For 2008, the government is estimated to have spent US$390 million on IT, 52 percent for hardware, with IT services accounting for 27 percent and the remaining 21 percent on software. The Springboard Research report adds that IT spending is heavily centralized at the national level with local governments controlling an estimated 7 percent of spending. It notes that government spending was centered on education, defense, healthcare, utilities, taxation, social services and transportation.
In a press briefing in Manila over the weekend, the research firm’s vice-president, Michael Barnes said, “The key challenge in the Philippine market is the lack of transparency and visibility. Lack of transparency enables corruption. That means not fully leveraging the spending because it is not going where it is supposed to. That’s stating it in the most euphemistic way possible. It’s corruption, which happens in most growth markets, not just the Philippines.”
Clearer procurement process will reduce cost for administration
The report sites three challenges faced by IT vendors who want to deal with the government, namely the complexity and ambiguity of the procurement process, poor record in implementing scheduled projects and difficulty in winning large foreign-funded or NGO-funded projects. It highlights examples in which there were public outcry on two projects, one involving a US$330 million national broadband network project with China’s ZTE Corporation and the other being a poll automation contract in 2004.
Also, if a project is funded by a foreign government or NGO, the work may be skewed towards parties from that country, Barnes added. He said that transparency would lead to fiercer competition among vendors and the government would benefit from savings. “If the vendors don’t have to pad their prices for these inefficiencies, that means that they get the same margins but charge less,” he reiterated.
Sharing that there is a track record of IT initiatives not being well-coordinated across agencies locally, Barnes attributed the cause for such disjointed spending to its geographical, not cultural, roots, since the Philippine is an archipelago. He pointed out that there are opportunities for the government to leverage on its size and share its infrastructure to enjoy economies of scale.
He advised that the Philippine is well placed to take advantage of new developments like cloud computing that will provide opportunities for local IT talents to service other markets. But it would need to invest in broadband access, otherwise the ‘benefits of e-government or healthcare information or cloud computing will not be available’.
Much scope for broadband growth
Towards this end, the two biggest telcos in the country, Philippine Long Distance Telephone Company (PLDT) and Globe Telecoms have been investing in infrastructure.
PLDT’s capital expenditure for nine months this year amounts to US$387 million out of a US$580 million budget for 2009. CAPEX allocation for the first three quarters comprises of 37 percent on fixed-line installations including a next generation network, 58 percent on wireless including GSM, HSPA and 3G services and 4 percent on infocomm infrastructure. During this period, there was an increase of revenue by 26 percent from broadband and Internet services which account for 9 percent of the telco’s total revenue, with broadband subscribers numbering 1.4 million. PLDT attained a net profit of US$665.8 million for the first nine months, up 11 percent year-on-year, with revenue topping US$2.3 billion, an increase of 3 percent from the same period last year.
The second largest telco, Globe Telecom reported having 517,000 broadband subscribers, achieving its target set for the entire year by the third quarter ending September. Broadband growth in revenue terms was 69 percent from a year ago. Globe Telecom has allocated US$500 million for CAPEX this year which will be spent on improving capacity for its fixed broadband, WiMax and 3G services. The telco’s nine month net profit ending September 2009 was 12 percent higher at US$211.4 million against its total revenue of US1 billion which is just l percent higher year-on-year.
Although the broadband uptake has been impressive for the two telcos, there is much scope for growth when seen against the country’s population of 97.9 million.
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Autor(en)/Author(s): Ek Heng
Quelle/Source: Telecommunications Magazine, 17.11.2009
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