Insight – Australia and the Philippines partner for digital transformation

The inaugural Australian Innovation Summit in Manila this year brought together experts from government, industry and academia to discuss the impact of innovation and the challenges and possibilities it presents.

The summit was organised by the Australian Embassy in the Philippines through Austrade, in partnership with the Australia New Zealand Chamber of Commerce and Stratbase ADR Institute. It was sponsored by Telstra and UnionBank of the Philippines.

Tremendous opportunities exist for practical and extended bilateral cooperation between Australia and the Philippines on policy, industry solutions, application development, education and training, and digitisation.

The Philippines is one of the world’s fastest growing economies, with a large, young, technically savvy, and mainly English-speaking domestic market.

Significant opportunities for digital collaboration are emerging – particularly in the education and health sectors. This is because of rapid growth in broadband and smartphone penetration, coupled with government commitment to boosting investment in innovation and technology.

CEO of the UnionBank of the Philippines, Edwin Bautista, has said that digital fluency and education are key to sustained economic growth and competitiveness.[1]

The Duterte administration has committed to a 5-7% spending on infrastructure, reducing poverty from 22% to 14% by 2022, achieving a growth of 7-8% annually up to 2022, connecting more people and communities, and creating more jobs.[2]

In 2017, the Philippines was among the top three growth performers in Asia, coming in just behind Vietnam and China.[3] With a population of 106 million with a median age of 23 years, employability in the Philippines or overseas is a priority. The country has placed a particular emphasis on upskilling, introducing technology and innovation across sectors, and intensifying international cooperation across a range of areas, including research and development (R&D).

The advent of ‘robotisation’ and automation is also driving the knowledge and business process outsourcing sector, which is one of the largest employers in the Philippines with over 1.3 million professionals – to move up the value chain and seek core skills such as big data, data analytics, cyber security, blockchain, digital commerce and fintech.

In line with this, the Philippines Department of Science and Technology (DOST) has strengthened its R&D programs to encourage more young innovators, particularly in the provinces, by providing grants and leadership programs in universities and state colleges linked to industry. Universities are being encouraged to produce more competent risk takers. DOST is offering scholarships in big data analytics and artificial intelligence (AI), and has nominated technology transfer and R&D commercialisation as priorities.

Importantly, the Duterte administration has stressed collaborations with neighbours and partnering with businesses – home-grown and foreign-based – as a means to drive progress.[4] The government has implemented a large-scale education reform agenda designed to align the Philippines system with others around the world.

Opportunities in edtech

Technology is key to the delivery of education in the Philippines. This represents an opportunity for Australian edtech providers, given our substantial strength in distance learning, transnational education, and curriculum development that incorporates emerging technologies.

Currently, many Filipino teachers lack the technological knowledge, support and materials to teach effectively. Better access to technology and a personalised training approach, at which Australian edtechs are expert, is integral to improving the quality of teaching staff and educating both students and their parents on the value of adopting technology to enhance future job prospects.

Education is a vital tool for cultural change and digital acceptance. In a bid to foster an innovative mindset, the non-profit GoNegosyo has been set up to encourage Filipinos to get entrepreneurial, while the Department of Trade and Industry (DTI) has partnered with the Technical Education and Skills Development Authority (TESDA) to train graduates in entrepreneurship and provide access to startup capital.

DOST has allocated A$500,000 to fund research grants to help Filipino startups develop market-ready products, and the recently passed Innovative Startup Act provides financial grants and tax breaks to local startups.

Opportunities in digital health

The Philippines is an archipelago of more than 7,000 islands and as such, digital healthcare is seen as an enabler to universal healthcare coverage. Its geography has created a highly fragmented system across doctors, pharmacists, patients and hospitals. Opportunities exist for data collection and analysis platforms, telemedicine systems, treatment, tracking and monitoring systems, encryption devices, and technology that will help deliver more efficiently distributed and affordable healthcare. Much of the traction in transitioning from non-digital to a digital system has been led by some private sector organisations but the overall acceptance rate and data sharing among facilities is still quite low, as ownership of data is also an issue.[5]

The government is committed to improving the healthcare system, developing a clear set of guidelines and standards to create more services. It understands that closer collaboration with industry and the private sector is necessary.[6]

Some international operators have already established a presence in the market.

For example, European software giant SAP has partnered with Accenture on a program to mentor 500 IT students from the Philippines top universities. The collaboration is designed to foster new talent and build digital capabilities by connecting students with startups, thought leaders, researchers, accelerators and venture firms.

The Japan External Trade Organisation (JETRO) has invested in Filipino startups, including Global Mobility Systems – a fintech startup facilitating automotive loans, and Informatix – a startup helping locals obtain certified IT qualifications to work in Japan.

The Asian Development Bank has financed several projects, including a unique biometric ID system designed to address corruption in the banking system.[7]

Germany’s Siemens provides imaging services and equipment to all major private and public hospitals in the Philippines and is using technology and digitisation to deliver better patient outcomes at a lower cost.

While challenges remain – a skills gap, corruption, uneven internet access, and social and educational inequalities – collaboration is key to the country’s innovation agenda.

Over the next decade, the government is set to ramp up infrastructure spending – on airports, seaports, telecommunications, and energy and water facilities – in a bid to transform the economy. The administration has passed a new tax reform package designed to support future growth.[8]

With its close proximity, Australia is ideally placed to develop partnerships to help the Philippines transition to a digital economy.

Join the Australia Borderless Skills Partnership Mission 2018

Austrade invites Australian VET and digital health providers to participate in two aligned missions to the Philippines in October 2018 to directly engage with government, industry and academic stakeholders. For more information, please contact Ms Tina Sendin, Austrade Manila or visit austrade.gov.au/PABSPmission

You can also visit the Philippines Market Profile on the Austrade website to learn more about doing business in the Philippines.

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[1]  Australian Innovation Summit in the Philippines, Manila, 22 May, 2018.
[2]  Presidential Communications Office, Speech of President Rodrigo Roa Duterte during the opening ceremonies of the Boao Forum for Asia, Delivered at the BFA International Convention Center, Hainan, China, 10 April 2018, http://pcoo.gov.ph/wp-content/uploads/2018/04/20180410-Speech-of-President-Rodrigo-Roa-Duterte-during-the-Opening-Ceremonies-of-the-Boao-Forum-for-Asia.pdf, accessed 25 July 2018.
[3]  The World Bank, Philippines Economic Update: Investing in the Future, https://www.worldbank.org/en/country/philippines/publication/philippines-economic-update-investing-in-the-future, accessed 25 July 2018.
[4]  Presidential Communications Office, Speech of President Rodrigo Roa Duterte during the opening ceremonies of the Boao Forum for Asia, Delivered at the BFA International Convention Center, Hainan, China, 10 April 2018, http://pcoo.gov.ph/wp-content/uploads/2018/04/20180410-Speech-of-President-Rodrigo-Roa-Duterte-during-the-Opening-Ceremonies-of-the-Boao-Forum-for-Asia.pdf, accessed 25 July 2018.
[5]  Australian Innovation Summit in the Philippines, Manila, 22 May, 2018.
[6]  Manila Bulletin, Improving Healthcare is a top priority – PRRD, Updated July 20, 2018, https://news.mb.com.ph/2018/07/19/duterte-improving-healthcare-is-top-govt-priority/, accessed 25 July 2018
[7]  Australian Innovation Summit in the Philippines, Manila, 22 May, 2018.
[8]  Republic of the Philippines, Department of Finance, https://www.dof.gov.ph/taxreform/index.php/2018/01/23/build-build-build-roll-75-projects-worth-35-5-b/, accessed 25 July 2018.