Digital Transactions for the Benefit of the Philippine Economy

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The Organization for Economic Co-operation and Development (OECD) defines digital commerce as “the digital transactions of trade in goods and services that can be delivered digitally or physically, and which involve consumers, businesses and governments”.

According to the OECD, while all forms of digital trade are made possible by digital technologies, not all digital trade is delivered digitally.

“For example, digital commerce also involves the digitally but physically delivered trade of goods and services such as buying a book through an online marketplace or booking an apartment stay through a mail order app.” , did he declare.

“The movement of data is the basis of digital commerce. Data is not only a means of production, it is also an asset that can itself be traded and a means by which GVCs (global value chains) are organized and services provided, “added the OECD. .

In Southeast Asia, Singapore is a leader in concluding digital trade treaties. The country has a digital economy partnership agreement with Chile and New Zealand and also has an agreement with Australia. Singapore is also currently negotiating a digital economy deal with the UK, Vietnam and South Korea.

In the Philippines, the Department of Trade and Industry (DTI) said it was considering entering into a digital trade deal with the country’s major partners.

“The Digital Trade Agreement is an area of ​​focus that the Philippines is considering either as a bilateral platform or a plurilateral platform. Secretary Ramon Lopez.

“For the Philippines, noting our niche in the service sector, especially in IT-BPM (Information Technology-Business Process Management) and other business services such as software development, graphics services and animation, and the fact that we want to position the Philippines as a hub for the hyperscale data center in the region, a digital trade agreement with key partners would be a strategic approach, ”added Lopez.

Lopez said that at present, the Philippines has adopted rules and disciplines on electronic commerce in the Regional Comprehensive Economic Partnership Agreement (RCEP) and the ASEAN Agreement on Electronic Commerce.

RCEP is a mega free trade agreement between the 10 members of the Association of Southeast Asian Nations (ASEAN), China, Japan, Australia, New Zealand and Korea South.

RCEP covers emerging areas of commerce such as intellectual property, electronic commerce, government procurement and competition.

The ASEAN e-commerce agreement signed in 2018, meanwhile, provides a set of policies, principles and rules to govern cross-border e-commerce.

It aims to provide a holistic approach to the development and promotion of e-commerce in the region, to foster a favorable e-commerce environment and to promote the public interest.

The deal is expected to benefit Filipino businesses – especially micro, small and medium-sized enterprises (MSMEs) – as well as Filipino consumers.

“E-commerce enables MSMEs to have an increasingly broad reach in the market with virtually no additional cost or very little. It also allows consumers to have access to a multitude of products and services around the world.” , Lopez said.

Lopez said the Philippines has also joined the Joint Statement Initiative (JSI) on e-commerce at the World Trade Organization.

The JSI aims to develop a multilateral agreement on trade-related aspects of electronic commerce.

“These policy directions and initiatives reinforce our policy towards a stronger and more conducive digital trade regime,” Lopez said.

Digital commerce for the benefit of PH

An economist from Rizal Commercial Banking Corp. (RCBC) said digital trade agreements would help complement the country’s free trade agreements (FTAs) and ensure greater productivity gains in the economy in the years to come.

“These would also ensure the harmonization and adoption of internationally accepted standards on digital trade, while also preventing digital protectionism that unduly favors local industry players, by applying the principles of reciprocity, equity and a level playing field for international digital trade which opens up immense market opportunities especially for small businesses to access larger markets around the world, ”said Michael Ricafort, Chief Economist of RCBC.

Ricafort said that with the growing share of digital commerce and other online businesses in the country, digital trade agreements have become more imperative in a more globalized economy that would help ensure sustainable economic growth and development.

He said digital trade agreements will help the Philippines adapt to the increasingly digitalized world of doing business and other transactions that lead to significant productivity and efficiency.

A study released by the Philippine Institute for Development Studies (PIDS) said the Philippines is “well positioned to pursue regional digital trade integration.”

The report titled “How Are We Prepared?” Measuring the Philippines ‘readiness for digital trade integration with Asia-Pacific ”written by Francis Mark Quimba, Slylyn Calizo Jr., Jean Clarisse Carlos and Jose Ramon Albert assessed the Philippines’ readiness for Digital Trade Integration with Asia-Pacific using the Regional Digital Trade Integration Index (RDTII) framework to provide analytical insight into the Philippines’ digital trade policy and regulatory environment.

Using the RDTII framework, the Philippines reported an overall RDTII score of 0.342 in 2020, which ranks the country as having a slightly restrictive digital business environment.

The authors said that in the same year, the Philippines performed best in three pillars: pillar 1 (tariffs and trade defense measures), pillar 6 (cross-border data policies) and pillar 8 (liability of intermediaries and access to content). In all three pillars, the country scored below 0.200, indicating an unrestricted policy and regulatory environment.

In contrast, the Philippines performed worst in three pillars: pillar 2 (government procurement), pillar 3 (foreign direct investment) and pillar 5 (telecommunications infrastructure and competition).

The authors said that in these three pillars, the Philippines scored above 0.610, characterized by a highly restrictive policy and regulatory environment.

Meanwhile, the Philippines has been found to be slightly restrictive on intellectual property rights (pillar 4), national policies on data use (pillar 7), quantitative trade restrictions (pillar 9), standards (pillar 10) and online sales and transactions. (pillar 11), with scores ranging from 0.210 to 0.400.

“This study reveals that the Philippines generally has an open political environment for digital trade, which suggests that it is ready for the integration of digital trade with the region,” the authors said.

“However, the correct implementation of some of these policies has not been fully achieved, and this could be a major obstacle or challenge to regional integration,” they added.

To fully pursue integration, some of the recommendations include amending constitutional restrictions on foreign participation in key digital industries; increase consumer participation in addressing cybersecurity issues; enable digital delivery of government services; step up programs to close the digital infrastructure gap; promote stronger intellectual property cooperation among Asia-Pacific economies; and explore the adoption of cross-border tele-banking to other sectors.


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