Product Market Study of ICT sector in PhilippinesDocument Transcript
PRODUCT MARKET STUDY (MATRADE Manila) INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT) SECTOR IN PHILIPPINESOverviewThere are still many Filipinos uninitiated to the use of the computer, or to the Internetalthough there is a very digital world that we live today. The things that make thissituation more unfortunate is they are young Filipinos living at the rural areas who aresupposed to be at the forefront of the modern age.Due to that, Commision on Information and Communications Technology (CICT)created in 2004 as the primary policy, planning, coordinating, implementing, regulating,and administrative entity of the government`s executive branch for Philippine ICTdevelopment. Ms Patricia M. Abejo, CICT Chief of Staff, and Director of CyberservicesGroup said the government recognizes the vital role of communication and informationin nation-building. Abejo explained that they used to rely on the traditional mode ofinformation like newspapers, television and radio and now they are moving up to theuse of more improved technology which high speed access to information.ICT Development in the Philippines Recognizing the potential benefits of ICTs in facilitating development initiatives, promoting good governance, and combating poverty, towards a people-centered, inclusive development-oriented information society, the Philippine government crafted the Philippine ICT Strategic Roadmap (first in 2003, then in 2006), which provides the country’s overall framework for ICT development, outlining strategic programs and initiatives on ICT infrastructure (universal access), ICT applications, human capital, e-governance, and enhancing business development. It also contains the legal and policy framework, including the proposal to create a ministry-level agency on ICT, envisioned to be the primary policy, planning,
coordinating, implementing, and administrative entity to ensure effective coordination and implementation of the national ICT agenda. The government initiated the Philippine Community e-Center (CeC) program to promote the establishment, operation, and/or consolidation of public ICT access points or CeCs in the country. In 2007, the Philippine CeC Roadmap (2008– 2010) was launched, which envisions affordable access to ICT-enabled services and relevant content at the municipal level. Despite significant accomplishments in ICT, the Philippines continues to experience a decline in its e-Government Readiness ranking, from 41 in 2005 to 66 in 2008, and its Networked Readiness Index, from 69 in 2007 to a ranking of 81 in 2008. The Commission on Information and Communications Technology* (CICT) is the primary policy, planning, coordinating, implementing, regulating, and administrative entity of the executive branch of Government that will promote, develop, and regulate integrated and strategic ICT systems and reliable and cost-efficient communication facilities and servicesForecast for ICT MarketAccording to IDC Asean, a research company based in Malaysia, year 2010 was a yearof recovery and transformation for the information and communications technology(ICT) market in the Philippines. Total IT market spending would increase by 7.6 percentto reach US$3.14 billion by the end of 2010, and would succeed in regaining a 9.1%compound annual growth rate (CAGR) by 2013.On the telecommunications front, spending is estimated to record 7.7% growth in 2010,following the decline of 2.9% in year-end 2009. Telecommunications spending willincrease and reach US$3.81 billion. IDC expects the Philippine ICT market to postmodest growth across various segments, driven by the transformation in businessobjectives, both from the vendor and service provider (SP) community and the end-usersegments, corporate or small and medium enterprises (SMEs) and consumer.
"Overall, the ICT landscape in the Philippines will be driven by recovery of the ICTspending psyche and activities and transformation of key business objectives of theenterprise sector, as well as the consumers ICT focus. Furthermore, the ever-evolvingend user needs and objectives will impel vendors and SPs to re-examine keytransformational strategies on marketing, consultative selling, and regionalization, aswell as expansion and product and solution portfolio," says Jubert Daniel Alberto,Manager for IT Spending research at IDC Philippines.The following are the Top 10 predictions that IDC believes will shape the ICT industry inthe Philippines:1. Philippine ICT spending will see modest growth IDC expects that while full recovery will only happen in 2011, 2010 will provide the impetus for the ICT market to jumpstart the local ICT environment. Investment motives are anticipated to shift from initial cost savings to long-term savings and efficiency. Organizations are seen to prioritize investments that would minimize the total cost of ownership (TCO) and look beyond the initial cost outlay. Driving the growth in IT spending for 2010 is the hardware sector, comprising an estimated 72.2% of the total market, is projected to increase by 7% year-on-year (YoY), on the back of 6% recovery in total PC systems spending. Spending on packaged software is predicted to contribute 7.5%, while services spending will account for 20.3%, as enterprises seek more ONGlonger-term ICT initiatives. Key to the telecommunications growth is the continued high demand on and pervasiveness of mobile phone usage and mobile devices, as well as the accelerated adoption of mobile data and market competition through competitive pricing.
