Transforming the Philippines with Internet of Things applications

At a glance

The Philippines is located in Southeast Asia, on the eastern rim of the Asiatic Mediterranean. It is an archipelago consisting of 7100 islands with a total land area of 300000 square kilometers. The Philippines has a large population, with more than 100 million people, and a relative young one as well, with less than 5% of the population above 65 years old.

In terms of economy, despite some political instabilities, Philippines is currently one of the countries in Asia with the highest growth rate, getting an annualized growth rate at 6.9% in the third quarter, just behind Vietnam but slightly ahead of China. However, FDI inflows reduced by 5% to $5.1 billion in the first 8 months, compared to $5.4 billion last year. This is partly due to the fact that companies are skeptical about President’s policies as well as the administration’s actions.

When it comes to the ICT scene and infrastructures, the Philippines enjoys a relatively high Internet penetration average of 58%, way above the global average of 50%. Moreover, the Philippines also has the longest average personal Internet usage time of almost 9 hours a day. This has even become a common joke in the country that people spend more time on the Internet as it is slow. This is not totally untrue, as the Philippines is among the lowest in ranking in terms of long term evolution (LTE) availability and speed, and the average speed is below the global average (6.3 Mbps) at 4.2 Mbps. This can be explained by the geographical factor, as there are too many islands in the Philippines, and it is impossible to build necessary infrastructures in every island and connect the lines nationwide. However, there have been many improvements since President Duterte took office. More infrastructure projects are now approved quicker under Duterte’s administration, and with the President’s 10-point economic plan, a humongous US$180 billion infrastructure program called “Build Build Build” is approved to boost the current infrastructure situation in the Philippines.

The current IoT landscape in the Philippines

Driver for IoT implementation

As the Internet of Things (IoT) is gradually becoming the next wave in technology, especially in Electronics technology, the government has realized its potential in transforming the nation from a previously “outsourcing and call centre” country into a more digitalized and industrialized one. As the result, more government bodies have been strong advocates for IoT.

For example, this year, the Duterte’s administration gave a chance to China Telecom to go into the market, in order to bring new technologies in and drive up the speed, while effectively ending the duopoly of local telcos. This will be a great opportunity to improve the current ICT infrastructures in the country.

The Department of Information and Communications Technology (DICT) is another strong supporter of IoT implementation. They have pushed for many projects, such as the Broadband plan, Free-Wifi Project, as well as the single government portal to provide fast and efficient delivery of services to citizens across the country. These projects will act as the stepping stones towards the masterplan to transform Philippines with IoT applications. Other government bodies such as Department of Trade and Industry, Housing and Urban Development Coordinating Council are involved in various IoT related projects in their respective fields of work as well.

Another factor that will act as a great driver for IoT implementation in the Philippines is its demographics. The Philippines has a very young population, with less than 5% above the age of 65. This is definitely an advantage, as younger people are receptive to new technologies and they find it easier to integrate technologies into their daily lives compared to those older. This is in line with the research carried out by Pew Research Center, as they point out that older adults face a number of challenges in adopting new technologies, such as the physical challenges from old age or difficulties in learning to use new technologies on their own.

Moreover, with high Internet penetration and long Internet use time, more people will find it easier to use the Internet as a tool for their daily activities be more dependent to it. Even though the slow and inconsistent Internet poses a big problem to connectivity, which could hamper the adoption of IoT, this could be solved with aggressive investments in ICT projects from the government, as well as the potential entry of the third telco, to bring in new technologies and pressure local telcos to improve their services further.

Opportunities for enterprises in 2018

2017 is coming to an end, so let’s take a look at some of the potential sectors that will have a need for IoT or will be invested heavily with IoT technologies next year.

Industry is definitely an important sector that the government and enterprises are paying attention to. As outsourcing the labor force to other countries is no longer a viable option to thrive its economy when more countries restrict the use of foreign labors to protect their citizens’ interests, the Philippines government looks forward to developing its home-grown industry with Industry 4.0. This year, Japan has vowed to back the Philippines in engaging in more cooperation activities that will prepare the country to embrace Industry 4.0. Such activities would include capacity-building initiatives meant for micro, small and medium enterprises (MSMEs). This is great news for the country and enterprises, as MSMEs make up about 99% of business establishments in the Philippines, accounting for almost 70% of the labor force. Manufacturing industry will likely benefit a lot from IoT applications such as automation or remote monitoring, and this will help the economy as well as export to other countries is increasing, thanks to the weakened Peso.

Smart city is another sector that will definitely flourish in 2018, as more cities are competing to bring more smart-city features to their respective places, after the successful launch of Unified ID card in Makati City. This card will not only act as the official ID card, but it is also equipped with NFC technology to be used as a credit card, as well as government related expenses and incomes. Moreover, the world biggest smart city may come from the Philippines, as the government has announced an ambitious reclamation project, which will create the next smart city called New Manila Bay City of Pearl. This 407-hectare project will bring about a self-subsistent city, that will be resided by the young and the next generations of Filipinos.

Last but not least, transportation will be an important sector that will benefits the most from IoT technologies. Currently, one of the most common issues in the Philippines is overpopulation in urban areas, as people from less developed areas or the countryside tend to migrate to urban areas for an opportunity to live in better condition. This poses a serious problem to public transport, as current facilities cannot cope with the sudden surge in users. However, with the use of IoT applications, the government and enterprises can improve the current situation. Useful data can be collected from users of the Internet, so that the government and enterprises can pinpoint their locations and needs, and understand the reason for settlement formations in urban areas, so that they can allocate more resources to areas that need them the most, such as more buses or additional roads or lanes. Moreover, with IoT applications, users can also receive real time updates on traffic situations, or arrival time of subway or buses. This will be a win-win situation for all parties.

Looking forward to 2018

Comparing to other countries in the region that have been adopting IoT for some time like Singapore and Malaysia, the Philippines is still in the infant stage when it comes to IoT implementation. However, it is not too late for Philippines to enter and become a regional IoT service provider in the future, as it is blessed with favorable conditions and a proactive government that is very supportive of the movement.

2018 will definitely be an exciting year for the IoT scene in the Philippines. Do check out our site frequently, so you can get updated with the newest trends and information about IoT development in the Philippines, as well as other countries in the region. However, if you want to obtain first hand insights and establish strategic relationships with key IoT stakeholders in the Philippines, join us at the 22nd edition of Asia IoT Business Platform in Manila this coming April.

Kiet Pham

27 December 2017

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