Will Philippines’ new national ID push the pedal on the digital economy?

Philippines national ID
Image by Elena Ermakova | Bigstockphoto

Will the Philippines’ new national ID push the pedal on the digital economy? Or will it further complicate the country’s ICT landscape? The answer lies in the hands of the government.

A few weeks ago, the Philippine Statistics Authority (PSA) reported that they are on target to provide 70% of Filipinos (out of the 100 million total population) a national ID by the end of 2021. This is good news for Karl Kendrick Chua, the country’s Socioeconomic Planning Secretary, who says that the national ID system can fuel the widespread use of electronic payments in the country, where as high as 70% of adults remain unbanked.

For many years, lengthy debates around privacy and cybersecurity dragged the rollout of a national ID system, until 2018 when lawmakers decided it was non-negotiable. The country’s low ease of doing business and increasing bureaucratic red tape led to Republic Act (RA) 1105 or the Philippine Identification System (PhilSys) Act.

Under RA 1105, it took another three years to roll out registrations for the national ID and encourage citizens to participate. As of July, around 16.2 million Filipinos have completed the registration. Of these, 4.4 million opened an account with Landbank, the Philippines’ state-run bank, which set up booths in PhilSys registration centres nationwide.

Prior to PhilSys, Filipinos had to present multiple government-issued IDs to simply open a bank account. This obstacle prevented many from availing of basic financial services like loans, investments, and insurance.

The national ID is also expected to link to mobile SIM card numbers in an attempt to curb increasing online scams and security threats. For a long time, SIM cards in the Philippines could be bought from sidewalk vendors for as little as $0.30 (P15.00). This has resulted in millions of unregistered SIM cards, many of which are used to siphon money from illegal activities such as drug dealing.

Other Southeast Asian countries, such as Malaysia, Thailand, Singapore, and Indonesia, have had national IDs in place for years, with Thailand implementing one as early as 1976. Around the world, 70 countries distribute either paper-based or electronic national IDs to their citizens and residents.

According to the World Bank, a national ID system should be pro-developmental, so it doesn’t risk further exclusion of marginalized sectors. However, today’s national ID systems can only work effectively under specific ICT conditions. For the Philippines, there is a need to have a robust core ICT infrastructure, such as secure data centres, that can reach even the most rural of locations and prevent the biggest and most recent of cybersecurity threats.

A new study explores where the Philippines can improve under the ​​Regional Digital Trade Integration Index (RDTII) framework. According to the authors, weak competition, restrictive policies, high costs for new entrants, and the lack of dependable and affordable ICT services in remote areas are some of the existing challenges hindering ICT development.

There have been bright spots, particularly in terms of policy and competition. In May 2020, the Philippines adopted a Common Tower Policy, which seeks to “ensure universal access to quality, affordable, reliable, and secure ICT services [in the country].” The President also issued Executive Order 127 in March of this year, expanding the provision of internet services through inclusive access to satellite services. New national players DITO Telecom and Converge ICT have also begun challenging the duopoly of Smart (PLDT) and Globe Telecom.

The Philippines’ national ID system is a welcome step towards greater financial inclusion. However, the country must also continue to develop its ICT infrastructure and encourage competition among ICT players to support more and better financial services and prevent further exclusion of marginalized sectors. This will help ensure that all Filipinos can participate in the digital economy — which is critical for economic growth and inclusive development in the 21st century.

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