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Economy

Duterte's new ID system aims to give every Filipino bank access

System seen bringing financial inclusion to millions, but raises privacy concerns

A woman walks past a display of fake certificates, diplomas and identity cards in Manila.   © Reuters

MANILA -- The Philippines is introducing a sweeping national identification system aimed at giving every Filipino access to bank accounts and government services.

The 30 billion peso ($562 million) program, signed into law this month, will give more than 100 million Filipinos and resident foreigners a national ID card with a unique 12-digit number. The system will collect information from eye scans and fingerprints, and hold data from addresses to blood types and dates of birth.

The nation's statistics agency will test the system on one million households in December, before a full rollout through 2023.

The system is intended to simplify transactions. More than 30 types of ID are currently accepted as proof of identity for government and business transactions, but many lack safeguards and are vulnerable to fraud. Strict requirements mean that many poor people do not have access to widely accepted identification such as passports.

On signing the law, President Rodrigo Duterte said: "This will not just enhance administrative governance but reduce corruption, curtail bureaucratic red tape, and promote the ease of doing business, but also avert fraudulent transactions, strengthen financial inclusion, and create a more secure environment for our people."

Duterte wants to replicate the success of India's ID program, known as Aadhaar. The system, introduced in 2009, has been heralded a game-changer for plugging leaks in welfare distribution, but it has also been criticized for making Indian citizens more vulnerable to identify theft.

Nestor Espenilla, the central bank governor, sees the system removing hurdles for many Filipinos in accessing financial institutions.

"The major pain point in including people to the financial system is onboarding them, and to onboard you need ID," Espenilla said Tuesday.

Central bank data show only 22% of the 70 million adults in the country had accounts with financial institutions. About half the population did not have access to banking services last year -- one fifth of them not having the required documents to open accounts.

Lisa Grace Bersales, head of the statistics office, said last week that information collected under the program will not be integrated with data obtained by other government agencies, but that the system allows future linkage.

"It is best not to have a super database," she told reporters in Manila.

Subsidiaries of Philippine conglomerates Aboitiz Equity Ventures and Ayala Corp. have formed a consortium with Unisys to propose a 17-year contract to build and operate the platform.

Discussions of an ID system began in the 1970s when then dictator Ferdinand Marcos floated the idea of a national reference card system. In 1996, former President Fidel Ramos issued an order allowing the creation of a computerized ID system, but the Supreme Court struck down the proposal for violating privacy rights.

In 2010, former President Gloria Arroyo implemented a unified multipurpose ID system which consolidated all existing government IDs into one.

Data privacy lawyer Cecilia Soria flagged the ID's "record history" feature that creates a digital dossier of individuals. She warned about possible trade-offs between convenience and privacy once the ID is linked to other information.

"We need to be wary about being lulled into complacency because the price for this convenience is rather costly: our privacy," Soria said, adding that the system needs safeguards against breaches similar to hundreds of cases in India.

"While Aadhaar started out as a simple identification system, it eventually morphed into a platform linked to distribution of government benefits and subsidies, attendance system for government employees, remittance and other financial products, land registration, and even SIM cards," she said.

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