2. 2010 will be the highest growth Year for Wireless Broadband In 2010, the Philippine market will see the highest growth for wireless broadband, particularly universal serial bus (USB) dongle-based portable broadband operating on 3G/High-Speed Downlink Packet Access (HSDPA) technology, and will pose serious competition to fixed broadband, especially xDSL. IDC believes that the key elements for a surge in growth are in place. These include the price of devices, including USB dongles, laptops, and mini-notebooks, having reached acceptable levels for mass adoption.3. "Dongled" portable devices will up the mobility ante IDC expects the presence of laptops and mini-notebooks to boost the adoption of portable broadband subscribers in the Philippines. The availability and affordability of such devices is expected to pave the way for the mass adoption of portable broadband in the country. The continued proliferation of laptops and mini-notebooks in the market will set the landscape for such technologies adoption.4. Smartphones will scale new heights For 2010, IDC expects that demand for smartphones to reach new heights, as shipments are foreseen to reach 1.36 million units, a 17% growth from 2009. Features such as Internet access capability, email access, and availability of downloadable applications would be the primary features that end users would be looking for. IDC expects that with the rise of smartphones, handset models that will be introduced in the near term will be equipped with more sophisticated applications through highly evolved operating systems (OSs).5. Data services will revolutionize telecoms pricing strategies IDC anticipates a transformation in telecoms pricing strategies in the Philippines from per kilobyte to time-based pricing to address the increasing demands for data services in the country. The market for data services will be characterized by high competition, with telecom players coming up with more products and services for data usage, transforming data services into a market that offers wider range of
charging options. This transformation will hasten the usage and practices of users, with mobile data services becoming more appealing and affordable to broader user base.6. Use of social media technologies for marketing will intensify In 2010, IDC expects a more enterprises and SMEs to adopt Internet social media as the new avenue for marketing due to its cost effectiveness. These companies will use the Internet more often as the venue to interact with current and potential customers. Solutions like signing up for a social community sites up to building and maintaining their own Web sites will be the tool that both enterprises and SMEs strategies will revamp vendor focus ICT spending in the country will greatly be pushed by the anticipated robust expansion of ICT buying outside Metro Manila, especially as vendors and SPs are aggressively and constantly pouring in initiatives toward decentralization of ICT focus. In the time of overall recovery, penetrating the largely untapped provincial market will be the centerpiece of most vendors and SPs 2010 strategies.7. Vertical consultative selling will transform vendor initiatives While this strategy has been played out in the past several years, 2010 will see new and intensified verticalization strategies in the Philippines in the form of consultative selling. Though the traditional market approach is still effective, the level of competition has evolved over time. Each industry has a different set of needs and priorities in terms of IT spending. Therefore, vendors must be able to leverage products and services to meet the requirements of each industry.8. End users will proactively seek "Bang-For-the-Buck" alternatives In 2010, end users will be actively looking for products with the expected functionalities and specifications but at relatively cheaper prices. In line with the main aim of reducing total IT cost in the long term. The recovery theme that will hover in
