The Philippine government and the rest of the Association of Southeast Asian Nations (Asean) should invest in digital infrastructure to help economies in the region achieve inclusive growth, former President and now Pampanga Rep. Gloria Arroyo told an Asean business leaders’ meeting in Manila on Friday.
She was speaking as a panelist during the Asean Business Advisory Council’s ‘Prosperity for All’ summit on how to drive economic growth through micro, small and medium enterprises (MSMes) in the trade, services and agriculture sectors.
Arroyo recalled how the MSMEs enabled the Philippines to survive the global economic crises in 2001 and 2008 when she was President, with 80 percent of them being involved in trade services (50 percent) and other basic service sectors, such as restaurants, rentals and transportation (30 percent).
Citing examples, she said: Digital technology is necessary because making payments is easier, like Paypal’s service does; it makes it easier to place orders, confirm orders via email … digital technology will make our trade world class rather than keep us in the mom-and-pop store category.
“Market access also becomes easier with digital infrastructure, as in the case of the AirBnB, Uber for transportation. This way, the MSMEs will remain prosperous operations,” Arroyo added, referring to online services that enable travelers to book reservations for accommodations and transport services.
The former President outlined her administration’s investments in SMEs, which she credited for keeping the economy afloat during the hard times: the One-Town-One-Product program; the unified lending program which provided affordable credit rates for farmers; and the relaxation of collateral and documentary requirements.
During her term, the administration was able to provide credit, technology and market assistance to 7 million entrepreneurs.
“The MSMEs are of high value to our country because from something that helped us survive, we can now use them to thrive. Digital infrastructure will make MSMEs break into the formal economy and make itself a driver of growth,” she said.
The scrapped NBN-ZTE deal
In April 2007, the Arroyo administration signed a $329 million contract with ZTE, awarding the construction of the proposed government-managed National Broadband Network (NBN) project to the Chinese telecommunications firm. Then President Gloria Arroyo scrapped the project in October of that year amid allegations the deal was overpriced.
Farmers’ access to capital
Arroyo lamented the fact that less than MSMEs account for only 1 percent of the agriculture sector due to lack of land and access to both markets and capital.
“For one, we have to make farmland eligible for collateral,” Arroyo said.
Her sentiment gained support from Vice President Maria Leonor “Leni” Robredo and Sen. Paolo Benigno Aquino 4th, who both called on government agencies and the private sector to allow the local farmers to serve as suppliers for development programs.
Citing examples, Robredo mentioned the partnership between the Department of Social Welfare and Development and farmers who supply 30 percent of its feeding program needs, as well as that of fast food chain Jollibee, which provides financial and technical assistance to farmers in San Jose City in Nueva Ecija for growing onions, and buys back their produce, giving them even more opportunities to improve their lives.
“Partnerships like these should be profitable if they are to be sustainable—and they are. On top of being profitable, these partnerships also solve big business’ supply chain problems. No wonder big businesses like Kenemer Foods, Unilever, Nestle and San Miguel are already looking into adopting the same model,” Robredo said in a separate speech delivered in the same event.
“We also envision all these initiatives to be rolled out through a process of convergence within the Philippine governments, and among governments of Asean nations. The role of the state is to facilitate convergence and communication, encourage technology and innovation, and create financing mechanisms, so that our MSMEs can survive cut-throat competition,” Robredo added.
Sen. Aquino, on the other hand, highlighted the newfound success of the buri bag makers on Boracay Island, who now supply their products to the Boracay Shangri-la Hotel’s shop for guests.
“E-commerce [built on digital infrastructure]is good, but the low lying fruit here is integration of an inclusive supply chain, so companies should buy their supply from local farmers,” Aquino added.
Asean groups the Philippines, Thailand, Indonesia, Malaysia, Singapore, Cambodia, Laos, Myanmar, Vietnam and Brunei.