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Economy

The requisite to recovery

Turning over to a new year always gives Filipinos new hope. Last year, with its economic turmoil, health risks, and social uproar, was challenging, to say the least. Many have taken to calling 2020 a “lost year.” An apt description given the lives, businesses, opportunities, and the suffering over the course of the pandemic. With news of a new strain of the COVID-19 virus and continued economic and political consequences, the crisis is far from over.

Throughout the pandemic-induced crisis, what has sustained and empowered our businesses, civil society responses, personal relationships, and even government services, is the power of the internet and digital services. These innovative technologies do not only allow us to continue to function. They also present a multitude of opportunities for adaptation and progress as digitization is changing our way of life. Our success in overcoming this crisis now hinges on our capacity to capitalize on the new opportunities presented by cloud-based technologies.

As 2020 came to a close, internet speed in the Philippines has been reported to have improved by more than 80% in the past two and a half years, spearheaded by the country’s telecommunications sector. Furthermore, Globe and PLDT have committed billions in investments to upgrade their networks and speed up cell tower construction to improve connectivity coverage and speeds in both urban and rural locations.

One thing is clear — the initiatives of the private sector are not enough to address the increasing demand for bandwidth. Government must match the developmental drive of private enterprise with public sector investment in an enabling policy environment that’s devoid of bureaucratic stop lights that tend to encourage corruption and expensive delays.

It was a big disappointment when the Department of Information and Communication Technology’s proposal for an P18-billion budget to implement the National Broadband Plan, a critical infrastructure project that is long overdue, was only allocated P1.9 billion in the 2021 General Appropriations Act.

All countries have sensibly prioritized COVID-19 expenses, like how the US government allocated $3.2 billion for the benefit of low-income citizens in its historic $900-billion coronavirus (COVID-19) relief package. In addition, the reality of the global shift to online transactions became the rationale to offer a $50 monthly discount off the retail price of broadband internet for households that lost a substantial amount of income since the onset of the pandemic. Though not at this scale, our government could have seen the urgent need to support our new dependence on online services.

That is not to say that the Philippine government has been found entirely lacking. A significant amount of the GAA was allotted for infrastructure meant to spur economic growth. However, infrastructure in this age of digitization should no longer be confined to bridges and roads. We need to close the 50,000-cell tower backlog. We need thousands of kilometers of fiber optic networks. We need to operationalize an existing but unconnected fiber optic backbone by linking public and private assets. All are strategic investments that will have long term benefits to all health, education, government, and economic ecosystems.

A McKinsey Global Institute report in December 2020 stated that Asia has accounted for a large share of global growth in the key technology metrics over the past decade and though the more advanced states are dominant, the rest of the Asian countries stands to greatly benefit from this “technological leapfrogging.”

According to the report, “Asia has been building its technological capabilities and infrastructure. More is to come based on the scale of markets and investment and the speed of technology adoption, as well as through intellectual property creation.”

The Philippines cannot afford to be left behind as the world’s economies and governments embrace the revolution of digital transformation. The dawning of the 5G revolution will significantly boost global connectivity with bandwidth speeds that spur a new breed of wireless technologies.

These are clear indicators that global recovery will be fueled by digital innovation. The capacity of a nation to keep up, utilize, and adopt its obsolete systems to new innovations will relate to the velocity of its development.

Moving into a new year, it is not a hard sell to realize that digitization will be a requisite to an acceptable pace of recovery, and that the foundation to building this capacity is with digital infrastructure. Our prosperity in the post-pandemic world will be difficult and protracted if we fail to synergize the inherent operational and attitudinal differences of private and public enterprises.

The private sector’s creative nature and ability to efficiently deploy resources when fused with a responsive government that is open to alternative modes of maximizing the utility of public assets is the first step to reversing this deep economic crisis.

 

Victor Andres “Dindo” C. Manhit is President of the Stratbase ADR Institute.

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