2010 will drive end users to actively seek out products and solutions that would provide "bang-for-the-buck" benefits.Trade Statistics of ICT productsExports of ICT Products from PhilippinesHS 2009 2010 CHANGECODE DESCRIPTIONS VALUE (USD) VALUE (USD) % TOTAL 3,869,651,085.00 5,018,610,474.00 29.69847170 Storage units 1,105,990,954.00 1,765,880,703.00 59.67 Portable digital automatic data processing machines, weighing not more than 10kg, consisting of at least a central processing847130 unit, a keyboard and a display 1,397,239,414.00 1,756,307,117.00 25.70 Transmission apparatus for radio-telephony, radio-telegraphy,852510 radio-broadcasting or television 500,020,541.00 #DIV/0! Input or output units, whether or not containing storage units in847160 the same housing 598,241,102.00 483,780,723.00 -19.13 Other parts suitable for use solely or principally with the852990 apparatus of headings No. 85.25 to 85.28 363,178,992.00 407,215,817.00 12.13 Other parts and accessories suitable for use solely of principally852290 with the apparatus of headings Nos. 85.19 to 85.21 32,991,938.00 #DIV/0! Aerials and aerial reflectors of all kinds, parts suitable for use852910 therewith 21,315,346.00 24,784,266.00 16.27852692 Radio remote control apparatus 13,831,062.00 14,955,803.00 8.13852610 Radar apparatus 7,609,579.00 8,987,585.00 18.11 Other parts and accessories suitable for use solely of principally852290 with the apparatus of headings Nos. 85.19 to 85.21 18,551,102.00 7,446,258.00 -59.86851721 Facsimile machines 3,915,277.00 4,434,397.00 13.26 Parts of electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and851790 telecommunication apparatus for carrier-current line systems 6,114,687.00 4,222,632.00 -30.94851810 Microphones and stands thereof 2,673,397.00 3,395,841.00 27.02847180 Other units of automatic data processing machines 6,230.00 2,044,927.00 32,723.87851829 Other loudspeakers, whether or not mounted in their enclosures 1,226,412.00 1,110,324.00 -9.47851719 Other telephone sets; videophones 233,381.00 #DIV/0!851780 Other electrical apparatus for line telephony or line telegraphy 196,164.00 #DIV/0!847190 Other data processing equipments, n.e.s. 2,264,004.00 193,319.00 -91.46852540 Still image video cameras and other video camera recorders 76,562.00 143,196.00 87.03851711 Line telephone sets with cordless handsets 59,328,368.00 133,265.00 -99.78851830 Headphones, earphones and combined microphone/speaker sets 281,022.00 63,633.00 -77.36 Other digital automatic data processing machines, comprising in the same housing at least a central processing unit and an input847141 and output unit, whether or not combined 10,203.00 20,694.00 102.82
Other apparatus, for carrier-current line systems or for digital line851750 systems 15,000.00 #DIV/0! Digital processing units other than those of subheadings 8471.41 and 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units,847150 output units 138,599.00 12,680.00 -90.85851850 Electric sound amplier sets 530,776.00 9,717.00 -98.17852691 Radio navigational aid apparatus 4,800.00 #DIV/0!851840 Audio-frequency electric ampliers 2,500.00 #DIV/0!851822 Multiple loudspeakers, mounted in the same enclosure 13,053.00 1,305.00 -90.00852210 Pick-up cartridges 1,300.00 #DIV/0!852530 Television cameras 498.00 #DIV/0!847110 Analog or hybrid automatic data processing machines 183,804.00 150.00 -99.92852790 Other radio telephonic and radio telegraphic receivers 6,026.00 -100.00852520 Transmission apparatus incorporating reception apparatus 260,933,374.00 -100.00 Parts of microphones and stands therefor; loudspeakers, whether851890 or not mounted in their enclosures; headphones, earphones, etc. 5,980,017.00 -100.00851821 Single loudspeakers, mounted in their enclosures 11,723.00 -100.00Source: National Statistics Office, PhilippinesImports of ICT Products from PhilippinesHS 2009 2010 CHANGECODE DESCRIPTIONS VALUE (USD) VALUE (USD) % TOTAL IMPORTS 1,272,088,749.00 1,252,313,967.00 -1.55 Parts of electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and851790 telecommunication apparatus for carrier-current line systems 625,449,125.00 509,683,718.00 -18.51852540 Still image video cameras and other video camera recorders 0.00 164,985,275.00 #DIV/0! Portable digital automatic data