Digital economy in Philippines among smallest in ASEAN

MANILA, Philippines — The Philippines trails its Southeast Asian counterparts in terms of the contribution of the digital market to the entire economy, according to a study.

Data compiled by Tech for Good Institute (TFGI) showed that in the Philippines, the contribution of digital economy to gross domestic product (GDP) stood at only 9.4 percent.

When compared to Southeast Asian countries of the same size, Vietnam credits 14.26 percent of GDP to the online economy, followed by Malaysia (14 percent), Singapore (13 percent) and Thailand (13 percent ).

The Philippines was slightly ahead of Indonesia, placing the share of its digital market at nine percent of the economy.

The study said that the Philippines has a lot of reforms to do to sustain the growth of its digital economy in the pandemic aftermath.

For one, TFGI said the Philippine government has to expedite the processing and release of the national IDs given the need for verified identities when completing transactions online and offline. Right now, the government is working on issuing all of the IDs before the end of the year.

“Beyond that, the government should consider collaborating with digital economy companies to drive further innovation of trust-enabling technologies that can meet the needs of the ecosystem like digital signatures for e-commerce transactions and verification tools for digital documents,” TFGI said.

Also, TFGI said policymakers could support tech startups by extending fiscal and non-fiscal perks like grants and subsidies.

“To keep pace with innovation, the government can consider developing sandboxes that provide a controlled environment for testing and piloting of emerging tech solutions and business models within a reasonable testing time frame,” TFGI said.

Despite this, TFGI expects the Philippines to remain one of the most promising markets in the region for digitalization. A previous survey by TFGI reported that 59 percent of Filipinos use at least two e-commerce platforms.

In 2021, the Philippines posted a gross merchandise value of $17 billion in e-commerce transactions, as the pandemic drove more Filipinos to order goods and services from online sites. The e-commerce market in the Philippines is expected to hit $40 billion by 2025.

In its study, TFGI found out that the highest priority of e-commerce players in Southeast Asia is data protection, with 39 percent of respondents concerned with tightening their cybersecurity.

TFGI, founded by Grab, is a think tank focused on Southeast Asia’s tech culture.