Business groups promote the free-flow of data in the region and support the Philippine government efforts to maintain open and enabling policies on data governance.
The Joint Foreign Chambers of the Philippines, US-ASEAN Business Council, IT & Business Process Association of the Philippines, Asia Cloud Computing Association and Asia Internet Coalition highlighted the importance of an enabling environment for cross-border data flow to enhance digital trade and competitiveness of data-driven industries in the Philippines.
“The ability to use, share, and access data across borders is vital for innovation and economic growth and to leverage technologies, such as the Internet of Things and artificial intelligence,” said World Bank senior digital development specialist Naoto Kanehira during a virtual policy discussion on Aug. 16, 2023.
He said public policies in the Philippines were generally supportive of the flow of data in the private sector. Requirements on data localization—or measures pertaining to the location for storage and processing of data—were limited only to some residency restrictions on above-sensitive and top-secret government data under the Cloud First Policy.
Besides Singapore, the Philippines is also a regional leader in implementing an “open transfers” regulatory approach to cross-border data flow that allows for free movement of data based on private information management standards as opposed to binding restrictions and with no mandatory requirements, conditions or approvals for data transfers.
This enabling policy environment is crucial to accelerating the digital transformation of the Philippines as it remains to be a key destination for foreign investments, such as on information technology and business process management.
IBM Philippines government and regulatory affairs executive Princess Ascalon said the outlook of locators on the Philippines remains very optimistic.
Industry projections showed the IT-BPM sector might expand employment to 1.7 million jobs and over $35.9 billion in revenue in 2023.
Imposing restrictions on cross-border data flows, however, could affect major operations in the IT-BPM industry such as increasing the cost of services and pose risks for cybersecurity and disaster recovery and redundancy.
“The IT-BPM industry is going to be more heavily-reliant on data as it continues to grow. We hope to have the Philippine government and industry’s support to keep our policies open and conducive to the growth of this sector,” Ascalon said.
A survey conducted by the OECD on the impact of data localization measures on sectors like aviation, cloud computing and cross-border e-payments found that restrictions in the flow and storage of data have led to a significant increase in data management costs; regulatory fragmentation; and cybersecurity risks resulting from the inability to share data on threats or system vulnerability.
“Any obstacle or barrier to the flow of information—including data localization measures—could substantially inhibit the benefits we extract from [being part] of this globalized environment. Data localization measures should not be something that inhibits innovation,” said Organization for Economic Cooperation and Development trade policy analyst Janos Ferencz.
OECD underscored the importance of a transparent and consultative approach between the Philippine government and industry stakeholders to ensure that relevant policy considerations and frameworks are consistent with international standards observed in various trade agreements and strengthening digital trust to facilitate cross-border access, usage and exchange of data.
“When doing a consultative approach, my advice would be to not only look inward but also outward and to acknowledge the role the Philippines has been playing as a regional leader for cross-border data flow. This is consequential not only domestically but [also has] regional and global implications,” Kanehira said.