Digital Transformation in the Philippines And Its Future Trajectory

With how various businesses and establishments have transitioned into the online landscape despite the pandemic, it’s no wonder that digital is estimated to bring in considerable numbers in economic value for the country. A report commissioned by Google forecasted that by 2030, digital transformation in the country may generate up to P5 trillion in economic value yearly.

Conducted by economists at AlphaBeta, the projections in the report were based on “transformative technologies”, such as mobile internet and artificial intelligence, that help micro, small and medium enterprises (MSMEs) on their road to digitalization.

Current and forecasted growth

According to AlphaBeta, our country’s Internet economy was worth around $7.5 billion the previous year. From here, a yearly 30% growth is expected, amounting to around $28 billion by 2025. Moreover, AlphaBeta’s founder and managing director Fraser Thompson pointed out that all of this growth would be possible due to the tech-savviness of the younger demographic.

The Philippines may generate P5 trillion annually by 2030. Additionally, the report suggests that P3.5 trillion from the total could come from technologies with the specific purpose of easing the effects of the COVID-19 pandemic.

Based on this data, we can see that digital transformation is on an upward trend due to the current circumstances of the country and the world at large. A lot of this growth is due to the expertise of the people, but it’s not without the help of various platforms – Google among them.

How Google helps in PH digital transformation

As per Google Philippines country director Bernadette Nacario, Google has been instrumental in providing the necessary tools for MSMEs to make the jump to digital. This includes tools that enable e-payment and remote work.

Looking at the figures from AlphaBeta’s report, we see that P363.4 billion worth of yearly benefits are acquired by different ventures from the use of various affiliated Google platforms “through increased revenues, digital connections, efficiency, and savings.” Some of them include Google Search, Google Ads, and Youtube.

Additionally, the app developing industry can generate P384 million worth of yearly revenue because of Google Play. This app distribution service can reach over 1 billion users worldwide, increasing exposure of their apps to various people worldwide.

Outside of industry professionals, Google is also a huge advantage among consumers. With their use of convenient platforms in their everyday lives, such as Google Drive, Docs, Sheets, Google Maps, and more, they enjoy P214.5 billion worth of annual benefits. Such platforms are used for quick access to information as well as improved productivity.

We can see just how helpful Google has been towards our local digital economy based on the data from the report. Several active platforms under its name are used for the convenience of businesses and consumers alike. Google also stated that because of its partnerships with several companies in conjunction with its tools, they could indirectly support over 110,000 jobs in the Philippines. Through the tools and programs provided by Google, companies can find new sources of revenue to keep their operations afloat.

Challenges that need to be addressed

Thompson said there must be an initiative “on enhancing digital skills, accelerating digital adoption and innovation, and promoting digital trade opportunities” if we want to take advantage of various digital opportunities. However, this isn’t a simple walk in the park.

The report further elaborates on the challenges that must be faced. It states that there’s still around 50% of the firms in the Philippines that lack a presence online. Aside from this, the percentage of MSMEs knowledgeable about digital initiatives is only at 26%. With the steady shift to digital, it’s a cause for concern for those who don’t want to be left behind by their industry competitors.

Upon further analysis, the report also found gaps in digital skills, complicated regulations, and troubles in accessing the Internet are also in play. In short, there is still quite a long way to go for the Philippines in terms of digital transformation.

The future of digital transformation in the Philippines is seemingly bright and profitable. It, however, doesn’t come without any obstacles. But as Nacario says, “Digital adoption is crucial for the Philippines to unlock new opportunities and gain resilience in the post-pandemic future.”

Moreover, Trade Secretary Ramon Lopez believes that to tap our local digital economy’s potential opportunities and inspire growth and success online among Filipinos, continued collaboration with partners from both the public and private sectors is necessary. Secretary Lopez teamed up with Google for the MSME Caravan project from March 8 to April 26, 2021 to educate around 46,000 firms.

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