Is Philippines Ready to Join the Cyber Economy?

by Cymbeline Refalda-Villamin

Lately, we often encounter these terms in our readings. What do they mean and why should we care about them?

The "k" in k-economy stands for "knowledge." Knowledge economy is also referred to as the new economy, and also as the surge economy. In this kind of economy, knowledge (and not capital, labor, nor land) plays a major role in the creation of wealth. The classic example is that of the cake maker. If the cake maker produces cakes and sells them, this is production economy. But if he writes recipe books about how to make various cakes, and sells them, he is selling the knowledge about cake making and this is knowledge economy.

The "e" in e-commerce and e-business means "electronic." E-commerce means the buying and selling of goods and services through the Internet. E-business refers to the means of transactions and operations, and relationships in digital format. Cyber market refers to all the e-stores or online markets found in the Internet.

Products and services offered for sale in the k-economy usually find venues in the

e-stores and e-shops of the Internet. The sellers and buyers thus engage in e-commerce and the manners and means of their transactions are embodied in the whole gamut of processes called e-business finding fulfillment or are consummated in the cyber market.

IT or information technology is experiencing a convergence in applications, content and interactivity, hence a new term was coined-- ICT or information and communication technology, which is the technology used to handle information and communication.

ICT is the electronic means to collect, store, process and present information to end-user in support of their activities. It consists of computer systems, data communication systems, knowledge systems, office systems, and consumer electronics, as well as networked information infrastructures, the components of which includes the telephone system, the Internet, fax machines and computers.

Why should we care about all this electronic means of buying and selling knowledge-based products? Because the Philippines, like the rest of all other countries in the world, is moving towards the direction of e-commerce to become globally competitive. Not to do so means to fall behind, stagnate, and become extinct like a dinosaur.

As of 1995, there were 44 million worldwide Internet users, which increased to 349 million users in 2000. About 36.4 million users are in Asia-Pacific excluding Japan and Australia. The Philippines has around 500 thousand Internet users. Some 766 million Internet users worldwide are projected in 2005.

Norway has 50% of its population enjoying Internet access, followed by Singapore, US, Sweden, and Canada. Finland has less than 40% of its population enjoying Internet access followed by Australia, Denmark, and New Zealand. Netherlands has less than 30% of its population enjoying Internet access followed by Britain, Switzerland, Austria, Taiwan, and North Korea. Belgium has 20% of its population enjoying Internet access.

Japan and China are expected to dominate the Asian Internet usage by 2003. Out of the 79,346 billion Philippine population, 375,000 users were online in 1999, and 683,000 users are expected to be online in 2003. Singapore, Malaysia, and Hongkong are expected to have more online users than the Philippines.

There are 240 million devices accessing the Web and some 200 thousand devices are being added each day. There are 1.5 billion total Web pages in the Internet and some 2 million pages are added daily. Some US$ 80 billion e-commerce transactions were fulfilled in 1999 and US$ 7 trillion more are projected in 2004.

A total of 4,670,824 telephone lines have been installed by various carriers including PLDT, Globe, Smart, Islacom, Piltel, Digitel, and others. As of this year, approximately 2,100,000 units of GSM phones including WAP (Wireless Application Protocol) enabled were sold. WAP phones can be used for emails and Internet access. Some 32,000,000 text messages are being sent everyday, making Philippines the text messaging capital of the world. In the ranking of worldwide Internet economy with regards to competitiveness in Asian countries as of the current year, the Philippines ranks 39^th, followed by India (43rd) and Indonesia (45^th). Singapore ranks 2^nd, followed by Australia (13^th), Hongkong (14^th), and Japan (17^th).

ICT or cyber parks continue to be established in the country-- Eastwood Cyber Park in Libis, Quezon City and Northgate Cyber Zone in Filinvest, Alabang. Fort Bonifacio Global City, BCDA ICT Zone, and Laguna Indusrial Park ICT Zone in Metro Manila; and Cebu ICT Zone in Northern Visayas are being planned.

