An updated Philippine E-Commerce Roadmap looks to bring the digital economy deeper into Filipino hearts and minds.
Written by Henrik Batallones
The growth of e-commerce in the Philippines over the last few years has been undeniable. Our digital economy—which encompasses online shopping, delivery services, digital media and financial services—is valued at USD 24 billion, according to the latest eConomy SEA Report by Google, Temasek and Bain, and it is seen to grow further to around USD 35 billion by 2025. Just the continued prominence of streaming services and online marketplaces in the zeitgeist is proof that things can only grow bigger from here.
Of course, things didn’t seem to go that way a few years ago. COVID-19 definitely accelerated the Filipino’s embrace of e-commerce, but a critical factor has been the government’s support for the digital ecosystem, recognizing its role in uplifting businesses, generating jobs, and building further economic value. The 2020-2024 Philippine E-Commerce Roadmap came together in the months before and after the beginning of the pandemic, and aimed to improve market access, accelerate digitalization for MSMEs and reduce logistics costs to support this growing sector.
In April of this year, the Department of Trade and Industry unveiled an updated roadmap for 2024-2028, and its ambitions are grander. In envisions e-commerce in the Philippines to be “plug and play” by 2030: safe, reliable, easy and efficient wherever in the country you may be, essentially indistinguishable from traditional commerce.
An important enabler of this is the recently passed Internet Transactions Act. Signed into law by President Bongbong Marcos last year, provides stronger protections for both consumers and online merchants, including the creation of an online business database that would promote accountability among sellers and marketplaces.
Two immediate deliverables outlined by the roadmap include the implementing rules and regulations of the Internet Transactions Act—which were finalized last May—and a continuing review of regulations and issuances concerning digital businesses.
After laying the groundwork in strengthening the entire e-commerce ecosystem—digital platforms, food delivery services, digital payments and logistics providers—the new Philippine E-Commerce Roadmap seeks to go further, with a focus on other industries that can stand to benefit from e-commerce. This includes creative industries such as game development and the performing arts—of course, movies, music and games are now mostly accessed through the Internet—as well as tourism and agriculture.
Plans concerning agriculture outlined in the roadmap solidify ongoing efforts to improve food logistics in the country, particularly initiatives to digitalize the country’s food terminals and hubs, allowing farmers to directly sell their produce to institutional buyers. One imagines the goal is to also allow end consumers to buy directly from farmers themselves.
Building future e-commerce
The roadmap also aims to build on previous efforts to improve capacity and capability among industries that will support the digital economy. This includes the logistics sector, particularly those in last mile delivery services.
One deliverable is the launch of a National Logistics Investment Plan, which identifies key infrastructure projects that will improve both physical and digital connectivity across the archipelago. (This plan is set to be unveiled alongside the National Logistics Strategy, which has been in the works over the last few months.) Another is the establishment of a convergence program with the Philippine Postal Corporation, allowing the company to better meet e-commerce and last mile demand, particularly catering to far-flung parts of the country.
The roadmap also sees strengthened relationships with other countries to expand the presence of Filipino products on international marketplaces. One deliverable is the establishment of e-commerce trade agreements or other means of international collaboration to address cross-border issues. This is significant considering a large volume of online purchases are of products coming from outside of the country. The Philippines can build on existing free trade agreements as well as ongoing initiatives such as the Indo-Pacific Economic Framework (IPEF) and the ASEAN Digital Economy Framework Agreement to address concerns.
An important aspect of the updated roadmap is the development of e-commerce capability by leveraging on the digital native youth population—the folks who are likely already generating content on various platforms and probably even already engaged in e-commerce themselves. Last August, the DTI and the Department of Education signed an agreement moving forward with plans to establish a new e-commerce track for senior high school students, envisioned to also cover topics such as digital marketing and entrepreneurship. There are also plans to introduce e-commerce modules in alternative learning systems that DepEd oversees, as well as to organize Youth E-Commerce Conferences at the regional and national level.
To address immediate needs for e-commerce jobs, programs for upskilling and reskilling will be put in place, as well as increasing protections for those who are part of the “gig economy”. Finally, increased adoption of e-commerce will be encouraged through education campaigns, particularly focusing on women, senior citizens and persons with disabilities.
The challenges ahead
Despite the growth of e-commerce in the Philippines over the last few years, there remains some sizeable challenges. The eConomy SEA Report notes that while there is high e-commerce demand in many parts of the country—particularly in highly urbanized areas—demand remains highest in Metro Manila. Accordingly, e-commerce supply—the report equates this to drop-off points—is much higher in the capital compared to the rest of the country.
One key concern remains the high cost of logistics in the country. Establishing an order fulfillment network across the country requires significant resources, and for now, most have to do with a limited number of trips to remote parts of the country that are high in cost. One hopes that increased investment in both infrastructure and in capability would help address these issues and make e-commerce viable for more Filipinos.
Finally, while protections for both consumers and merchants are being strengthened, awareness still needs to be raised to instill confidence for all stakeholders. Scams are still rampant, and some feel the process to officially address these are cumbersome and lengthy. E-commerce’s main strength is the ability to know when your order is arriving, and being able to count on it: one hopes that these protections can be relied on as quickly and effectively.
Once these issues are covered, it’s certain to say that e-commerce in the Philippines will grow further—that it will be, as the DTI’s roadmap puts it, both “easy” and “exciting”.