processing machines, weighing not more than 10kg, consisting of at least a central processing unit, a847130 keyboard and a display 141,538,313.00 134,355,562.00 -5.07 Other parts suitable for use solely or principally with the apparatus of852990 headings No. 85.25 to 85.28 101,624,902.00 129,622,590.00 27.55 Input or output units, whether or not containing storage units in the847160 same housing 46,727,343.00 48,750,548.00 4.33851730 Telephonic or telegraphic switching apparatus 354,449.00 48,317,289.00 13531.66 Digital processing units other than those of subheadings 8471.41 and 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output847150 units 37,645,238.00 33,908,171.00 -9.93852540 Still image video cameras and other video camera recorders 30,552,106.00 29,709,474.00 -2.76847190 Other data processing equipments, n.e.s. 15,536,236.00 19,605,623.00 26.19 Other parts and accessories suitable for use solely of principally with852290 the apparatus of headings Nos. 85.19 to 85.21 19,111,728.00 18,414,343.00 -3.65
Aerials and aerial reflectors of all kinds, parts suitable for use852910 therewith 7,724,527.00 16,460,684.00 113.10847170 Storage units 11,533,361.00 15,574,859.00 35.04 Other digital automatic data processing machines, comprising in the same housing at least a central processing unit and an input and847141 output unit, whether or not combined 7,808,854.00 9,360,677.00 19.87 Transmission apparatus for radio-telephony, radio-telegraphy, radio-852510 broadcasting or television 119,662,833.00 8,633,075.00 -92.79847180 Other units of automatic data processing machines 7,770,922.00 8,221,312.00 5.80851822 Multiple loudspeakers, mounted in the same enclosure 3,970,020.00 7,705,248.00 94.09851850 Electric sound amplier sets 4,722,789.00 6,630,196.00 40.39 Digital automatic data processing machines, presented in the form of847149 systems 7,345,613.00 5,488,210.00 -25.29851719 Other telephone sets; videophones 3,746,751.00 5,037,189.00 34.44 Parts of microphones and stands therefor; loudspeakers, whether or851890 not mounted in their enclosures; headphones, earphones, etc. 5,719,346.00 5,027,130.00 -12.10851829 Other loudspeakers, whether or not mounted in their enclosures 4,049,037.00 4,148,493.00 2.46851830 Headphones, earphones and combined microphone/speaker sets 3,140,350.00 3,498,235.00 11.40852530 Television cameras 2,091,338.00 2,867,456.00 37.11851721 Facsimile machines 1,421,468.00 2,589,406.00 82.16852610 Radar apparatus 734,750.00 2,252,856.00 206.62851821 Single loudspeakers, mounted in their enclosures 1,669,384.00 2,174,729.00 30.27852790 Other radio telephonic and radio telegraphic receivers 568,885.00 2,022,983.00 255.60851840 Audio-frequency electric ampliers 919,092.00 1,725,199.00 87.71851810 Microphones and stands therefor 1,434,839.00 1,686,065.00 17.51851711 Line telephone sets with cordless handsets 1,092,040.00 1,491,940.00 36.62 Other apparatus, for carrier-current line systems or for digital line851750 systems 55,391,285.00 933,897.00 -98.31852691 Radio navigational aid apparatus 467,405.00 593,980.00 27.08852692 Radio remote control apparatus 375,254.00 587,884.00 56.66852210 Pick-up cartridges 186,797.00 180,277.00 -3.49851722 Teleprinters 2,369.00 69,394.00 2829.25Source: National Statistics Office, Philippines
Export of ICT Products to Malaysia HS 2009 2010 CHANGE CODE DESCRIPTIONS VALUE (USD) VALUE (USD) % TOTAL 29,379,602 27,694,933 (5.73) Portable digital automatic data processing machines, weighing not more than 10kg, consisting of at least a central processing847130 unit, a keyboard and a display 4,767,863 #DIV/0! Digital processing units other than those of subheadings 8471.41 and 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units,847150 input units, output units 13,413 (100.00) Input or output units, whether or not containing storage units in847160 the same housing 126,123 1,980 (98.43)847170 Storage units 28,122,019 18,596,065 (33.87)847180 Other units of automatic data processing machines 480 32,054 6,577.92851721 Facsimile machines 46,810 83,525 78.43 Parts of electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line851790 