Recently, this year, Republic Act No. 8792 know as the E-Commerce Act has been approved. It is an act providing for the recognition and use of electronic commercial and non-commercial transactions, penalties for unlawful use, and other purpose-- authored by Senators Flavier, Ople, Magsaysay, Sotto III together with Representatives Verceles, Punzalan, Angping, Golez, Badelles, Bunye, Valera, Calalay, Unde, Lorenzo-Villareal, Teodoro Jr., and Liban. This e-commerce law is based on the UNCITRAL model (also the basis of the US and Singapore e-commerce laws) which facilitates the use of digital communications within and among nations, promotes and validates transactions of ICT, and promotes uniformity of laws regarding electronic documents.

The passing of the e-commerce act embodies the role of the Philippine government in developing e-commerce. The Philippine government aims to provide a favorable policy environment, promote trust and confidence among e-commerce participants, and develop a domestic framework compatible with international norms. It also seeks to be a leading-edge user to jump-start e-commerce and encourage its mass use.

Soon a Philippine portal, the RP Web will connect all departments and agencies of the government. Some P 50 million will be allotted for the purchase of modems and for payment of ISPs (Internet Service Providers).

Another government initiative is the IT21, which is the Estrada administration's master plan that aims to make Philippines the knowledge center of Asia in the 21^st century.

We can understand why the Philippine government wants to lead the entire country to become a major player in the cyber economy. As of the current year, the total Internet economy totals US$ 730 billions. In 1997, the Philippine Internet economy (selling of goods and services through the Internet) earned some US$ 1.6 million. This amount is expected to increase to some US$ 383.7 million in year 2002.

Do we become Asia's knowledge center in the 21^st century when at the moment, Singapore is perhaps already Asia's knowledge center, with Malaysia fast becoming another one. We can see that detrimental factors including weak infrastructure, terrorists problem and others do not prevent the Philippines from transforming into a digital economy and treading the threshold of globalization. Human resources is our vast capital.

According to the survey by Global Index / Meta Group Research of 47 countries, the Filipinos are the top knowledge workers of the world, followed by the Australians, Americans, Canadians, and French. The Filipino IT professional is the man of the hour. Undergoing only perhaps a week-long software / hardware training course, IT companies in any part of the world are willing to immediately hire and relocate him and give him US$ 10,000 or Ph P 400,000 basic monthly salary.

But how do we become a major e-commerce player when all of our IT professionals are going to the US, Australia, and the Middle East to work?

Jaime Augusto Zobel de Ayala II, President and Chief Executive Officer of Ayala Corporation offers a strategy-- the Filipino entrepreneural culture must be enhanced, for it is the driving force of the new economy.

According to Ayala, (in his presentation during the Knowledge Economy Conference sponsored by the Department of Science and Technology last May at the Manila Hotel)-- In a changing world, the winners are those who adopt, those who see opportunities that emerge as the world changes, and turn those opportunities to their advantage. Those people are entrepreneurs. Entrepreneurs are the catalysts who will help our society adapt and embrace the countless opportunities ahead. Can we succeed?

Ayala, whose Ayala Group of Companies aspire to become the prime architect of the new economy, believes that this combination of opportunities and challenges constitute a great opportunity for the Philippines to catch up with the industrializing and advanced nations.

Ayala said, we have the best engineers and artists. We have a great wealth of human resources who can excel given the right incentives.

New world power centers have emerged-- Silicon Valley for entrepreneural environment, India for software development, Finland for wireless adoption, Singapore for high bandwidth penetration. Ireland is the European e-commerce headquarter, Washington DC has the highest US Internet penetration, Utah is the digital signature capital, what about the Philippines?

Ayala left a question mark in the Philippine slot in his presentation. But from what he said , we can surmise that the Philippines can carve niches of excellence in areas like-- development of wireless data applications and establishment of new content communities. We can export Filipino WAP expertise to other countries. With regards to content communities, for instance, Ayala has secured rights to the music.com portal which hopes to sustain a growing network of Filipino musicians and entertainers.

