PH economy’s digital ball-and-chain
Ben D. Kritz
ALL I wanted to do was to check my bank account balance.
My bank, Unionbank, like most of the country’s large banks has a wonderful online banking facility, a well-designed, easy to use website that allows an ordinary customer like me to do almost everything I might need to do at the bank short of physically handling cash. I can check my balance, transfer money between accounts, buy phone airtime, and pay most of my bills, all in a matter of seconds.
Or at least I could, if I could actually access the website. Thanks to the capabilities of Globe Telecom’s LTE broadband service, a simple intention to check my bank balance before going out to dinner on Friday evening turned into a 42-minute ordeal requiring me to reboot my Wi-Fi receiver five times before I was able to enter Unionbank’s website, and then only just long enough to glance at my account information before the connection was lost again.
Most internet users in the Philippines can likely relate to this sort of tribulation, which was not at all an atypical experience in the area where I live. Globe and its counterpart PLDT/Smart have made the Philippines somewhat of a laughingstock in terms of digital capabilities, to the grim extent that “internet connectivity” is recognized as a serious obstacle to economic expansion, as I learned from attending a briefing by some officials of Moody’s Investor Services last week.
Globe and Smart provide excessively costly yet still completely inadequate telecommunications services because they can. Thanks to a chronic lack of government foresight, the duopoly has been allowed to entrench itself and essentially hold the entire country hostage: Consumers and businesses can either pay premium prices for minimal services, or they can resort to using carrier pigeons.
As a result, normal development of a wide swath of the economy has been seriously retarded. Internet connectivity issues are an obstacle the country’s burgeoning BPO sector has had to work around; it has done so successfully for the most part, so far, but technical difficulties are among the reasons the Philippines’ dominance in this key industry has begun erode to the advantage of places like Vietnam and China. Shortcomings in digital capabilities are also hampering much of the government’s drive to modernize its services. In some areas of the economy, such as customs administration, tax collection and management, and agricultural development the opportunity cost has been enormous, not just in terms of unresolved inefficiency and corruption, but also the potential for expanding services.
It is in the area of banking and financial inclusion, however, where growth of the economy has been most seriously hamstrung. One of the ways in which the nation’s aspirations toward poverty reduction and diffusion of economic growth across the entire country can be most quickly realized at a relatively low cost is through extending access to formal financial services to the roughly 70 percent of the population that does not currently have a bank account. Banks like Unionbank are aggressively developing digital-based services, and thanks to the relative ease with which mobile applications can be developed, a whole host of non-bank digital money networks have become available in the past couple of years. With a smartphone, a personal appliance that is now available at no more than the cost of an ordinary cell phone a few years ago, consumers even in remote areas can have organized financial accounts, whether through a regular bank or some other service, along with all the benefits to managing household or small business finances that sort of regularity offers.
Financial inclusion in some fashion reduces reliance on the informal economy, reduces leakage of financial resources, and helps to reduce poverty by improving financial literacy. Giving people the tools to handle their money more efficiently turns them into more active consumers and gives some of them a chance to become small entrepreneurs. Although launching digital financial services tend to have high upfront costs, they pay tremendously outsized dividends within a relatively short period of time.
Provided, of course, people can actually use them, which under present circumstances in the Philippines is uncertain at best. While the efforts of the current administration to work out a mode of entry for a third telecom provider have advanced further than those of previous administrations, progress is still glacially slow; if we’re lucky, the terms of reference might be completed and the long-awaited third telco selected by the end of this year.
Provided the government does not continue to allow Globe and Smart to dictate the scope of regulation of the telecom industry – which may be a faint hope, as this government has not yet demonstrated it is any less inclined to be accommodating than any other administration – consumers and businesses may see improvements in choices and service within two to three years.
Two to three years to achieve a level of digital development most of the Philippines’ peers raced past five or more years ago is a discouraging prognosis. But we will not have even that much to look forward to if the government does not continue its efforts, and so it should be strongly urged to do so.
ben.kritz@manilatimes.net
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