systems 23,933 62,297 160.30851810 Microphones and stands therefor 33,540 16,906 (49.59)851829 Other loudspeakers, whether or not mounted in their enclosures 14,504 (100.00) Parts of microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones,851890 earphones, etc. 391,903 220,670 (43.69) Other parts and accessories suitable for use solely of principally852290 with the apparatus of headings Nos. 85.19 to 85.21 21,541 89,999 317.80852520 Transmission apparatus incorporating reception apparatus 25,555 475,896 1,762.24852530 Television cameras 498 #DIV/0! Aerials and aerial reflectors of all kinds, parts suitable for use852910 therewith 14,524 (100.00)852692 Radio remote control apparatus 102,885 #DIV/0! Other parts suitable for use solely or principally with the852990 apparatus of headings No. 85.25 to 85.28 545,257 3,244,295 495.00Source: National Statistics Office, PhilippinesImports of ICT Products from MalaysiaHS CODE DESCRIPTIONS 2009 2010 CHANGE USD USD % TOTAL 27,273,309 57,165,537 109.60 Portable digital automatic data processing machines, weighing not more than847130 10kg, consisting of at least a central processing unit, a keyboard and a display 14,480,429 27,591,554 90.54 Other digital automatic data processing machines, comprising in the same housing at least a central processing unit and an input and output unit, whether or847141 not combined 337,511 723,411 114.34847149 Digital automatic data processing machines, presented in the form of systems 238,776 296,890 24.34
Digital processing units other than those of subheadings 8471.41 and 8471.49, whether or not containing in the same housing one or two of the following types of847150 unit: storage units, input units, output units 402,541 904,795 124.77847160 Input or output units, whether or not containing storage units in the same housing 724,560 1,573,064 117.11847170 Storage units 62,215 65,215 4.82847180 Other units of automatic data processing machines 622,182 483,701 (22.26)847190 Other data processing equipments, n.e.s. 2,268,002 2,133,968 (5.91)851711 Line telephone sets with cordless handsets 3,079 34,244 1,012.18851719 Other telephone sets; videophones 24,890 209,427 741.41851721 Facsimile machines 210,067 1,841,506 776.63851730 Telephonic or telegraphic switching apparatus 11,147 4,521 (59.44)851750 Other apparatus, for carrier-current line systems or for digital line systems 124 16,611 13,295.97851780 Other electrical apparatus for line telephony or line telegraphy 3,684 27,356 642.56 Parts of electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for851790 carrier-current line systems 4,802,597 9,983,633 107.88851810 Microphones and stands therefor 1,105 985 (10.86)851821 Single loudspeakers, mounted in their enclosures 88,976 121,568 36.63851822 Multiple loudspeakers, mounted in the same enclosure 210,426 89,168 (57.63)851829 Other loudspeakers, whether or not mounted in their enclosures 333,740 250,907 (24.82)851830 Headphones, earphones and combined microphone/speaker sets 39,841 26,980 (32.28)851840 Audio-frequency electric ampliers 10,644 11,488 7.93851850 Electric sound amplier sets 38,480 117,967 206.57 Parts of microphones and stands therefor; loudspeakers, whether or not mounted851890 in their enclosures; headphones, earphones, etc. 60,776 18,558 (69.46)852210 Pick-up cartridges 7,117 25,471 257.89 Other parts and accessories suitable for use solely of principally with the852290 apparatus of headings Nos. 85.19 to 85.21 125,951 780,921 520.02852520 Transmission apparatus incorporating reception apparatus 31,408 19,503 (37.90)852530 Television cameras 38,659 2,983,562 7,617.64852540 Still image video cameras and other video camera recorders 114,882 1,973 (98.28)852610 Radar apparatus 470 969,900 206,261.70852691 Radio navigational aid apparatus 3,624 3,433 (5.27)852692 Radio remote control apparatus 35,302 66,017 87.01852790 Other radio telephonic and radio telegraphic receivers 59,076 235,745 299.05852910 Aerials and aerial reflectors of all kinds, parts suitable for use therewith 17,734 39,701 123.87 Other parts suitable for use solely or principally with the apparatus of headings852990 No. 85.25 to 85.28 1,863,294 5,511,794 195.81Source: National Statistics Office, Philippines
