Hinrich Foundation Digital Trade Report: Philippines economy to reap US$37B by 2030 with digital trade
Published 31 May 2019
Digital exports are the Philippines 6th largest export sector today and account for 5.4 percent of its total export value. This value could grow 218% by 2030.
The Hinrich Foundation and AlphaBeta Advisors released a report today (“THE DATA REVOLUTION: How the Philippines can capture the digital trade opportunity at home and abroad”) measuring the current contribution and potential future impacts of digital trade to the Philippine economy. The report also formulates specific policy recommendations for capturing the digital trade opportunity and for managing potential risks.
Digital trade also enables benefits for domestic firms in the Philippines, particularly in non-digital sectors. The value of digital-trade induced benefits is currently estimated to be around is ₱160 billion (US$ 3.2 billion, which is equivalent to 1.8% of the country’s GDP) and to have the potential to grow 12-fold by 2030 to reach ₱1.9 trillion (US$37 billion) by 2030. The growth potential arises from improved penetrations rate of digital technologies, particularly for MSME’s.
Domestic sectors that will benefit the most from the growth of digital trade include financial services, infrastructure, agriculture and food, and education & training, manufacturing and healthcare.
A solid, open and transparent digital regulatory environment, in line with international frameworks, will be required in the Philippines to reduce compliance challenges and transaction costs, and to enable domestic companies, particularly MSME’s, to participate in overseas markets.
“Digital trade has the potential to accelerate significantly productivity and economic growth in the Philippines, particularly in non-digital sectors and for MSME’s. With the right policies, revenues from digitally-enabled exports can double by 2030.” – Berenice Voets, Director of Public Affairs of the Hinrich FoundationBerenice Voets - Director of Public Affairs of the Hinrich Foundation
There are two key components of digital trade which are already creating economic value to the Philippines today, and have the potential to grow further.
President Duterte and his delegates announced during the APEC Business Summit in November 2018 that the Filipino government was preparing to meet the challenges of the digital world by embracing the positive disruptions from artificial intelligence, big data and the internet of things. The BPO sector in the Philippines has already benefited from digital advancements. According to the findings of the Hinrich Foundation report, an open and transparent digital regulatory environment could unlock substantial economic value of up to ₱1.9 trillion (US$37 billion) across a range of domestic sectors by 2030. Digital trade can enable local firms to reduce their cost of production, increase efficiencies, and acquire richer business insights – all of which will help grow exports and enter new markets.
"The value of digital exports of goods and services in the Philippines today amounts to ₱187 billion (US$3.7 billion), accounting for 5.4 percent of the country’s total export value. With an open and transparent regulatory environment, digital exports have the potential to grow 218 percent to reach ₱594 billion (US$11.8 billion) by 2030."Berenice Voets - Director of Public Affairs of the Hinrich Foundation
To fully harness the potential of digital trade for its economy, open and transparent digital trade rules will be required both domestically and in bilateral and multilateral trade agreements. Read more about the Phillippines Digital Trade report here.
All information in this report is derived from AlphaBeta analysis using both proprietary research and publicly available data. Detailed information on the methodology can be found on the Digital Trade Research article above.
About the authors
This report was prepared by the Hinrich Foundation with analytical support from AlphaBeta. Google and the Hinrich Foundation commissioned the report. The Hinrich Foundation considers digital trade to be a growth opportunity for countries. This report aims to help policymakers, businesses, and other stakeholders to better identify ways to harness the benefits of digital trade and to manage potential risks. It is one of eight digital trade reports the Hinrich Foundation and AlphaBeta will be publishing. Other economies reviewed include: Australia, China, India, Indonesia, Japan, Malaysia, and Vietnam.
The Hinrich Foundation is a non-profit organization focused on promoting sustainable global trade. The Foundation’s work is grounded in the belief that sustainable global trade requires mutually acceptable terms and balanced economic, social and environmental outcomes. It produces forward-looking policy research, as well as programs that educate and engage stakeholders on global trade issues. The aim of the Foundation is to influence and improve trade behaviors and outcomes, so that trade can create maximum benefits for all its participants, for geopolitical stability.
AlphaBeta (www.alphabeta.com) is a strategy and economic advisory business serving clients across Australia and Asia from offices in Singapore, Sydney, Melbourne and Canberra.