THE PHILIPPINES will benefit significantly from the ongoing major shift in global trade, the Asian Development Bank (ADB) said, with the services sector expected to see the most significant gains.

Although the coronavirus pandemic and lockdowns have disrupted the global economy and trade, ADB said Asia should make greater efforts to liberalize trade and promote trade so that economies can benefit from the realignment of their supply chain networks.

"ADB Economic Research and Regional Cooperation Department Director for Regional Cooperation and Integration Cyn-Young Park said during the launch of the Asian Economic Integration Report (AEIR) 2021 on Wednesday, "I believe that the Philippines has strong potential, provided that its post-pandemic trade environment would give more weight to the digital and services trade.

In the new round of globalization, where digital transformation plays a key role, Park said, the services sector in the Philippines is likely to be among the winners. She noted that Filipino employees can take on services related jobs abroad, while the outsourcing of the local business processes (BPO) sector remains untouched.
Last year, the ADB noted a huge blow to cross-border migration, while the effect on remittance inflows, particularly to countries that depend on them, remained "acute."

"Despite the large drop, remittances to Asia are likely to remain a relatively stable source of external funding relative to other types of financial flows," he said.
Cash remittances to the Philippines decreased by 0.8% to $27.013 billion in the first 11 months of 2020, according to data from the central bank.

The ADB study reported that Southeast Asia, driven by trade, investment, and human migration, remained the most integrated sub-region in the Asia-Pacific region.
This is focused on the Asia-Pacific Regional Cooperation and Integration Index (ARCII), which, based on 26 indicators and in six dimensions, tests economies' regional integration.

The pandemic has also made digital transformation crucial for countries to boost wider economic production, especially in the areas of trade, trade, and employment.
The ADB predicted that if the digital sector grows by 20 percent in 2025, Southeast Asian economies could report an annual gain of 8.4 percent in regional production on average. In the meantime, trade and employment in the region will increase by an average of 8 percent and 6.2 percent.
With increasing internet penetration, digital connectivity in Asia has increased, but wide subregional gaps remain. Greater access via internet connectivity to online tools enables users, enterprises, and governments to obtain broader and better access across regional boundaries to goods and services, the report said.
Between 2006 and 2017, internet penetration in the Philippines was among the lowest in the 20 Asian economies selected. However, in 2014-2017, the connectivity rate increased dramatically, equivalent to that of all other nations.

"Asia will continue to grow as a major player in the global market for digital platforms as wider access reaches more users and generates higher growth in revenue," said the multilateral lender.
Countries should, however, ensure that they are equipped to counter the digital divide and avoid the worsening of inequality.
The Philippines has a lot to do with catching up, as it scored 0.8221 in the Network Readiness Subindexes Digital Platform Penetration (DPP) index that measured the readiness of the country for technology, citizens, governance, and effect. Out of 34 Asia-Pacific economies tracked, the country placed 13th.
With a DPP index score of 2,5847, China topped the chart, with Korea at 2,5283, Australia at 2,1010, Hong Kong at 2,0323, New Zealand at 1,8795, and Japan at 1,7794.

"This suggests that governments cannot slacken the upgrading of the underlying infrastructure and regulatory foundations in order to sustainably develop the domestic digital platform economy," it added.
Turkmenistan, Papua New Guinea, Timor-Leste, the Lao PDR, and Mongolia were at the bottom of the list.

"There is a great need to catch up with all four aspects of network readiness for countries in the lowest group," it said.
The ADB said wider use of digital media, provided that proper policies are in place, could help countries attain economic inclusion.