Current SituationThe three leading telecommunications companies in the Philippines are: PhilippineLong Distance Telephone Company, Inc. (PLDT); Globe Telecom Inc (Globe) andDigital Telecommunications Philippines Inc (Digitel) with PLDT being the market leader.These three companies are involved in mobile, fixed line and Internet services.The fourth telecommunications company, Bayan Telecommunications Inc, entered themarket in 1993 by pioneering the wireless landline service. It has since expanded intobroadband Internet and DSL services.The latest entrant into the Philippine telecommunications market is Liberty BroadcastingNetwork Inc (LBNI), a subsidiary of San Miguel Corporation and the Qatar TelecomGroup (Qtel) which launched Wi-Tribe, its 4G broadband technology in February 2010.The mobile business is dominated by three major operators, Smart CommunicationsInc (which is owned by PLDT), Globe Telecoms and Digital Telecommunications whichruns Sun Cellular. Current mobile penetration rate is 77 per cent with an estimated 70million subscribers, led by Smart with a hold of 54 per cent of the market, followed byGlobe with 30 per cent. Mobile penetration is expected to rise especially in less-developed market segments to reach an estimated penetration level of 147 per cent by2013.The mobile market is 95 per cent pre-paid. There is an increasing business for wirelessbecause mobile handsets are cheap. A mobile handset costs as low as US$30 and aSIM card is free or priced at around US$1.00.The Philippines is the SMS capital of the world responsible for sending 1B SMS dailyaccounting for 20 per cent of the world’s SMS traffic. This is due to the affordability of
sending an SMS which is approximately AU$0.02 per text versus AU$0.20 per minutefor voice calls.The industry technology is on state-of-the-art digital network providing moderncommunication means such as broadband Internet access and wireless connection.In 2009, leading landline operator PLDT and its mobile subsidiary, SmartCommunication, had an estimated broadband subscriber base of 1.2 million while GlobeTelecom had approximately 370,000 broadband subscribers. Sun Celllular and Bayantelhave also rolled out their fixed and wireless broadband service but their subscriber baseis nowhere near the numbers of Smart and Globe. These three companies continue toallocate a significant amount of capital expenditures to increase their footprint in thewireless and broadband network business.Internet subscription accounted for an estimated 24 per cent of the Philippine population(2009) or roughly around 24 million. By 2013, Internet and broadband penetration ratesare expected to be 31 per cent and five per cent, respectively, driven by the fallingprices of PCs and Internet subscription rates.The National Telecommunications Commission (NTC) has given 3G licences to fourmajor domestic carriers, namely, Globe, Smart, Digitel, and Connectivity UnlimitedResources Enterprises (CURE). However, there is evidence of consolidation occurringin the 3G market after Smart bought out CURE in 2008 and launched its 3G service,Red Mobile, in late 2008. A fifth and final 3G licensed is still to be auctioned.VoIP has been accepted as a value-added service for both ISPs and telecommunicationcompanies. Connectivity options available are WCDMA, WLAN, Bluetooth wirelesstechnology, and WiMAX for ‘last mile’ connectivity.In terms of broadcasting, the NTC had drafted the rules and regulations for digital radiobroadcast in the Philippines. Digital audio broadcast signals are transmitted in-band, on-channel or the Iboc technology. This means that several stations can be carried within
