Republic of the Philippines

1. Republic of the Philippines Where the East meets the West Renee Dobson Arpitha Reddy Desi Segundo

2. The Philippines

3. IT-led Development in the Philippines

4. Environmental FactorsSocial / Political • Population: 84.5 million (July 2003) • Capital City: Manila (Pop: 10 million) • People: Predominantly descendants of Malays, Chinese and Muslim minorities and a number of Mestizos (Filipino-Spanish or Filipino-Americans) • Language: Filipino. English and Spanish. Also numerous widely spoken indigenous languages. • Religion: 82% Roman Catholic, 9% Protestant, 5% Muslim, 3% Buddhist • Government: Republic

5. Environmental FactorsEconomic • GDP: $356 billion (2002) GDP Growth in the 1990’s suffered due to the Asian Financial Crisis & Poor Weather. Public sector has a debt of double the country’s GDP due to this crisis. • Real Growth Rate :GDP (2002): 4.6% Real Growth Rate: GNP (2002): 5.2% • Gini Index : 46.2 (1997) USA: 40.8 (1997) • Percentage below Poverty Line: 40% • Currency: Philippine Peso • Exchange rate: P 52.30/US $ (May 2003)

6. Industry Structure • Industry: Textiles & Garments, Pharmaceuticals, Chemicals, Wood Products, Food Processing, Electronics Assembly, Petroleum Refining & Fishing. • Top 5 Exports (as % of total exports): Electronic Components (54.0), Apparel and Clothing Accessories (6.8), Ignition Wiring Set (1.5), Woodcrafts and Furniture (1.2), Metal Components (1.2) • Exports partners: (2002) • US 24.9%, • Japan 15.0%, • Netherlands 8.8%, • Taiwan 7.1%, • Singapore 7.0%

7. Industrial PolicyEducation / Skills • Philippine education is patterned after the American system, with English as the medium of instruction. Schools are classified into public (government) or private (non-government). • The general pattern of formal education follows four stages: Pre-primary level (nursery and kindergarten) offered in most private schools; six years of primary education, followed by four years of secondary education. College education usually takes four, sometimes five and in some cases as in medical and law schools, as long as eight years. Graduate schooling is an additional two or more years. • Computer technology/ literacy is only available in private elementary and high schools due to cost. • Most colleges / universities are able to provide computers technology / literacy. In fact, computer literacy classes have been included in the curriculum.

8. Industrial PolicyInfrastructure • Total number of main telecommunication lines increased to 6.98 million in 2001 from 3.3 million in 1996 • Teledensity ratio (# of installed lines per 100 people): 9.9 • Implementation of Service Area Scheme to make sure that all regions have access to the network. • Current Domestic Telecom Players: PLDT (Philippines Long Distance Telephone Company) Islacom, Globe Telecoms, Smartcom, Digitel, Philcom, Capwire and PT&T, Eastern Telecom (ETPI), Piltel, Atlas Telecom and BayanTel • PLDT accounts for 67% of the telephone service in the country

9. Industrial PolicyInfrastructure

10. Industrial PolicyTechnology Policy • In July 1994, President Fidel V. Ramos approved the National Information Technology Plan. • The National Information Technology Council (NITC) was constituted to oversee the implementation of the Plan, now called the IT Action Agenda for the 21st Century (IT21), the country's blueprint for IT development. • IT21 was approved on October 28 1997, as the Philippines' guide for IT development in the country over the next 7-15 years. • Its overall goal and vision of the country is to transform the Philippines into a "Knowledge Center in Asia”.1

11. Industrial PolicyTechnology Policy • The plan sets forth an agenda to: • Develop the information infrastructure for interconnection and networking within the country • Turn the Philippines into an Asian hub of software development and training • Improve the government's capacity and efficiency in adopting IT to help in governance of the country and help spur the growth of the Philippine IT industry • Develop and adopt IT in education, in both the public and private sector, as well as training institutions, to create a critical mass of IT professionals and an IT-literate workforce • Upgrade available IT resources in the local R&D sector • IT21 relies on both the government and private industry to play leading roles in pushing forward IT use and IT production in the country

12. Industrial PolicyTechnology Policy • The Information Technology Agreement (ITA) was formed to eliminate tariffs on information technology by the year 2000 • The Philippines has already reduced the duties on selected IT products to 3%. This began in 1995 and continued until the year 2000. • A final goal of this agreement is a uniform duty of 5% which will be introduced by the year 2004. • Another government initiative, pushes for the interconnection of local Internet Service Providers into one Internet exchange • This exchange, called the RPWEB, puts the entire government organization online. • On November 7, 1997, the President directed all government agencies down to the local and field levels to interconnect through the Internet.

