Significant growth in private and public investment, upward consumer spending, and demand for better service drive the information and communications technology industry in the Philippines (ICT).
The Marcos Administration has announced its intention to continue the previous Duterte Administration’s digital transformation program. Under the digital transformation program, the immediate priorities include a cloud data center, software development for business process improvement, the conversion of local government units into smart cities, cybersecurity solutions for data privacy protection, and improving the internet and mobile services landscape through a national broadband plan.
The Duterte Administration believed that improving ICT would also improve the Filipinos’ quality of life while addressing the many challenges of doing business in the Philippines. On March 21, 2022, former President Duterte signed the amendment to the Public Service Act (11659), allowing up to 100% foreign ownership of public services in the Philippines, including Telecommunications. To create a better business environment and support its digital transformation projects, former President Duterte signed the Ease of Doing Business and Efficient Government Service Delivery Act (RA 11032) in May 2018. In 2016, the Philippine Government established its own Department of Information and Communications Technology (RA 10844) to show its strong support to the ICT industry.
The Philippines’ growing middle class and the young population are also important drivers of IT demand. There is an upward trajectory in their spending levels on technology benefitting premium brands.
Philippine infrastructure investments are another area of opportunity for U.S. exporters. Road, railway, airport, bridge, and port systems will require design software, building information modeling (BIM) for better project management and file-sharing applications. These systems will drive demand for hardware, software, and services.
Leading sub-sectors
There are four leading subsectors with commercial opportunities for U.S. companies:
Cybersecurity
The tech-savvy Filipino population with few data protection mechanisms makes the Philippines extremely vulnerable to cyber-attacks and incidents. The COVID-19 pandemic has changed the Philippines’ digital landscape. A February 2020 survey declared that 43% of Philippine private companies had increased allocation towards cybersecurity solutions investment. Eighty six percent (86%) use anti-malware and antivirus tools, 59% uses next-generation firewalls, and 47% are starting to invest in cloud-native security. Due to the continued adoption of cloud storage and solutions, software-defined area network security is gaining market popularity.
Market Opportunities: Philippine Government, the business process outsourcing (BPO) industry, education sector, financial sector, health sector, and the telecommunications industry are key vertical markets for IT. There is also growth in e-payment and fintech platforms. BMI forecasts the Philippines software and software sales will reach $95 million by 2025.
The National Cybersecurity Plan 2022 of the Philippine Department of Information, Communications, and Technology (DICT) is now on the rollout of cybersecurity infrastructure, including the capability-building program for all the national agencies and local government units. The Philippine Government continues to amplify the Data Privacy Act (RA 10173), set data protection standards, and recommend that all entities register with its online portal and hire a Data Privacy Officer. The rollout with the allocated budget indicates opportunities for U.S. software and hardware solutions providers.
Software and Services
Philippine software and software service sales will reach $95 million by 2025. From 2020-2021, software sales benefited from increased demand for devices from Filipinos working and studying remotely. Local firms have also pushed for digital transformation, increasing spending on enterprise architecture projects. The purchases were also driven by Microsoft Windows 11 releases to access significant security and feature updates. The 2021 IMD Digital Competitiveness Ranking report listed the Philippines as a lowly 58th out of 64 countries.
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