The Digital Landscape in the Philippines

March 2021

  • The Philippines’ internet economy has grown remarkably from USD 2 billion in 2015 to USD 7 billion in 2019. Of the six largest South East Asian countries, the Philippines has the most room for growth: the internet economy makes up 2.1% of the country’s GDP currently, and is expected to rise to 5.3% by 2025, hitting a value of USD 25 billion.
  • As of January 2020, the Philippines recorded 73 million internet users with an internet penetration rate of 67%, and 173.2 million mobile connections. Notably, Filipinos are the heaviest internet users in the world, spending around 10 hours per day online.
  • The Philippines is currently in the middle of upgrading its digital infrastructure. Some USD 105 million have been allocated in 2020 to the country’s Department of Information and Communications Technology (DICT) to speed up the rollout of interconnectivity and data security programs. This specifically includes installing free Wi-Fi in public places and state universities and colleges, setting up of centralized data centers, servers and storage facilities to interconnect government agencies. Importantly, the country is planning to build and launch two more international submarine cables. The eastern link, which will connect to Singapore and Japan via Indonesia, will be ready by 2022, while the western link will connect to Japan, South Korea, Hong Kong, Vietnam, and Thailand, and will be operational by 2023.
  • Private companies have proven to be remarkably active in supporting government-led projects. For instance, Facebook agreed to construct and operate a 240 km submarine cable system, and Singaporean company HyalRoute Group announced an investment of up to USD 2 billion for laying out shared fiber optic cables throughout the country, as part of the government’s Free Public Wi-Fi Network project to reach the unserved and underserved areas in the country.
  • From having only two telco operators (PLDT and Globe), the country saw two more players joining the field in 2019 – DITO Telecommunity and NOW Telecom. These telco operators are currently racing to rollout 5G services. Globe is partnering with Huawei and PLDT with Nokia. Globe already introduced 5G services to its home subscribers in Metro Manila in July 2019. PLDT’s plans for a commercial rollout of 5G services in the first half of 2020 had to be postponed due to the COVID-19 outbreak, but are expected to be relaunched soon.
  • Among the key segments of the internet economy, e-commerce is the fastest growing and the largest. The online media sector is also an area of strength as the Philippines it recorded a 43% increase from 2015 to 2019, with subscription music and video streaming services popular among young Filipinos.
  • The Business Process Outsourcing (BPO) sector is the major driver of ICT developments in the Philippines, with the country being one of the global leaders in the area. The sector recorded USD 26.3 billion in revenues in 2019 and employs 1.3 million full-time employees. Interestingly, because of the high level of digitalization of the sector, it has proven to be resilient during the COVID-19 outbreak.
  • As the pandemic redefines the world’s economy, the government of the Philippines has taken a more decisive approach in supporting the development of the ICT sector. In June 2020, the Philippine government launched the “Digital Cities 2025 program”. Under the program, the government will set up 25 new digital hubs in the country, which will be the focus for new economic development in the next three years. The initiative is geared to sustain the rapid growth of the Information Technology and Business Process Management (IT-BPM) sector and promote countryside development. Various Local Government Units, ICT Councils, and IT-BPM locators will have access to information on strategies and best practices from the private and public sectors to effectively develop and grow the IT-BPM industry in the selected regions.

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