Manila, August 10, 2011—Additional income-generating opportunities and improved public service delivery can be derived from Information and Communications Technology (ICT) if the Philippines can further develop its potentials in this sector and build on its strengths, as shown by recent gains in business process outsourcing (BPO), a World Bank report says.
However, while ICT is already a significant and growing segment of the Philippine economy, developing it further will require more equitable and affordable access to high-speed or broadband Internet, especially at the level of local government units, says the report, “Philippines Discussion Notes: Challenges and Options for 2010 and Beyond”.
While access to mobile phone networks is enjoyed by 99 percent of the country’s population within range of these networks—enabling the Philippines to post one of the highest rates of text messaging (SMS) usage worldwide—access to Internet remains limited compared to its neighbors in Asia, says the report, which discusses ICT issues as part of its analyses of options for improving the investment climate in the country.
Expanding access to Internet can further strengthen the Philippines’ position as a world leader in information technology-enabled services (ITES), thanks to robust growth in such activities as hardware (microchip) manufacturing, computer servicing, Internet cafes, plus a host of other services.
Also, the Philippines has scored big gains in BPO activities: call or contact centers, back office processing, software development, architecture and engineering, animation, transcription services, and games development.
Growth has been sustained since the industry generated US$6.1 billion in revenues in 2008 although a shortage of skilled labor has emerged as a “significant constraint” to expanding toward more advanced and higher-value services, the World Bank report says.
Meanwhile, broadband penetration outside Metro Manila and Metro Cebu remains low, due particularly to infrastructure limitations and the total cost of ownership, the report says.
Fiber-optic backbone, which offers the fastest transmission speeds, is available in all larger cities and municipalities along the archipelago’s developed transmission routes. However, 17 provinces have no fiber-optic backbone networks; they rely on either satellite or microwave transmission, the report points out.
This level of backbone infrastructure, according to the study, is insufficient to meet the fast-growing demand for bandwidth from commercial and institutional users, including government.
Now becoming essential for the effective functioning of the Philippine government, ICT is bound to have major potential sources of demand from such services as public expenditure management projects, Internet access for high schools and other schools, new E-Government services at the national and LGU level, applications such as “telehealth”, and agricultural information systems.
The report says the government can facilitate further development of broadband Internet into rural areas primarily through regulatory incentives to increase competition, and competitive capital subsidy mechanisms for network development and public access facilities in commercially less viable areas. The government can also stimulate the sector through its own use of ICT, it says.
Leadership in ICT development is one area that the government will have to clarify and strengthen, particularly toward reducing skills shortages to stimulate further development of IT-enabled services, improving access to broadband Internet for users outside major cities, and using ICT to deliver public services in a more coordinated and cost-effective manner, the World Bank study says.