PH digital exports could reach P600B by 2030 if e-commerce is fully harnessed, report says

If the Philippines fully leverages the benefits and opportunities from digital trade, the country’s digital exports through e-commerce could grow by more than 200% to reach nearly P600 billion by 2030, according to a new report.

The report, entitled “The Data Revolution: How the Philippines Can Capture the Digital Trade Opportunity at Home and Abroad,” said the country’s digital exports in 2017 were estimated to be worth over P187 billion, making digital exports the country’s sixth largest sector and accounting for 5.4% of its total export value.

However, the report, published by the Hinrich Foundation, noted that while the figures appeared substantial, digital exports were primarily driven by the Philippines’ large IT-BPO sector.

Digital export revenues from e-commerce, on the other hand, were significantly low. Comparatively, Vietnam’s e-commerce export revenues were estimated to be 110 times that of the Philippines in 2017, said the report.

“This is attributable in part to the Philippines’s inadequate Information and Communications Technology (ICT) infrastructure-in 2016, the country had the slowest reported internet speeds in Asia Pacific.”

But the report also observed signs of an upturn owing to the Philippines’ rapidly increasing Internet and smartphone penetration rate and a national roadmap to advance e-commerce.

“If the Philippines fully leverages the opportunities afforded by digital trade, it is estimated that its digital exports would grow even more rapidly by a massive 218 percent to reach P594 billion (US$11.8 billion) by 2030,” it added.

For digitally enabled export products, particularly fast-moving consumer goods, their value was estimated to be P1 billion in 2017. This value “could grow almost 300 times to reach P315 billion (US$6.2 billion) by 2030,” the paper said.

“This growth is expected to be largely driven by expanding e-commerce exports, which currently have a very small base in the country.”

Citing Philippine Statistics Authority data, the report said the Philippine e-commerce market in 2015 accounted for only 0.5% of retail transactions in the country, “reflecting an immense export potential for Philippine businesses.”

However, most local businesses have yet to tap the export opportunity, with less than 8% currently engaged in direct exporting, versus 16% in East Asian and Pacific economies on average.

“Philippine businesses, particularly Small and Medium Enterprises (SMEs), still face substantial challenges in bridging the gap to global markets. They often lack the resources to research international sales opportunities, build global business networks and promote their products overseas,” said the report.

To realize the full potential of digital trade, it said policymakers will need to ensure open data flows and interoperability, promote innovation-oriented approaches to copyright and intermediary liability regulations, and minimize border frictions.

“Digital trade is crucial not only as a way to increase and diversify the Philippines’s export base, but also for helping Philippine firms leverage digital technologies across every sector of the economy,” said the paper.

“It is in the Philippines’s interest to ensure a strong domestic ecosystem for digital trade and to also play a role in advocating strongly for digital trade to remain open in the Asia Pacific to safeguard the potential benefits for Philippine firms.”

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