The Philippines and other economies need to adopt domestic legislations and international agreements to enable them seize the benefits of digital trade, according to a Hinrich Foundation report.
“Sensible regulatory frameworks are essential to address related issues such as privacy and cybersecurity, but many countries are adopting digital trade rules that could undermine digital trade opportunities,” said the report titled “The Data Revolution: Capturing the Digital Trade Opportunity at Home and Abroad.”
The report said it is imperative to address issues such as imposing undue red tape on data-driven operations, restricting cross-border data flows, and imposing imbalanced copyright and intermediary liability regulations.
“Unlocking billions of dollars in economic value for local companies requires governments show leadership by seeking balanced digital trade rules in bilateral and multilateral trade agreements across the region,” it said.
Digital trade currently contributes $3 billion to the Philippines domestic economy, which is equivalent to 1.8 percent of gross domestic product (GDP) can create huge positive impact for the economy.
By 2030, it is estimated that this value could grow by almost 12-fold to reach $36.2 billion, equivalent to nine percent of its projected GDP.
The report said digital trade already contributes tens of billions of dollars in value to domestic economies, with the potential for hundreds of billions more.
“Domestic economies derive value from digital trade in multiple ways. It supports collaboration (especially in the case of skill gaps or labor shortages), creates cost efficiencies through overseas storage and data pooling, enables adoption of efficient business practices (such as allowing consumers real-time access to their bank accounts even when abroad), and supports management of global supply chains (e.g. tracking of export containers using Internet of Things technology),” it said.
The report also sees that digital exports may soon make up a substantial portion of total exports for many countries.
“The export of digital goods and services can add tens of billions of dollars to Asia Pacific economies when taking full advantage of digital trade opportunities,” it said.
Digital exports account for 5.4 percent of the Philippines’ total export value today, and this value could grow by more than three times in 2030.
The export value of virtual goods and services enabled by the digital economy, such as e-commerce, amounts to $3.6 billion in exports today, accounting for 5.4 percent of its total export value.
“While this is largely driven by the Philippines’s large IT-BPO4 (information technology-business process outsourcing) sector, the country has room to grow in terms of its other digital exports. If the Philippines fully leverages the opportunities afforded by digital trade, its digital exports could grow even more rapidly by 218 percent to reach $11.3 billion by 2030,” the Hinrich Foundation report further said.
The Philippines’ digital trade primarily relies on services in its digital export sector, but products could overtake services slightly 2030. The value from the export of digitally-enabled products could grow from $19 million in 2017 to $6 billion by 2030.
“This growth is expected to be largely driven by expanding e-commerce exports, which currently have a very small base in the country,” it added.
The value of digitally-enabled services is currently $2.9 billion in 2017 and could grow by forty-eight percent to reach $4.3 billion in 2030.
This growth is expected to be largely driven by expanding digital infrastructure services,” it said.