The technology that promises a better future is the same one that will render millions of Filipinos working in business-process outsourcing (BPOs) jobless in a decade.
At the sidelines of the Philippines-Singapore Business Council (PSBC) Conference on Thursday, former National Economic and Development Authority Secretary Cielito F. Habito said artificial intelligence (AI) and robotics are already cutting incomes worldwide.
Habito said AI is changing the services industry and could replace people employed in sectors, such as BPOs.
“Some people are saying its time to look at the post BPO scenario for the Philippines because it will not last. Maybe in 10 years or so, those in BPOs will be jobless. Artificial intelligence is taking over, so lets enjoy it [BPO] while its still there, but we should already plan for the era after that,” Habito said.
Habito added there is now a global trend wherein economic growth is increasing rapidly, but incomes and wages are declining. This, he said, can be explained by automation and/or robotics.
This means that moving forward, Habito added, the Philippines should be more strategic in addressing its economic challenges and not rely on just services to boost growth.
“The growth in GDP is a growth in profit, not in income. By the way, this is a phenomenon worldwide that the share of profit income to total income meaning total GDP has been growing through time, but the share of labor income, the share of salaries and wages to total GDP has been declining over time,” Habito said.
“It’s really a formula for increasing inequality. But it’s not only unique to us. Unfortunately, its because of the technology trends we are seeing, jobs are being taken over by artificial intelligence, robotics,” he added.
Habito said the country has been quite successful in finding other sources of growth in recent years. He noted that the growth of the economy since 2010 has been largely due to the manufacturing sector.
He added the growth of the industry sector increased to 8 percent in 2016, from only 6 percent in 2015. In the last quarter of last year and 2015, industry growth increased to 7.6 percent, from 6.5 percent.
However, more needs to be done, especially in agriculture, tourism and manufacturing, which have the highest potential to reduce income inequality nationwide.
One of the ways to do this, Habito said, is to spread development to various parts of the Philippine archipelago by improving the capacity of ports outside Metro Manila.
This means allocating some of the “Build, Build, Build” program funds toward reducing the capacity of the Port of Manila and increasing the capacity of other ports, such as Batangas and Subic.
He added this will not only solve the congestion in Metro Manila, but will also make it cheaper for all kinds of shipments to reach various parts of the country.
“This is not something you can leave to market forces, because on its own, the situation will self perpetuate in Metro Manila, so we really need an intervention,” Habito said.
This can also pave the way for the transformation of the Philippines into a trans shipment hub, similar to Kaoshung in Taiwan which is the hub for goods from the Pacific ocean being shipped to the Asean and Singapore for European goods.
This was the plan under the term of former President Fidel V. Ramos. Habito served as the socioeconomic planning secretary of Ramos.
At that time, in the 1990s, he said the Ramos administration obtained information that these ports, particularly Kaoshung, were reaching full capacity.
Habito said the Ramos administration looked at Subic to become a transshipment hub or the port in Infanta Real which is easier to reach than Manila Bay.
“Those are the kinds of forward- looking things that, perhaps, we ought to be reviving again,” Habito said.
These will also help increase the interest of foreign investors in the Philippines. PSBC Cochairmen Guillermo D. Luchangco of ICCP Group and Loh Chin Hua of Keppel Corp. said interest is still not that high for the Philippines among Singaporean investors.
However, the recent economic success of the country, the PSBC said, has made Singaporean firms more keen on investing the Philippines.
Luchangco said Singapore-based firms are looking for partners in halal goods, information-technology-business-process outsourcing, infrastructure and tourism.
Loh said the interest of Singaporean firms on the country are more long term. He said that these firms remain bullish on the country, despite crises, such as the Marawi siege.
“We look at business opportunities in the long term so is not something that we look at as a short-term engagement. I think this is obviously an area of concern not only for us, but also for everyone but ultimately we look at the long-term fundamentals of the Philippines and the signs are all very positive,” Loh said.
Singapore stands as the Philippines’s largest trade partner with a total trade value of $9.3 billion in 2016. Of this amount, around $3.8 billion are Philippine exports.
The Philippines’s top export to Singapore is electronics with a total export value of $3.3 billion.