13. IT DiffusionIT Production / Use • PLDT (Philippines Long Distance Telephone Company) offers Integrated Voice and Data Services include Diginet (domestic leased line), Fibernet (international leased line), DataPac (international and domestic packet switching), PhIX (Philippine Internet Exchange) and ISDN (Integrated Services Digital Network). The Voice and Messaging Services include VideoCon (video conferencing) among others. • PLDT is part owner of an existing fiber optic submarine cable systems. • Cables connect the Philippines to the rest of Asia and to the rest of the world via these 20 gig cables. • A new backbone network has been installed allowing PLDT ability to offer new services such as Voice over IP, VPN’s and unified messaging.

14. IT DiffusionIT Use • Cellular teledensity has risen to 27% of all telephone subscribers in the country • A leading adopter of Cellular technology - Text messaging has been available for the past 5 years and the picture phone for the past 3 • Companies: Smart & Globe

15. IT DiffusionIT Use & E-commerce • Internet users estimated to be 4.5 million. (2002) • Philippines Internet Exchange (PHiX) allows local ISP’s to access and exchange local internet transactions w/o accessing the global internet. • This network solves the problem of dropped data and also decreases the time data is sent between Philippine companies. • The number of Philippine ISPs increased from 19 in 1995 to 88 in 1996, and to over 160 by the end of 1997. The number of ISPs in the country is now estimated to be around 190. (1999)

16. IT DiffusionIT Use Software Development • The software and services subsector has been a consistent export winner. • With export revenues reaching US$206 million in 1996, up by 51% from the US$125 million in 1995, which was a phenomenal increase from the US$66 million in 1994. Target exports by year 2000 is US$300 million. • Most of the country's software exporters only serve as subcontractors for bigger software producers in other countries such as the United States. • Though the IT21 Agenda is making efforts to increase the nation's niche market in software production, still, many major players are US owned businesses who have decided to move their software services in the Philippines for the Asia-Pacific region. Some of these players are: • Computer Associates Philippines • Linux Philippines Corporation • Microsoft Philippines • Oracle Philippines

17. Strengths Well-educated, competent, reliable and price-competitive labor English proficiency within the nation Growing record of successful IT work Fast-growing telecom infrastructure Government interest in the industry A democratic government system fostering flexibility and creativity Less regulation than some neighbor countries Large investment interest from the foreign and private sector Creation of a special IT office complex to give the IT industry incentives to grow through tariff-free imports of capital equipment and simplified tax returns Quick adopter of new technologies Weaknesses Power and wealth distribution – Too many people are either very rich or very poor Lagging behind in basic infrastructure w/ limited access to networks Inefficiencies of current ISP’s network – Too much downtime as PhIX had to be adopted just to keep local e-commerce business up and running A scarcity of middle to high-end IT professionals Difficulties marketing the nation and the industry globally Capital cost and scarcity of monies available A small domestic market Insufficient IT education Competition from neighboring countries such as Malaysia or India which both have strong IT labor forces & already established infrastructure more equipped to handle IT demands Economic Payoffs?Strengths & Weaknesses

18. Recommendations • General: • Continue to increase teledensity & widen coverage nationwide • Continue to expand the telecommunications infrastructure across all urban & rural areas • Increase computer technology and literacy - People must be taught how to use computers at an earlier age • Increase computer schools, training facilities & computer science & engineering degree programs within Universities • Accelerate the deregulation of government ownership, provision & direct operation of telecommunications services • Specific: • Adoption of the Mondex Card - use it in conjunction w/ a smart chip to eliminate the use of other cards & information • Increase the use of E-Commerce - although still in it’s infancy & very pricey there is a government initiative to reduce the cost of it

19. Resources • CIA – The world factbook http://www.cia.gov/cia/publications/factbook/index.html • Information Technology Association of Philippines http://www.itaphil.org • The Official Government Portal of the Philippines www.gov.ph • Information Technology in the Philippines http://www.american.edu/carmel/bree/ • Gervacio Brondial director of kodaly program California State University