THE acceleration of digitalization helps boost environment, social, and government (ESG) related communities and businesses in the Philippines amid the ongoing coronavirus pandemic, according to research firm ESG Intelligence.
According to the report, almost two-thirds of new digital consumers came from non-metro areas in the first half of 2021. Filipino consumers use twice as many digital services as before the pandemic.
The Philippines’ internet economy is also expected to double in value by 2025, the fastest projected growth in Southeast Asia.
“Protracted lockdowns and containment measures across the Philippines during the COVID-19 (coronavirus disease 2019) pandemic encouraged consumers to turn to digital tools for the fulfillment of daily tasks, as well as for work, education and social connection,” it stated.
ESG Intelligence reported that technology also helped micro, small and medium enterprises (MSMEs) maintain operations over the pandemic.
“In this way, increased digitalization can enable equitable development across the archipelago, and looks set to present a sizable growth opportunity over the coming years,” it added.
The report also said that digital finance can enhance process efficiency and widen financial inclusion. “Digital payments can offer greater security, efficiency and revenue opportunities for merchants,” it added.
With regards to consumers, digital payments are seen as a tool to raise financial inclusion, the report stated, citing a study by the Bangko Sentral ng Pilipinas. The central bank also aims for 50% of total retail transaction volume to be digital by 2023.
“Nevertheless, challenges remain. Among these, digital lending options from financial institutions can be limited, with high minimum requirements. Strengthened digital finance infrastructure, including credit risk evaluation as well as rules and regulations, could help overcome this and unlock the ESG-related benefits of digital finance for all stakeholders,” it added.
Apart from increasing the use of digital payments, the pandemic also triggered a review of digital regulation and taxation in the Philippines.
“The pandemic triggered a reevaluation of the cross-border e-commerce tax system. The COVID-19 pandemic increased the use of e-commerce, including for products from overseas. With a relatively high exemption threshold, reducing or abolishing this could help preserve the Philippine VAT base amid VAT and customs-free competition from overseas,” it added. — Luisa Maria Jacinta C. Jocson
