring with PacPay, which will create new opportunities to monetize social media.
The situation has changed now. The economy has begun to stabilize in the country, thanks to a ravenous appetite for innovation, with economists at the Asia Development Bank (ADB) forecasting that the Philippines’ gross domestic product growth will be back to 6.5 percent in 2021.
If we continue to face the future with optimism and an open mind toward the rapidly evolving tech industry, then we are well poised to move beyond simply surviving and retake the ground lost these past months. —CONTRIBUTED INQ
The author is Executive Director of Fintech Philippines and Convener of the World Fintech Festival Philippines.
The Monetary Authority of Singapore convenes the World FinTech Festival (WFF) on Dec. 7-11. This year will be unprecedented in terms of access as the program will take place online.
WFF-Philippines, organized by Geiser Maclang, copresented by Globe, will feature discussions led by no less than Bill Gates, Microsoft’s incumbent CEO Satya Nadella, PayPal president and CEO Dan Schulman, Zoom Video Communications, Inc. CEO Eric Yuan, with local technology champions such as Globe CEO Ernest Cu and UnionBank vice chair Tito Ortiz.