Mitch Locsin, Vice President and Head of PLDT SME Nation, discusses the growing ICT landscape in the Philippines and how his company is helping Filipino SMEs to get online and embrace e-commerce
The Philippine economy was a top performer in South-east Asia in 2016, due to factors such as its growing middle class and expansionary fiscal policy that emphasises public investment in infrastructure. What is your expectation of the 10-point economic agenda, the 2017 budget, and the National Broadband Plan (NBP), and what impact do you expect on the investment climate, and particularly in the SME sector?
In relation to the SME industry, these initiatives are of big help since it focuses on inclusive growth. You must have heard it numerous times from Joey Concepcion (presidential consultant for entrepreneurship) that the administration’s programs are devoted to ensuring that the rest of the country benefits, not just Metro Manila or Cebu City for example.
There are also numerous public-private partnerships (PPPs) which I believe is mainly because the new appointees of the administration in the various government agencies are coming from the private sector. As a result, there has been an increase in the “kapatid” or “big brother” programs that involve high levels of mentorship. This involves the big players helping the micro, small, and medium enterprises (MSMEs) in various regions in the country.
I believe that these initiatives of the current government are poised to spur a lot of growth. Among its other benefits are increasing awareness on MSMEs and providing much help in fuelling this industry. I have spent the last 2 years evangelizing because there is a lot of education needed to be done.
With reference to a story from Google about a specific fish vendor that makes a fish delicacy out of Vietnam, one can see the role of telecoms in doing business. The fish vendor, with whom Google made a special project, brought the delicacy business into e-commerce and made various advertisements. That fish vendor is now able to do business across the region. Using this as an example, we can help a lot of SMEs to grow their online presence and move towards e-commerce.
There may be a little bias because I am from a telecom company, but the power of the Internet and e-commerce can give SMEs vast opportunities. DTI has previously mentioned that there are about 1 million registered MSMEs and only 1% of these are online. However, this 1% is able to contribute up to the 32% of the Philippines GDP. Imagine the opportunity that it can bring if we are able to pull this percentage to 5-10%. It is really education, training, enablement, and flexible solutions from the telco and IT providers that makes it more affordable for MSMEs to eventually go into e-commerce.
In terms of the government, it’s clear that everyone is geared towards economic growth. Most of the programs I am seeing, whether it be in agriculture or SMEs, one can observe that everybody is really working together. I see that type of difference now. Therefore, the opportunity is quite huge for this year and the next three years.
From the government’s approach to regional integration, what benefits does it bring to the SME and ICT sectors in your perspective?
The government’s current approach is very effective. Measuring the Philippines in a per-area basis, whether it is the market share or adaptability to the Internet, there has been a growth spike especially in the Visayas and Mindanao regions in the past year and a half.
Businesses growth from those regions are not only competing with those from Luzon, they are surpassing them. This is a very good example in terms of inclusive growth. It reflects that these regions are getting more equipped to spur growth for the SME industries.
I am from the province of Leyte where Tacloban is. After the province was struck by typhoon Yolanda, the growth and opportunities are just massive. There is a different mindset, a different type of scenery in terms of the growth of businesses coming up. This is another example of how special emphasis is being given to the regional areas of the country in terms of government projects.
I am seeing a better partnership and mentorship program between large corporations in the Philippines supporting the SMEs as well.
To focus more on the telecom and ICT sector, investment in broadband and telecommunication infrastructure could benefit the Philippines greatly. How do you see the Philippines evolving in this context and how can the Philippines become a major business enabler through increased broadband penetration and digitalization?
In relation to the telecommunications and ICT industry in the country, the Philippines is one of those unique countries that has a big challenge given its geography of more than 7,000 islands. Compared to our neighbouring countries like Thailand, Vietnam, or Singapore, it is different. From an infrastructure perspective, it is difficult.
As a result, telecommunications companies need to lay down fibre that cuts across the country with multiple rings of redundancy. For example, for PLDT alone, we have more than 3 million kilometres of fibre optic cable in our domestic network, with a capacity of 7.42 Tbps. This develops four major rings in the country with subtending ones.
Just recently we were dubbed as the “texting capital of the world”, and because of the over-the-top (OTT) players this has changed completely. From being a call and text country, we transformed into a data-driven country. Thus, telecommunication companies have had to completely change their network infrastructure from being previously designed for voice and text into a data-driven network. With the technologies changing rapidly, from 2G to 3G to 4G – and we are even talking about 5G already – our investment in network expansion is massive and unprecedented. Ninety percent of this is building and maintaining networks —not just for fibre footprints that would support fibre to homes and enterprises but also for signal cellular towers. The challenge is that making all this happen means massive capital expenditure, time and resources.
Having a government department specifically for ICT helps in addressing the challenges in the industry. Putting up one mobile signal tower used to require so many permits and took so much time to process. Now, the department of information and communications technology (DICT) is helping address this by simplifying the process and putting all these requirements at a minimum. This will allow us to implement projects as fast as possible.
Another issue is demarcation. Today you can lay down fibre here and then the next day you can also have a road widening project resulting to fibre cuts. This eventually hinders the type of speed or excellent customer experience that we need to deliver to the consumers.
