TECH4GOOD
“I believe in the transformative power of e-commerce for Philippine MSMEs.” This was the key message of the newly installed DTI Secretary Cristina A. Roque when she recently met with the leaders of the various e-commerce platforms in the Philippines. This is a strong and clear manifestation of the government’s intent to push for the digitization of local MSMEs by making them use reliable e-commerce platforms.
According to a 2023 report by Google, Temasek, and Bain & Company, the Philippine digital economy is projected to reach $35 billion by 2025, with about two-thirds of the growth attributed to e-commerce, rapidly changing the country’s economic landscape. The industry is also estimated to generate an impressive $4 billion in revenue in 2025, with a compound annual growth rate (CAGR) of 17 percent forecasted between 2024 and 2025. Platforms like Lazada and Shopee have become household names, offering consumers various products at competitive prices. On the other hand, Grab has made it possible for local producers to be easily accessible to consumers, wherever they may be. The Covid-19 pandemic, the increasing number of internet users, and the shift toward online shopping fuel this growth. There is now a tremendous opportunity for the MSMEs to tap into these latest trends and consumer preferences.
As narrated by the very amiable DTI Secretary, she has seen excellent examples of how e-commerce has become a game-changer for ordinary Filipino MSMEs. She cited the case of an ordinary laing producer whose fortunes changed when she started selling her products through an e-commerce platform.
Many of these MSMEs, which account for 99.5 percent of all enterprises in the Philippines and employ over 60 percent of the workforce, have found a lifeline in digital platforms. By leveraging e-commerce, MSMEs are able to reach a broader audience, reduce operational costs, and compete with larger enterprises.
The integration of MSMEs into the digital economy is expected to profoundly impact their growth and sustainability. E-commerce platforms provide these businesses with tools and resources to enhance their online presence, from digital marketing to logistics support, including digital wallets for more efficient cash management and remediation facility for questioned transactions. This has leveled the playing field, allowing small businesses to compete with established brands.
However, the benefits of e-commerce extend beyond sales. Digital platforms also offer MSMEs valuable insights into consumer behavior, enabling them to tailor their products and services to meet market demands and better address customer expectations. This data-driven approach fosters innovation and improves the overall competitiveness of Philippine MSMEs. Additionally, e-commerce has created new employment opportunities, particularly in logistics, digital marketing, and customer service, contributing to job creation and economic development.
While e-commerce has been a blessing for MSMEs, it has also highlighted the vulnerabilities of the local manufacturing sector. A significant portion of products sold on e-commerce platforms are imported. This has led to increased competition for domestic manufacturers, many of whom struggle to match the scale and efficiency of foreign producers. On the other hand, this situation should encourage local manufacturers to continue innovating.
During the meeting, Sec. Roque also discussed the need to strengthen consumer protection and promote an environment where goods produced by local manufacturers are prioritized on local e-commerce platforms. All the platform players expressed full support for these initiatives, especially in allowing Philippine-made products to be sold online, which aligns with the new Tatak Pinoy Act of 2024 provisions.
To maximize the benefits of e-commerce for Filipino MSMEs, it is imperative to continue the development of an enabling environment for the Philippine digital economy. This requires a multi-faceted approach that includes policy reforms, infrastructure development, and capacity-building initiatives. The recent passage of the Internet Transactions Act of 2024 provides clear guardrails toward ensuring the development of a trusted e-commerce landscape in the country. Aside from these, the continued push for more reliable internet connectivity in rural areas and efficient logistics networks remain critical for the sector’s growth.
The growth of e-commerce in the Philippines opens up new doors for MSMEs, empowering them to reach broader markets and thrive in the digital age. By creating an enabling environment that supports both MSMEs and local industries and a healthy dialogue between the e-commerce players and the government, the Philippines can harness the full potential of e-commerce to drive inclusive and sustainable economic growth. As the Philippine digital economy continues to evolve, it is crucial to share its benefits, paving the way for a brighter future for Philippine businesses and consumers alike.
(The author is an executive member of the National Innovation Council, lead convener of the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics and AI Association of the Philippines, and vice president of UP System Information Technology Foundation. [email protected])