The Duterte administration has shown enormous political will to get things done, from every crisis to every solution considered and rolled out. Some say government should deal with every crisis but we know from our history that the private sector should lead the offensive and government should provide the environment, the very ecosystem to respond to it. The public sector should be nimble, it should be lean and mean and go to things in a market failure scenario and lead the transition to a platform economy.
Note: This column originally appeared in The Manila Times on October 29, 2019.
What are the conclusive indications that we are in the right direction in building our nation? Two indices came out recently that augur well for our national health: the ease of doing business by the World Bank and results of the first semester 2018 official poverty statistics by the Philippine Statistics Authority (PSA). The Philippines recorded a jump of 29 ranks in the recent World Bank 2020 Ease of Doing Business report, gaining an overall score of 62.8. Among the 190 countries, the Philippines’ position rose to 95th place from 124th place last year with a score of 57.68 plus (1.36). According to the report, the Philippines improved in three areas: starting a business, dealing with construction permits and protecting minority investors. On the other hand, the PSA placed “poverty incidence among individuals — the proportion of Filipinos whose incomes fell below the per capita poverty threshold of P10,481 per month — at 21 percent, compared to the 27.6 percent recorded in the first half of 2015. The latest poverty data translates to a reduction of more than 5 million poor individuals, from 28.8 million in 2015 to 23.1 million in 2018.
We have been in the cusp of several momentums since 2016 due primarily to having the guts to see things through. The Duterte administration has shown enormous political will to get things done, from every crisis to every solution considered and rolled out. Some say government should deal with every crisis but we know from our history that the private sector should lead the offensive and government should provide the environment, the very ecosystem to respond to it. The public sector should be nimble, it should be lean and mean and go to things in a market failure scenario and lead the transition to a platform economy.
Momentum is a physics term; it refers to the quantity of motion that an object has. A sports team that is on the move has the momentum. TeamPH is moving fast and strategically with the various infrastructure about to finish by yearend, such as the Sangley Airport, Skyway stage 3, the North Luzon Expressway and South Luzon Expressway connector which will partially open. Clark is a show window of what can be and Pampanga is moving to adapt fast. And there are the six lanes of highways built and being built across Mindanao. The biggest problem we are facing are with the water concessionaires, the ills of privatization that has gone astray without much development (wastewater treatment, water impounding, collection, etc.) despite the grant of franchises to private corporations. Legislation on public utilities is central to the issue, which has remained pending since Day 1 in Congress.
With two-and-a-half years going before 2022, PRRD has to take the problem by the horns and get the lifting of the economic provisions in the Constitution done with before December 2020. Lifting is such a catalyst in order to continue the climb in terms of ease of doing business and making the country the preferred location for companies hit by the protracted trade war between the US and China. The same is true for attracting more foreign direct investments into our economy.
What are the drivers of the future? Digital platforms and the changing norms of work/occupation, otherwise known as the “gig economy,” are key drivers. When you look at all these drivers, it is inherent that education should lead the way towards a skills-based type than a degree-centric model that has plagued Philippine education. We have been producing graduates that do not fit with the needs of the market and that of industry.
“How people live, work and spend their money has changed dramatically over the past decade, especially with the advent of smartphone technology. Being hyperconnected via social networks has increased communication and has opened new ways to make and spend money online, picking up a “gig” (or a temporary work engagement) is as easy as making plans for dinner or finding a date.” The so-called “gig economy” is altering the way that people view and perform work, and counties must be ready to respond with innovative policies and programs. The gig economy is made up of “three main components: the independent workers paid by the gig (i.e., a task or a project) as opposed to those workers who receive a salary or hourly wage; the consumers who need a specific service, for example, a ride to their next destination, or a particular item delivered; and the companies that connect the worker to the consumer in a direct manner, including app-based technology platforms. Companies such as Uber, Airbnb, Lyft, Etsy or TaskRabbit act as the medium through which the worker is connected to — and ultimately paid by — the consumer.”
Digital platforms are made up of a “base layer of technology that helps different types of users create a value and exchange that value with one another. In addition, it also has a governance model that explains and controls the types of behavior that are permissible on the platform, all with the goal of creating good behavior and preventing bad behavior. The goal of any platform is to consummate a match between a provider and a consumer. The more, the better. Subgoals are that you want to facilitate and encourage the creation of value objects and their consumption.”
So, is the Philippines ready for digital transformation? Or are we stumped because of our destructive politics? “Why is it still happening” is a question of seeing things where there are none and creating scenarios that are needed to question the record of accomplishments that are clouded by the battle against illegal drugs.
If we think of the internet era, firms are harnessing economies of scale on the user side. The “Windows operating system won the desktop wars, a generation ago, because more developers produced for the system which then pulled more users onto the system which then ensured that more developers would develop the system.” A virtuous “feedback loop of demand side economies that increased the value that all of these are experienced from affiliating through the system.” Similarly, in merchant markets with the rise of Alibaba in China or in mobile with Android, or in social networks with the rise of Facebook. In each of these instances, because more users affiliated with the system, other users find the system increasingly valuable that join themselves. Imagine if our national and local governments are in platform ecosystems.
And across the world, North America and Asia are leading “valuable platform companies that have achieved market capitalizations in excess of $1 billion.” The “United States and North America, because they have a common language and a common market, it’s easier for firms to roll out one standard for the entire region. In Asia, looking at giants like Baidu and Alibaba and Tencent, they have an enormous market. And so they’re able to harness the demand side network effects of users coming to the system.”
Where are we in digital transformation? And yet we used to be the texting capital of the world and today, the social media capital of the world. Good thing that the Department of Information and Communications Technology has decided to “implement the Central Business Portal which will serve as a central system that will expedite the process for business registration in compliance with Republic Act 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018.” But still we need more digital transformation. If we want to control leakages in systems and prevent corruption, digital transformation is the way to go. An open, more transparent and accountable government is the one huge push needed to institutionalize the gains of this administration.
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