Japan is moving the digitalization of micro, small and medium enterprises (MSMEs) in Central Luzon forward as it opened the Digital Transformation Center in Mabalacat City, Pampanga on Friday.

The Embassy of Japan said the center is part of its project called “Bringing Back Jobs Safely under the Covid-19 Crisis in the PH: Rebooting Small and Informal Businesses.”

Launched in 2021 in partnership with the International Labor Organization (ILO), the project provides training on entrepreneurship and digitalization to rural residents through the digital transformation centers.

“The project supports the pilot of the three hubs, and provides internet connectivity, co-working spaces, back-office services and linkage to the support programs for the non-metropolitan MSMEs through these hubs and the affiliated satellites,” a report by the ILO said.

Data from ILO show the Japanese government allocated a total of $2.2 million to the project which is targeted to be completed by 30 April.

The Japanese embassy added the project is supported by the Department of Information and Communications Technology.

Fruits of friendship

“Japan is honored to be part of this endeavor. Rest assured of Japan’s steadfast support for the Philippines as we put much value on the longstanding friendship between our two countries,” First Secretary of the Embassy of Japan in the Philippines Chihiro Kanno said.

Despite the growing access to the internet, global consultancy firm Bain and Co said only 16 percent of MSMEs in Southeast Asia were using the technology in 2018.

It added a small group or 10 percent of them were using the internet to the fullest.

Digitalized businesses can reach more customers, design appropriate products or services, and save operation costs using online platforms, such as online marketplaces.

Due to the lack of digital skills of more Filipinos, the Philippines ranked lower at 59th from 56th under the digital landscape category of the 2023 World Competitiveness Index. The index consisted of 64 countries.

The Philippines placed nearly at the bottom at 63rd in digital knowledge from 62nd in 2022.

In terms of digital infrastructure, the country was also downgraded to 51st from 49th.

MSMEs are key to the country’s socioeconomic growth as they account for 99.6 percent of all businesses and generate 65 percent of all jobs, according to the Department of Trade and Industry.

DTI’s data show most MSMEs are located in Metro Manila, followed by the CALABARZON Region and Central Luzon.