the same frequency spectrum. Digital television should use Digital Terrestrial Television(DTT) technology, shifting from analogue to digital by 2015.The BPO of the Philippines is one of the key growth stimulants. It has potential earningsof US$13 billion by 2010 with a CAGR of 40 per cent from 2005 to 2010. Examples ofBPO services are: customer care, medical transcription, software development,animation and shared services.About BPO The Philippines` IT-BPO (information technology and business process outsourcing) industry is eyeing to hit $11 billion in revenues for the year 2011, increase by 20 per cent from 2010`s estimated revenue of $9 billion. The Presidents Aquino was pledging a fresh P62 million fund for the industry when he inaugurated the new IBM facility in Quezon City on 1st Dec 2010 in order to reach the target. The country`s BPO sector is growing faster than the orther globally, or around 15 per cent higher than the global rate, said by Malik Parekh, CEO of Spi Global. The CICT is will cooperate with Business Processing Association of the Philippines (BPAP) to oversee the development of the ICT in the country with 300 corporate members and 4 partner asscoiations, is umbrella association which represents, in term of employment, a majority of IT, voice and non-voice BPO, and media outsourcing company in the Philippines.About the Market In terms of telecommunication hardware the market is very price sensitive. Most of the end users source their supplies from China because of its price. Other customers prefer high quality and thus source hardware from North America, Europe, and also from other country such as Australia.
In terms of software, local companies have their own IT pool that does in-house programming. Examples of home-grown software programs are payroll system, inventory and planning software. However, complex softwares with critical mission applications are sourced from foreign companies. Examples of complex softwares are network management software and integrated management software.ICT Indicators for the PhilippinesThere are various means to measure the level of ICT capacity and developmentaccording to a country’s context. This can be done by measuring subscription andaccess of the population to ICT. Global efforts have developed indices to measure: Networked readiness – an international assessment of countries’ capacity to exploit the opportunities offered by ICTs by looking at the extent of increase in the use of ICT in a specific country and the factors that enable this (World Economic Forum*); and E-government readiness - a systemic assessment of how governments use Information and Communication Technology (ICT) to provide access and inclusion for all (United Nations*).Key Economic Indicators 2000 2007 ADB (2008)Population (millions) 76.2 87.9 90.5GDP (PPP) per capita (intl $) - 3,383 - 2000 2007 2008GDP growth rate (%) 6.0 7.2 (7.3) 4.6Access 2000 2007 Difference
Telephone lines (per 100 people) 4.0 4.5 0.5Mobile cellular subscribers (per 100 people) 8.5 58.9 50.4Internet subscribers (per 100 people) 0.5 2.8 2.3Internet users (per 100 people) - 6.0 -Personal computers (per 100 people) 1.9 7.3 5.4Households with a television set (%) 53 63 10 2006-07 2007-08 2008-09ICT Development Indicators (122) (127) (134)Networked Readiness Index 69 81 85 2003 2005 2008 (173) (179) (189)E-Government Readiness Index 33 41 66Sources: World BankThe Philippines Issues on ICT1) E-Government Inadequate ICT infrastructure to support interconnectivity and wider public access to government information and services. Weak regulatory and administrative capacity on ICT development. Need for improved procurement policy for ICT resources and services2) E-Commerce / E-Business Limited broadband in key cities and identified growth centers and priority areas
Need to address constitutional issues on ownership (e.g, 60-40 and 100% Filipino ownership for mass media) Need to promote internationally competitive Small, Micro and Medium Enterprises (SMEEs). Need to make business more competitive in the global arena and responsive to local needs.3) E-Community Inadequate communal/collective public access to ICT facilities throughout the country. Limited access to basic information and services.4) E-Knowledge Low quality and standard in basic education Inadequate human resource competency in ICT Low literacy among broad section of the population Wide knowledge gap and uneven distribution of technical know-howOpportunitiesThe opportunities in the Philippines ICT industry are: Digital value-added services for mobile and wireless Innovative wireless broadband technology and services ERP and other e-business applications, particularly for SMEs Equipment and applications for BPOs and contact centresList of ICT`s related projects Education Finance Health Industry and Trade Law, Economic Management and Public Policy