Ayala stresses the importance of nurturing the risk-taking entrepreneural culture. He sees the Ayala Group as a catalyst to help the Philippines develop the entrepreneural communities who will provide the foundation for our country to embrace the new economy. On the government side, DOST and DTI join forces in establishing the ICT Fund for Research and Innovation which hopefully will encourage entrepreneurs to invest their talents and skills at the home base rather than opt to work in foreign countries.

So back to the question-- Is the Philippines ready to join the cyber economy? The answer is a resounding "yes!." We are already a part of the cyber economy although we still are at the toddler stage. We are still a "little boy" in the world of the "big boys" key players.

An excellent showcase of our new economy capability is the Subic Cyberport in Zambales. Just about 110 kilometers from Manila, Subic is home to some 35,000 knowledge workers of foreign companies that relocated in the area.

Among the locators at the Subic Industrial Park are Acer, Taiwan Hitachi Group. Teco Electronic and Machinery Company, GC Corporation, Yow Ming Industrial Company and First Resistor Company. Leading locators at the Subic Techno Park include Omron Corporation, Nihon-Inter Electronics and Volvo Penta. Soon to rise is Sankyo Seiki, the second largest facility in the Freeport involved in manufacturing micro motors for hard disk drives and pick ups for digital video disks.

There are more than 100,000-line capacity telecommunications system at Subic, installed with technologically advanced equipment in order to meet international standards. Trunk lines were also replaced with fiber optic cables, connecting the country to other cable communication systems and satellites around the world. Telephone lines are available for fast installation.

Subic Bay Freeport offers a wide range of satellite-based communication services through the Mabuhay Satellite, RIMSAT's Subic Bay Satellite Systems Incorporated and Omnilink. The Mabuhay Satellite Consortium has launched the most powerful satellite in Asia-- Agila II. Plans have been formalized for the launching of various long distance communication services such as video conferencing, telemedicine, distance education, and direct-to-home TV.

Filipino entrepreneurs and retirees are going to Subic. For instance, 38-year-old Mitzi Sobiron-Keiser opted for an early retirement from her regular job in one of the government offices and opened a cyber café at the ground floors of the Subic International Hotel, called the RFK Internet Center. Only six months old, RFK Internet Center earns a minimum of Ph P 9,000 daily mostly from students, residents, and knowledge workers in the area. The café is open 24 hours/day, 7 days/week, and 365 days/year. When all the offices of Subic sleeps in the night, those who don't want to sleep go to RFK to surf the Internet, check e-mails, and chat using RFK prepaid cards ( Ph P 100 for six hours of Internet use). Budget snacks are also provided for knowledge workers on-the-go. The RFK cards also serve as discount cards in several commercial establishments at Subic. Mitzi met her husband at-- where else-- but the Internet. Cyber romance bloomed into true love and Robert F. Keiser came to the Philippines to marry Mitzi and make her dream business of a cyber café a reality. It was most rewarding for the couple specially when they see young boys and girls surfing the Internet for the first time, screaming in excitement as the web pages appear on the monitor. RFK is proud of fast Internet access because of its direct connections to Mississippi, USA. They have extended the RFK Internet Center to a number of schools including the Gordon Heights High School, Baretto High School, and Regional Science High School. RFK provided the computers in these schools where students can access the Internet using their RFK prepaid cards. The principals, teachers, and students love the Keisers because of their effort to narrow the digital divide, and eventually close the gap between the "haves" and the "have nots," and because of the importance they are giving to the most precious natural resource of the country-- the youth, the future knowledge workers. Already, the Keisers are going into franchising. Many new e-entrepreneurs are interested to bring the RFK concept to other parts of the country.

Acknowledgements:

Gerardo S. Doroja, "ICT Status in the Philippines," STII-DOST, July 2000.

Gerardo S. Doroja, "E-Commerce Status in the Philippines," STII-DOST, July 2000.

Jaime Augusto Zobel de Ayala II, "Enhancing Entrepreneurship in the New Economy," May 2000.

Felicito C. Payumo, "Subic Bay Freeeport Philippines," Subic Bay Metropolitan Authority,"September 2000.

Mitzi Sobiron-Keiser, Robert F. Keiser, Fernandito Lanada of RFK Internet Center, Subic Bay Freeeport, Zambales.

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