MANILA, PHILIPPINES — Truelogic Managing Partner Berns San Juan delved into the key findings of Google‘s “e-Conomy SEA 2023,” highlighting the rapid growth and projections for the country’s digital
“e-Conomy” in the recent episode of the Truelogic DX podcast.
Berns emphasized the remarkable growth of the Philippine digital economy, with an expected GMV of USD 24 billion in the current year and a projected USD 35 billion in 2023. This growth positions the country as one of Southeast Asia’s fastest-growing digital economies. Ecommerce also continues to be a major driver of the country’s digital economy, accounting for 70% of all online activities.
“The Philippine digital economy is on an impressive trajectory. There’s an additional 11 billion dollars over the next two years. It’s exciting to witness the country becoming a key player in the Southeast Asian digital landscape,” he said.
“I would also argue the Philippines is usually pretty resilient against macroeconomic headwinds. So we’re in a pretty good position plus terms of digital adoption, Filipinos are very game. This momentum is probably expected to continue and it’s fueled by a lot of the potential offered by AI and the digital participation of many internet users in the country, especially those outside of Metro Manila,” he added.
Online travel also experiences an 88% growth, marking the highest growth rate in the local economy. The Southeast Asian digital economy is set to surpass $100 billion this year, with online platforms outpacing traditional retail growth rates.
On the other hand, funding – like the online startup community, investments in startups, and investments in technology in the Philippine – saw USD 800 million come into the country in the first half of 2022 to invest in various startups, and various technology companies. However, in the first half of 2023, the country only got a fourth of that.
“Private funding slowdown is influenced by the macroeconomic environment globally, with a mismatch in valuation perceptions between private companies and investors,” according to Bain and Company.
“The valuation in the country evaluates the real value, not the imagined value. And to a degree, that’s a blessing because that means people are not gambling with our stock market. Investor confidence in the technology industry in the country could be better, however, I’m not sure we’re ready to see stocks outperforming our usual blue chips. That’s just not the investment climate in the country,” Berns underscored.
Despite these challenges, Berns highlights positive indicators such as a healthy expansion set to continue, lower unemployment rates, increased remittances, and a recovery in tourism contributing to the overall growth of the Philippine economy. He also encourages businesses with a low online presence to participate in ecommerce.
To sustain and amplify this growth, infrastructure development, especially in outer cities, plays a pivotal role. Recognizing that a majority of future digital and economic growth will occur outside the NCR, investment in domestic and regional transportation infrastructure becomes imperative.
“Capturing the non-NCR segments requires down-to-earth and easy-to-understand offerings. The ongoing and approved infrastructure projects, especially in the rail sector, present a game-changing opportunity to fuel economic growth beyond metropolitan areas,” he said.
Recent studies also indicate positive trends in the fintech sector, with the market value of traditional banks increasing by USD 2.2 billion between 2021 and 2023. Notably, the top three fintech firms witnessed a rise of USD 3 billion in their total market value during the same period.
“Digital payments at $93 billion. The digital lending group is at $3 billion. That’s up by 48% since last year. Digital insurance, they did about $100 million worth of transactions in 2023 alone. So digital wealth investment products grew by triple from 2022 to 2023. There’s a lot of other good news to look forward to regarding how the Philippines is poised to succeed over the next two years,” he emphasized.
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