Multi-sector Public Sector ManagementTariffs, regulations and customs Zero tariff for importation of electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones (HS Code 85.17). However, this equipment will be subject to 12 per cent expanded value added tax. Telecommunications hardware is type-approved by the National Telecommunications Commission and/or the Philippine Long Distance Telephone Company, being the major dominant player for more than 50 years in the market. Computer software to the Philippines is duty-free. However, there are instances where computer softwares have tariff rates depending on the declaration of the importer. In this instance, it is best for the importer to seek tariff classification ruling from the Tariff Commission (HS Code 85.23). Importers of all telecommunication hardware must obtain an importation certification from the National Telecommunications Commission. Hardware used for government telecommunication projects are tax free. Local inspection for standards compliance is required for products subject to mandatory Philippine national standards, including electrical wires and cables.Market entryICT-specific considerations for Malaysian exporters: Prospecting Malaysian exporters must first determine the requirement of the telecommunication companies and the end users.
A visit to the Philippine ICT market is a requirement as this will allow the Malaysian exporter to gain first-hand knowledge about the market and the business potentials of the hardware and software. Meetings with local systems integrators, potential local agents are also productive activities because you will develop good contacts within the industry. Test case studies are helpful tools to promote the products and services of Malaysian exporters. The market is price sensitive and Malaysian products and services known to be high-quality and high-priced. It is up to the Malaysian exporter and the appointed local agent to educate the end users of the benefits of high-quality competitive priced. Product differentiation against that of low-priced products must be established. Participating in local ICT exhibitions as an exhibitor is expensive. In some cases, the appointed local agent will share the cost of exhibition with the principal supplier. Malaysian exporting companies can time their visit to the Philippine market during the local ICT exhibition. In this way, they can know the ICT market trends and be introduced to the industry players and associations in one exhibition hall.Distribution channelsFor telecommunication suppliers of hardware and software it is best to appoint a localagent to represent the supply company in this market. This will assure the end usersthat after-sales support service is available. There are systems integrators that canbundle products and services to offer a complete package to the customer. In practice,most local agents prefer a non-exclusive partnership agreement so they will not feel thepressure to meet sales targets. Commission rates averages between 15 per cent and30 per cent depending on the product.
Link and Industry ContactsCommission on Information and Communications Technology (CICT)CICT-NCC Building,C.P. Garcia Avenue,1101 Diliman Quezon City,Philippines.Tel. No: (632) 920 0101Email: email@example.comWebsite: www.cict.gov.phNational Computer CenterCommission on Information & Communicaions TechnologyCICT-NCC Building,C.P. Garcia Avenue,1101 Diliman Quezon City,Philippines.Tel. No: (632) 920 0101 Fax No: (632) 920 7414National Telecommunications Commissionhttp://portal.ntc.gov.phPhilippine`s Telecommunications ( Service Providers)Digitel – www.digitel.phGlobe Telecom – www.globe.com.phPhilippine Long Distance Telephone Co. – www.pldt.com.phSmart Telecom – http://smart.com.ph