The government should beef up the country’s competition policy to open growth opportunities for businesses and sustain investments in an increasingly digital economy, according to the country’s chief economist.

With more than half of retail payments now being made digitally, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said there is “room for improvement” in the country’s competition landscape to keep pace with this rapid expansion.

Citing data from the Organization for Economic Cooperation and Development (OECD), Balisacan said the Philippines posted one of the highest product market regulation (PMR) ratings in the world, with a score of 2.4 in 2023—higher than the global average of 1.53.

A lower PMR score reflects fewer regulatory barriers and a more competitive market environment.

“This suggests that restrictions remain material and that competition can be strengthened by improving the rules and reducing frictions to entry,” Balisacan said at a forum organized by the antitrust watchdog Philippine Competition Commission (PCC).

“Sound competition policy matters even more today as the economy rapidly goes digital,” he added.

Balisacan, who served as the PCC’s first chairperson, said competition policy should encourage productivity, inclusion, and consumer welfare in the digital market.

He said this is achievable by easing regulatory frictions that limit market entry, discourage investments, and constrain service improvements.

By making the local market more responsive to technological innovation, he said the country would attract more investments in sectors critical to digital transformation, such as energy and telecommunications.

“If connectivity remains expensive and unreliable, and if power costs stay high, it becomes harder to make digital transformation broad-based. Firms, especially smaller ones, will struggle to adapt to new technologies and to scale,” Balisacan said.

He said it is also important for competition policy to be aligned with the emergence of new technologies, such as artificial intelligence (AI), which are poised to introduce new competitive conditions.

Balisacan said there should be a system in place that fosters AI development in the country without overengineering rules that stifle innovation before it takes root, while keeping competition and key safeguards intact.

“Digital transformation does not stand on its own. It depends on foundational enablers that determine whether its benefits are broad-based or concentrated,” he added.

Through reforms, Balisacan said the economy will continue to benefit from a competition landscape that fosters innovation and builds investor confidence.

According to the Philippine Statistics Authority (PSA), the value of the country’s digital economy rose by 7.6 percent to ₱2.25 trillion in 2024 from ₱2.09 trillion in 2023.

Digital transactions now account for almost 60 percent of monthly retail purchases, up from just one percent in 2013.