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Philippine Finance Secretary says disruptive technologies prompt rethinking of development banking

Philippine Finance Secretary says disruptive technologies prompt rethinking of development banking

According
to a recent
press release
by the Philippine Department of Finance, Finance Secretary
Carlos Dominguez III has called for the rethinking of development banking
strategies to make economies more inclusive amidst the rise of disruptive
digital technologies.

At a
Technology
for Inclusion
Conference held at the Asian Development Bank (ADB) in Manila,
Finance Secretary Dominguez noted that advances in
healthcare, education, communications and productivity that were principally
driven by the digital revolution helped improve the average life expectancy by
11 years and reduce infant and maternal mortality rates, along with building a
large middle class and rescuing hundreds of millions across Asia from absolute
poverty.

“We
are at the dawn of a utopia driven by digital technologies. Autonomous
vehicles, 3D printing and personalised medicine demand we alter the way we do
things. Obsolete businesses die like dinosaurs, except at an even faster pace.
New businesses will have to be imagined by the day,” said Finance Secretary Dominguez
in his remarks.

“The
pace of technology-driven change will likely quicken. It alters the terms of
our confederation. It instantly redefines the horizon. The challenge is to make
this fast-paced technology-dictated change work to make human association
better and our shared future brighter,” he said.

Yet,
according to Finance Secretary Dominguez, this revolution has only just begun.

“Cloud
computing, artificial intelligence and increasingly more powerful mobile
technologies will alter the way we live and the way our economies are
organized,” he added.

He
also named fintech as a “particularly dynamic area” that development banking
policymakers should look into as new digital tools like e-payment systems speed
up business transactions and make possible a more inclusive financial system.

Finance
Secretary Dominguez said new digital technologies, complemented by open
borders, free trade and increased connectivity will change the way wealth is
produced, shared and used. He emphasised that rather than fear the emerging
digital chaos, governments should aspire to make technology-driven economies
more inclusive.

Dominguez
said the discussions held at the conference make up only the beginning of more
dialogues that should be done with the acceptance that today’s institutions
must be reinvented lest they perish in this era of rapidly evolving
technologies.

ADB
deputy Chief Economist Juzhong Zhuang opened the Conference, which began with a
report on the highlights of the findings of the ADB’s Asian
Development Outlook 2018 Report on how technology affect jobs
.

According
to the report, despite growing concern that new technologies could cause
widespread job loss, optimism about developing Asia’s job prospects springs
from several observations:

(1)   
New technologies often automate only some tasks
of a job, not the whole job. ATMs, for example, have not replaced bank
tellers but broadened their role in customer relationship management.

(2)   
Job automation goes ahead only where it is both
technically and economically feasible. Both requirements tend to be met in
capital intensive manufacturing, where employment shares were already low
in 2015.

(3)   
Rising demand offsets
job displacement driven by automation. From 2005 to 2015, jobs created by rising
domestic demand more than compensated for job losses to technological advances.

(4)   
Technological change and economic growth create
new occupations and industries. Many new job titles have arisen in ICT, and new
types of jobs will arise in health care and education and in finance, insurance,
real estate, and other business services.

The
report also suggests that governments should respond to these challenges by
ensuring that workers are protected from the downside of new technologies and
able to harness the new opportunities they provide. Governments should also use
new technologies to improve education and skills development, as well as to
deliver public services. This will require coordinated action on skills
development, labour regulation, social protection, and income redistribution.

The
presentation of the Report’s findings was followed by a discussion on how new
technologies can be harnessed to create new jobs to replace the ones rendered
obsolete by artificial intelligence. Professor Reuben Ng of the Lee Kuan Yew School of Public Policy also
spoke on the role of government in ensuring a more inclusive digital revolution
during the final session of the conference.