On Cloud Nine

By Zhu Mengxiao

The Philippines accelerates economic transformation through digital technologies

On a hot afternoon in the Philippines,street vendor Janica rushes to prepare fresh juice for her customers.In stark contrast to years past,her customers rarely pay with cash and instead scan a QR code and tap mobile phones to finish the purchase.Providing great convenience for many in daily life,the mobile app GCash has been attracting popularity in both bustling urban areas and tranquil villages in the Southeast Asian country.

In an era of digital transformation,GCash has emerged as more than just a payment tool.It offers a peek into the island country’s transition to modernization and digital inclusiveness.Behind the easy-to-get online services is the fundamental digital technology industry.With highly efficient data management and processing,the industry has ensured seamless user experience with digital services like GCash.

In 2017,Ant Group,the fintech arm of China’s e-commerce giant Alibaba Group,became a business partner of GCash,propelling the app’s technological upgrade through cloud computing services.Such a cross-border partnership injected new momentum into efforts to industrialize the data sector in the Philippines.

Eighty-five percent of Philippine businesses plan to complete cloud adoption in two years.

Cloud Computing Empowers Digital Transformation

According to the definition of cloud computing from the U.S.National Institute of Standards and Technology,it features three service models: IaaS,PaaS,and SaaS.IaaS,which stands for infrastructure as a service,provides users with basic computing resources.PaaS,which standards for platform as a service,provides developers with a platform on which they can develop applications and services based on the global internet.SaaS,or software as a service,provides users with directly accessible software services.

The government of the Philippines has been promoting cloud computing in recent years.Maria Victoria Castro,director of the Cybersecurity Bureau of the Department of Information and Communications Technology (DICT) of the Philippines,said cloud computing technology can provide Filipinos with quality services and contribute to better governance.Because cloud computing is an emerging technology in the country,the Philippines lacks homegrown giants to deliver professional cloud services,which presents opportunities for leading cloud service providers from other countries to invest in the Philippine market.

According to Next-Generation Cloud Strategy in Asia,a research report released by Alibaba Cloud earlier this year,85 percent of Philippine businesses plan to complete cloud adoption in two years.

GCash was one of the earliest Philippine businesses to establish a partnership with Alibaba Cloud.It once faced huge computing pressure as a result of surging usership.Before the partnership,the payment service provider relied on an old local platform that could hardly handle the boom in usership.When usership surpassed the platform’s limit,the platform would shut down,resulting in payment failures or service disruptions.And expanding and upgrading the old platform required massive investments of both time and money.

After establishing a partnership with Alibaba Cloud,GCash adopted a solution involving IaaS,the MaxCompute data warehousing platform,the Elastic MapReduce big data platform,and an app firewall.Relying on the elasticity and extensibility of cloud computing technology,GCash was ultimately able to manage the surge in usership while maintaining service stability and accessibility.

Alibaba Cloud has secured a partnership with Asia Pacifci College (APC) in the Philippines,pledging to offer cloud computing training sessions for its teachers and students.(ALIBABA CLOUD)

Alibaba Cloud provides client-side solutions for Kumu,a video sharing and social networking platform in the Philippines,to help users easily and quickly access multiple short-video functions while enjoying a smooth uploading and playing experience.

Data processing and machine learning,tools provided by cloud computing,make it possible for GCash to conduct an intensive analysis of its users and deliver better services accordingly.Furthermore,the payment platform can identify fraud in real time and ensure transaction security.

Like Alibaba Cloud,many globallyleading cloud service providers are eyeing the rising cloud markets in Southeast Asian countries.They include Huawei Cloud,Tencent Cloud,Google,Microsoft,and Amazon Web Services(AWS).Eric Conrad,AWS regional managing director for Southeast Asia,expressed confidence in widespread adoption of cloud technology in the Philippines at the AWS Summit ASEAN.Digitalization and technology application will promote sustainable development in the region at a faster pace,Conrad said.

AWS now provides cloud services for BDO Unibank,Globe,GCash,and UnionBank among other local businesses in the Philippines,aiming to reduce the data workload and improve the efficiency of the digital economy.Microsoft introduced CDN POP and Front Door in Manila to provide cloud services for the country’s digitalization of the public sector.Since 2017,Microsoft has been providing cloud services to Philippine government departments as well as the country’s central bank.Government departments have adopted cloud services for finance,education,technology,justice,social security,and taxation.

In the process of digitalization,cloud computing technology has been providing businesses grappling with physical infrastructure restrictions with real-time,flexible,and economically efficient computing resources.The technological empowerment accelerates the transformation of the country’s digital economy.Globally-leading cloud service providers have accumulated extensive experience in cloud computing.When they make forays into overseas markets,they bring not only investment,but also technological innovation.That makes them highly appealing to the Philippines.

