MSMEs in Philippines keen to shift to digital – report

by Louise Maureen Simeon – The Philippine Star, 15 Oct 2021

MANILA, Philippines — Micro, small and medium enterprises (MSMEs) in the Philippines are the most inclined to shift their activities to digital platforms compared with their counterparts in Southeast Asia

Based on the latest ASEAN Digital Generation Report 2021 of Geneva-based World Economic Forum (WEF), MSMEs in the Philippines recognized the crucial role of digitalization for economic recovery from the pandemic.

Sixty three percent of the respondents in the Philippines viewed digitalization as “very important,” the highest among the ASEAN-6 consisting of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

This is also higher than the 54 percent average for the region.

Malaysia and Vietnam followed with 60 percent each. Thailand came in next at 53 percent. Singapore and Indonesia had 49 percent and 47 percent, respectively.

The survey also revealed that self-discipline is the most important skill in the post-pandemic world for the Philippines. This is followed by technology use and resilience and adaptability.

The WEF report, which surveyed almost 90,000 individuals in ASEAN 6, showed that the pandemic continues to cause severe impact, both economically and mentally, particularly to MSMEs and women.

Some 60 percent saw a decline in income and savings, with over 40 percent reporting a significant deterioration. In addition, 68 percent of surveyed MSME owners reported a drop in income.

WEF said those in the dining and tourism sector were the most severely impacted.

Further, some 66 percent identified payments as a key area for further digitalization while 43 percent wanted to further digitalize the loans and financing process.

WEF noted that the majority in ASEAN have adapted to the challenges of the pandemic through significant digital adoption. In the region, over 60 percent have digitized at least 50 percent of their tasks, most of which are MSMEs.

“Those who reported greater levels of digitalization of their work and business reported lower levels of income decline. Similarly, business owners with an online presence were more likely to report an increase in savings and income compared to those without one,” WEF said.

But, WEF emphasized that the benefits of digitalization are unevenly spread across the region with those who are less “digitized” finding further digital adoption less appealing.

Respondents continued to point to expensive or poor internet quality or digital devices as the top barriers to digital adoption.

“It is critical for the public and private sector to work even more closely to lower any friction and barriers, which may prevent the positive digitalization momentum from taking place. Through this, digitalization can enable post- pandemic recovery in an inclusive and sustainable way,” WEF said.