More importantly, so that we can support the growth of this industry since we all know that mobile and data is already the trend across the world and across different countries. This will also help spur growth in the MSMEs because eventually these enterprises will have to move and adapt into e-commerce.
The National Broadband Plan also has a significant role in improving all the issues and performance of the industry. Without the cooperation of the telecommunication companies, it will not be effective. Thus, despite being hard competitors with our counterparts, we are already doing joint peering. A lot of these synergies are just to get the quality of service that we want to give our consumers. Moreover, the DICT dubbed telecommunications as a public service. This will change the mindset of the players in the industry. Now, it is a necessary service that needs to be provided to the people.
Delving into the company, PLDT SME Nation has been providing entrepreneurs with technologies suited for their needs – from business-enabling voice, broadband and mobility solutions to more sophisticated enterprise-level ICT and Cloud services. By providing MSME’s with these services, the opportunity for them to penetrate a global market becomes more possible. As such, where did the idea of establishing a specialized SME arm in PLDT’s operations originate?
PLDT SME Nation began nine years ago. We were just referred to as the Corporate Business Group (CBG) of the company. This CBG has always been the dominant enterprise group carrying our PLDT Fixed, Smart Wireless and e-PLDT ICT services and solutions to the enterprises in the country. Thus, there was a conscious effort that if we were to give more attention to the domestic market, we really need to focus on the MSMEs as well. Since then, PLDT SME Nation was born and has been growing by double digits every year.
Our growth may be attributed to the large customer base. Micro enterprises alone average 500,000 in count, the small players around 90,000, and the medium players are close to 5,000. As a result, PLDT SME Nation is organized by geography. As I took over this group, it was actually the first time I was able to visit the far-flung areas of the country.
The corporate relationships management group is the one enabling the SMEs to adopt more to ICT and digital solutions. PLDT Alpha, handles the top 5,000 corporations and conglomerates in the country, whereas SMEs adapt more to the cloud. This is more agile, flexible, and affordable. Thus, making it possible to compete with bigger companies.
The second team is the acquisitions team. We continuously have to acquire new customers because year after year there are more companies popping up. There is a community engagement group. They are the ones who put the word out, conduct the evangelization, promote ecommerce or cloud solutions, and organize around a hundred events a month. These are the mind-shaping and brand-improving events in where we include our big players to become our ambassadors and mentors.
Given the broad customer base and the wide range of products and services of PLDT SME Nation, what are the services you would highlight especially, which you think are most appreciated by your MSME customers?
First and foremost is the bandwidth. Everybody needs Internet. Depending on the maturity of the MSME, whether it is a start-up Internet plan or a dedicated gateway, it is really the bandwidth that is the most important and most appreciated by the customers.
The next service is related to mobile packages, which enables the customers to work on a real-time basis from wherever they are.
Thirdly, we have the business efficiencies—anything that we push forward that will improve your business efficiency. It is always about the value we bring to our customers. For example, the solutions here are the Microsoft 365. We are the largest reseller of Microsoft in the Philippines, ranked 6th in the region. Another example would be our Machine2Machine (M2M) solutions which enables our customers to increase business efficiency.
Imagine buses enabled with Wifi and tracking devices. The CEO of the bus company will know the locations of their vehicles, the speed they are traveling in, wear and tear, and gasoline consumption. At the same time, through our BizWifi solution installed in their buses, they’re providing an awesome experience to their passengers. This is business efficiency.
How to aid the MSMEs acquire customers is another significant service we provide. That makes it B2B2C (business-to-business-to-customer). This includes web builders that build and manage websites for you; e-commerce solutions wherein processes are digitalized; or takatak solutions, which is like Ebay or Zalora, where you can just place your products in the market place.
Lastly, providing resilience, security, and a backup plan in case of calamities or emergencies. This involves disaster recovery as a service, co-location services in our data centres, and cloud solutions which ensure your data is intact and accessible despite your location being struck with calamities.
These are the ways we approach our customers—it is about the value. Our solution gives you this value for your company exactly. This is how we approach the market.
Following these services highlights, PLDT SME Nation provides one-stop-shop solutions. More importantly, the company is able to provide SMEs opportunities for internationalization through Internet connection and the like. You are not only providing business solutions but are also pushing initiatives such as your Make It Big Campaign and other SME events. How exactly can SMEs benefit from these initiatives?
Coming from a recent brand development activity we had, one of the things we identified across the Enterprise Group’s different units is that we are all trying to position ourselves as a one-stop-shop and that people are always waiting for our next event or product launch. Everybody is eager to learn more or is interested to know what we have that could aid them in their respective businesses or companies.
This is how we are viewed right now. We are blessed to have this coverage and to be able to come across easily. We make our pricing to the market very flexible, so there is no need to invest heavily. Lastly, we try to ensure that everything we do is done on a well-managed service. We are more on doing it for the country and touching the Filipinos’ lives. We are working with the public sector locally, so we continue to push forward.
Just as an example, we organize the largest digital event for SMEs called “tech island”. Last year, there were about 1,200 enterprises that confirmed their attendance and as we got confirmations we did background checks on their websites. Apparently, 80% of these companies did not have one. Thus, we made one for every customer that attended and gave it to them for free right there at the event.