IDC Asia/Pacific,an international market analytics firm,reported that 40.6 percent of software in Southeast Asia has been developed and operated on public clouds.The top five companies delivering such services are global giants.The analytics firm predicted that the year-round growth rate of the public cloud market in Southeast Asia would hit 22.4 percent in 2023.IBM estimated that by 2024,Philippine businesses will spend US$2.6 billion on cloud services.

Promising Cloud Industry

The active presence of global cloud service providers and their competition has propelled rapid growth of the cloud industry in the Philippines.Cloud computing technology is fostering the creation of more and more digital products and services and more widespread application.AWS stressed in a recent statement that cloud computing is the catalyst for innovation and extendibility.It facilitates a series of cutting-edge technologies such as artificial intelligence,machine learning,and the Internet of Things.

Liu Song,vice president of PingCap,was formerly a vice president at Alibaba.“Cloud computing serves users of the mobile internet,” he said to China Report ASEAN.“It meets people’s rigid demands in daily life,from clothing to traveling and housing.Future mobile apps will be all based on cloud computing and integrated with AI models and industry data.Essentially,cloud computing is the platform for technological innovation at a large scale.”

The Philippines has invested considerable energy into encouraging emerging tech businesses to get involved in the digital economy.The cloudfirst policy shows that the country’s government and businesses have a strong desire for digital transformation and that the digital economy fosters huge growth potential.

A market poll by analytics firm NielsenIQ showed that around 90 percent of companies in the Philippines have considered future investment in cloud solutions to satisfy the demands of consumers who prefer online transactions.The poll also found that 80 percent of IT decision makers in the Philippines believe that foreign cloud service providers in Asia can deliver better cloud solutions.The Philippines placed the highest confidence in foreign cloud service providers from Southeast Asian countries,and 90 percent of respondents expressed belief that cloud service providers would deliver on their promises.

Liu Song said that the cloud computing market in Southeast Asian countries poses great opportunities for Chinese cloud service providers.“Sharing similarities with China in culture,customs,and preferences for mobile apps,many Southeast Asian countries believe China’s cloud technology and business model are most suitable for them,” Liu said.

In a market-oriented business environment,Alibaba Cloud established a wide range of partnerships with local businesses in the Philippines.Alongside GCash,the Chinese firm helped Kumu,a Filipino community livestreaming platform,build an independent platform.It also helped build the first cloud computing data center in the Philippines.

Huawei Cloud also provides open services in the country.Individuals,businesses,and institutions can purchase Huawei’s cloud services after registration.Such partnerships support the Philippines’ development of the digital economy.

Innovation and application of digital technology requires talent.The Philippines is the second most populous country in Southeast Asia.The average age is 25.Thanks to a young population,new technology has been widely accepted and broadly adopted by the people.This has created a huge user base and talent pool for the growth of the cloud computing industry.

The Philippine Department of Education launched a Digital Rise Program in 2019,aiming to improve digital literacy among K-12 grade students,particularly those living in remote areas.Local universities produce an average of more than 130,000 information technology and engineering graduates every year,enriching the tech industry.

Alibaba Cloud secured a partnership with Asia Pacific College (APC) in the Philippines,pledging to offer cloud computing training sessions for its teachers and students.A cloud computing solution under the partnership will strengthen the college’s data backup,student management system,online teaching platform,and other cloud infrastructure.The move is expected to inject momentum into APC’s efforts to train digital talent and in turn boost the country’s cloud computing industry.

Data Security and Compliance Challenges

Broad adoption of cloud computing technology has made data security and privacy a common challenge for providers.Liu Song said cloud services require high standards for technology and engineers,an area in which Southeast Asia is weak.The Philippine government and businesses face great risks of data leakage and cyber attacks while using public cloud services.Joey Fontiveros,a colonel with the Signal Regiment of the Philippine Army,said that as more and more organizations move their services to the cloud,new internet security protocols including cloud security terms have become critically important.“We need to implement more proactive risk evaluation,” he said.However,the Philippines lacks a big independent local cloud service provider to maintain its complicated and vast data.Loopholes in data security and risk prevention technology exist.

Chinese cloud service providers making forays into the Philippine market also face security challenges including exposure of sensitive data,unauthorized access,and weak authentication.But a greater risk might be compliance risk.The Philippines has unique data protection laws,business permit regulations,and internet security standards.Chinese cloud service providers need to invest great energy and resources into studying,comprehending,and complying with these laws and regulations to ensure operations do not violate local laws.

The Philippine government’s requirements and restrictions on localized data storage and cross-border transmission mean that businesses need to make the necessary adjustments in terms of technology and business operations.Rigid requirements might lead to technological isolation,causing the locale to miss some advanced cloud computing technology or solution for digital development.

Despite the challenges,the Philippines’ cloud industry poses huge potential.As globalization advances,more international cooperation and investment in technology will accelerate the Philippines’ R&D of cloud computing technology and mass application,injecting strong impetus into its digital industry and economic growth.