Regulatory bottlenecks constrain PH ICT services

The country’s information and communications technology (ICT) sector is faced with regulatory bottlenecks that hinder its development.

This is according to a study recently published by state think tank Philippine Institute for Development Studies (PIDS). Authored by PIDS Consultant Lai-Lynn Angelica Barcenas and PIDS Senior Research Fellow Ramonette Serafica, the study is a follow-through on an earlier study in regulatory measures on services trade and investment, which included the logistics and financial services.

With the advent of the digital age, experts have long encouraged governments to invest in their ICT sectors to promote innovation and labor productivity, which contribute to long-term economic growth.

Examples of ICT service providers, according to the Department of Information and Communications Technology Act of 2015, are telecommunications and broadcast information operators, ICT equipment manufacturers, multimedia content developers and provider, ICT solution providers, internet service providers, ICT training institutions, software developers and ICT-enabled services providers.

In the Philippines, the ICT sector is recognized as a driver for economic growth. However, certain policies and regulators have limited it from gaining its full potential.

“The comparative advantage enjoyed by the Philippines in specific ICT and ICT-enabled services indicate the availability of competitive ICT to support services exports,” the study stated, noting, however, that ICT connectivity “is still a major concern for the country”.

For one, internet connections is low, with “only 1 out of every 20 Filipinos” enjoying a fixed broadcast subscription. This, according to the study, is due to higher prices relative to global prices. Regionally, internet speed in the Philippines is also among the lowest in Asia.

While this connectivity problem can be improved by “encouraging foreign investment in ICT infrastructure and services”, the 1987 Constitution makes it difficult for foreign players to enter and compete given its provision barring foreign-owned corporations from operating in the country.

“With the strict interpretation of the 40 percent foreign ownership limitation under current jurisprudence, the Philippines is unable to maximize foreign capital and technology in ICT development,” Barcenas and Serafica said.

The problems of local competitors are no different.

An interested service provider will have to go through layers of regulatory requirements in different branches of government, both national and local, before it can secure its license and franchise.

The study found that these processes take years to be completed, with investments being held up until the application is approved.

The existing regulatory policies have also affected the country’s compliance with international trade obligations on transparency, as some requirements are not publicly available, the study revealed.

Another is in terms of establishing telecommunications networks, with “the acquisition of right-of-way and other permits from local government units where the physical telecommunications infrastructure will be built” proving to be “time-consuming and costly to service providers”.

The study also noted that underdeveloped institutions addressing cybersecurity problems as one of the major threats to ICT.

“The attendant risk to poor cybersecurity strategies lowers trust and confidence in the use of ICT, thus, discouraging trade and investment in related services,” the study said.

To encourage investment in the ICT sector, the authors recommend the creation of an efficient regulatory framework.

They also suggest to improve transparency in procedures, establish a competitive safeguard mechanism, and have better coordination among government agencies on ICT-related policies. — PIDS Newsletter

Close Menu