Study: Bright future ahead for e-commerce in PH

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Metro Manila (CNN Philippines) — With a rising middle class and young population, the Philippine online market is set to grow by leaps and bounds in the next 10 years.

That's according to a study by Google and Temasek titled "e-conomy SEA: Unlocking the $200 billion opportunity in Southeast Asia." It reported that the country's e-market is poised to reach $19 billion (P918 billion) by 2025.

The projection assumes a 34-percent annual growth over the next 10 years, which is said to be above the global average.

"It is certainly much faster than the global growth because a lot of the big countries like U.S., as you can say, they're still growing but it's in a much more mature stage," Google Philippines Country Head Kenneth Lingan told CNN Philippines.

Opportunities for e-commerce alone is seen to grow almost twice, from $5 billion (₱241 billion) in 2015 to $9.5 billion (₱459 billion) by 2025.

This include online purchases such as clothing, gadgets, household goods, food, among others.

The online travel industry is also expected to expand sixfold to $6 billion (₱289 billion) from only $1 billion (₱48 billion) last year.

"A lot of the bookings especially on hotels and airlines are happening online," Lingan said.

The figure, however, is only a paltry chunk of the $90 billion (around ₱4.37 trillion) revenue potential for the entire Southeast Asia.

The number of Filipinos who buy goods and services online, meanwhile, is predicted to grow five times, from eight million in 2015 to 42 million a decade after.

"Imagine a future 10 years from now where at least five percent of all purchases are bought online and if you think about the products that they would buy, it's not just about current products that they have but even consumer goods would be bought online," Lingan said.

Challenges lie ahead

To achieve such astounding growth, the Philippines needs to overcome a lot of challenges especially issues on Internet connectivity.

According to Ookla's speed test of 202 countries, the Philippines' Internet speed of 3.4 Mbps is way below the global average of 23.3 Mbps and Asia's slowest after Afghanistan.

The country also ranked 161st in affordability, which is 3.5 times the global average cost per Mbps.

"When data is expensive or slow, you're least likely to engage on using online as a medium to transact," Lingan explained.

The report also cited other issues pulling down the potential of the country's digital economy, such as complexity of payments and online fraud.

Lingan suggested the government should open the country's telecommunications industry to more foreign players for greater competition, which will lead to faster but cheaper Internet service.