(Published in The Manila Times 500, May 2021)
The Philippines tops it again. Filipinos are again the highest in internet usage, clocking in close to 11 hours per day at 10 hours and 56 minutes according to the Digital 2021 report of We Are Social and Hootsuite. This is 2 hours and 11 minutes longer than that in 2020, most likely driven by the move of organizations and individuals to digital communications brought about by the pandemic.
The same is true for social media use, where 89 million active Filipino social media users spend an average of 4 hours and 15 minutes each day on social media, topping the global usage rankings for the 6th straight year. This is also longer by 22 minutes compared to the 2020 report, buttressing the impact of the pandemic.
But people joke that the reason why we Filipinos spend the longest time on the internet is because of the tediously protracted loading of webpages due to the slow internet in the country. While the Philippines also held the rank of having one of the slowest and most expensive internet services in the world, we are also seeing some progress, albeit as slow as the internet speed.
In the latest Speedtest Global Index report of Ookla in January 2021, the internet download speeds in mobile and fixed broadband are 25.77mbps and 32.73mbps, respectively. These are big jumps from the August 2020 report, which pegged the mobile and fixed broadband internet speeds at 16.44mbps and 25.34mbps, respectively.
The rate of increase in internet speed download is relatively higher compared to the previous years, which we can probably attribute to the huge pressure to the internet service providers’ (ISPs) to improve their services. Urgent calls from public officials, work-from-home arrangements, and the threat from the third telco have driven the ISPs to invest more to improve the state of the country’s internet.
All these augurs well with the bright prospects of the Philippine digital economy. Just in 2019, the Philippines was dubbed as having the smallest internet economy in Asia, according to a Google-backed study, which valued Philippine online economic activities at $7 billion. This is a far cry from the digital economy size of our neighbouring countries – Malaysia ($11 billion), Singapore ($12 billion), Vietnam ($12 billion), Thailand ($14 billion), and Indonesia ($40 billion),
But in the same study conducted in 2020, it is projected that the Philippine digital economy’s gross merchandise value (GMV) will hit $28 billion in 2025, accelerating to a 30% compound annual growth rate (CAGR), driven by the growth in new digital consumers. In the latest e-Conomy Southeast Asia report by Bain & Company, Google, and Temasek described the country’s digital economy as “resilient” pegging its value at $7.5 billion in 2020.
The e-commerce sector’s value is projected to increase by a CAGR of 55% to $4 billion in 2020, and by 31% to $15 billion in 2025. The decline in transport, food, and travel sectors due to the pandemic was offset by the growth in e-commerce and online media offset. The online media sector’s value is seen to grow by a CAGR of 27% to $2.1 billion in 2020 and hitting $5 billion in 2025.
These jibe well with the Hootsuite report which indicated that in 2020, the Philippines saw a 26.6% worth in the value of digitally enabled consumer payments, hitting $10.52 billion, with 38.88 million Filipinos making digitally enabled payment transactions in 2020.
In the business sector, the value of investments in the Philippines’ internet sector rose 34.13% to $169 million in the first half of 2020 with a total of 22 investment deals, as compared with the $126 million posted in the same period a year ago with 32 investment deals, according to the latest Google-backed report.
One aspect of the digital economy in the business sector is the adoption of cloud computing. A recent survey commissioned by Alibaba Cloud revealed that a majority (94%) of Philippine businesses view cloud-based technology solutions as an important factor in mitigating the impact of the pandemic.
Furthermore, with cloud technologies being an enabler of digital transformations, 88% of Philippine businesses stated they are now more supportive of using cloud-based technology solutions to grow their businesses as compared to before COVID-19, among the highest of the markets surveyed.
In addition, an increasing number of Philippine enterprises are turning to cloud-based technology solutions to navigate the new conditions with more than half (51%) of businesses reporting they have adopted more cloud-based technology solutions.
These statistics jibe well with actual cloud technology adoption figures. According to a global cloud technology vendor in the Philippines, they have seen a 100% growth in private sector cloud adoption and a whopping 200% growth in public sector cloud adoption over last year. Cloud-based applications like collaboration and productivity tools, analytics, customer relationship management, and sales force automation grew by more than 60% in adoption in the country, led by the financial services and business process outsourcing sectors.
Indeed, the crisis due to the pandemic has forced our country to accelerate its pivot to digital. Consumers and businesses will continue to use and consume digital services even after the pandemic. The Philippine digital economy is poised to help our country weather the storm.
The author is CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is Fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at firstname.lastname@example.org