News Analysis Society

Fast losing ground

Technology absorption

The time has long passed when governments and corporations could view digital technology as a desirable option, or something they’d get round to eventually. The Digital Age is here – in all areas of life – and it’s moving at an ever-faster rate.

Information and communication technology (ICT) plays a crucial role in economic development and the bottom line is that firms cannot survive without it. But, actually, the situation is even more critical than that – those firms also have to keep pace with the latest ICT buildouts which offer greater cost efficiencies and faster processing.

In the business world – from industrial manufacturing to the services sector – digital technology is an integral part of day-to-day operations. And those constant improvements – sending high-tech to higher-tech – means that for those with it to remain competitive, they must continually upgrade; while those without it fall further back.

Today, governments which are determined to press their countries’ development and firms hoping to compete in what has become a highly competitive hi-tech global economy, have little choice but to embrace as much of this technology as they possibly can. And those that don’t will find themselves overtaken and left in the dust trail of those that do.

Now we turn to the 2018 Global Entrepreneurship Index (GEI) and the section dealing with “Technology Absorption”. The GEI, produced by the Global Entrepreneurship Development Institute, evaluates 137 countries world wide. Here, we’ve extracted the results for the countries of the Association of Southeast Asian Nations (Asean), to show how the Philippines ranks among its peers.

To evaluate this indicator, the GEI’s compilers asked these two questions – “Is the technology sector large?” And, “Can businesses rapidly absorb new technology?” The point here is that technology sectors need to be of sufficient size to support the needs of commerce; and that firms need to have the ability to tap into such resources and apply them profitably in the production of their goods and services.

Here are the Asean scores for Technology Absorption – and for the Philippines they’re not pretty. Singapore, 74%; Brunei, 37%; Vietnam, 22%; Cambodia, 16%; Laos, 16%; Myanmar, 12%; Thailand, 11%; Malaysia, 9%; Indonesia, 8%; Philippines, 1%.

While we can certainly make exceptions for the small frontier economies of Cambodia, Laos and Myanmar – with two, possibly three, exceptions at the front of this list, these results are extremely poor. And particularly for a region with one of the biggest growth potentials of anywhere on Earth. The Philippine result, however, leaves us speechless.

There can really be no excuse for that. And, frankly, we can’t explain it. It was always going to be low – over the years, ICT in the Philippines has been treated more like a political hobby horse than a serious and vital component of the economy. But 1% technology absorption will have exceeded the lowest expectations.

We’ve alluded in the past to the “high-price of politics” in the Philippines – where political interests and influences are allowed to take precedence over the economy’s welfare. This result is a graphic example of that.

The problem here though, is that unlike a bad one-off government contract hitting the economy, Technology Absorption – or in the Philippines’ case, the lack thereof – telephones throughout the entire economy and will continue to, and will take an evermore-damaging toll until it’s been addressed.

Furthermore, as far as innovators and entrepreneurs are concerned, the lack of this resource is like asking them to work from behind a blindfold as their counterparts in other countries are given 20:20 vision. This needs to be sorted out – and quickly – because, eventually, it will no longer fit under the carpet as it has in the past.

A robust, effective, up-to-speed tech sector is as vital for the Philippines as it is for everywhere else. And so, it’s time to end the political gamesmanship, ignore the arguments put forward by vested interests, and slap this at the top of agendas from government departments to company boardrooms. That, or reap the losses – because ultimately, that’s the choice.

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