September 4, 2020, as delivered
Good morning everyone. It’s great to be here.
I was asked to discuss what we are doing in DTI amidst the ongoing pandemic and will cover, as well, the area of innovation and what we are doing in that field—Innovation, Competitiveness, and Increasing productivity.
As a way to contribute to the recovery efforts of government amidst the pandemic, we have a program called, REBUILD PH! It’s basically revitalizing businesses, investments, livelihood, and domestic demand. This our way to safely re-open the economy, while balancing health and economic activity.
As you know, during the first phase of the pandemic, it was health taking primacy over economy that’s why we imposed very strict lockdowns. Now, I must say, we have already moved to phase two and we are now in the period of trying to reopen the economy as much as possible, in a safe and gradual manner so that we can bring back jobs. That’s really part of rebuilding the Philippines. This program that we’re doing is part of the overall recovery efforts of the government. A plan is also being prepared by NEDA. All agencies have their respective REBUILD PH! Programs.
I’m not discussing anymore the macroeconomic indicators. We know very well that we’re doing very good. Prior the pandemic, the country was the second-fastest growing economy, growing 6 to 7%, 5.3% unemployment, and even inflation at 2.3%. There were positive exports until February, while other countries were experiencing a decline in their exports. We were positive in 2019, as well as in January and February this year, but with the pandemic and the lockdown, everything went south and the worse is the GDP decline of 16.5% and the decline in the second quarter.
A piece of good news: when we started to reopen the economy, the unemployment rate of 17.7% went down already to 10%, so it’s a really good news. It is a good indication that as we bring back jobs and reopen the economy, things will hopefully get back to the way it was. It’s just a matter of time when we are going to be back doon sa ating previous level.
Certainly, in the mindset of the IATF, if I might share, is that we should really reopen the economy. We’re thinking of ways on how we can still keep a safe environment while we are opening more and more businesses. This is where we reiterate the need to encourage cooperation and enjoin the citizenry in these efforts. It is actually the responsibility of each one of us that we take care of ourselves, keeping a safe distance, wearing of mask and face shield, and the frequent washing and sanitation of hands. That alone, If everybody will follow that just for two weeks, you will see a drastic reduction kasi walang transmission kapag everybody follows that.
The discipline will really have to come from all of our kababayans from all segments of society. We were able to do that plus the isolating of the positives and suspects, intensive contact tracing, testing, and treatment. Take note: nauna ang isolation bago testing because not all need to be tested. We only test the symptomatics, as much as possible. Tracing, isolation, testing, and treatment to those who really get sick—intensive effort there. Tapos ‘yung minimum health standards naman, gagawin ng ating mga kababayan.
When it comes to lockdown, I’ve been saying with the IATF that we need a new approach not only the GCQ. Whether that’s ECQ or MECQ or Modified GCQ, regardless of the CQ, ang effort talaga would be what I’ve mentioned—the responsibility of the citizen, the minimum health standards, and the intensive isolation of the positive. Those things should be what we call the new way of living, new way of working, new way of life. Once we do this we can really operate closer to normal, but iba ang behavior lang, iba ang precautionary measures ng bawat isa. With this, we will able to continue with what we are supposed to do in work, at school, at play.
Overall, building back better is the main task of REBUILD PH! to continue this vision of creating a better future for Filipinos. We’re still looking at staying the course in terms of having modern, dynamic, responsible Philippines. We have a modernized objective, integrated industrial capacity.
Philippine products should be one that will continue to push upward, higher value products and services in the global value chain. We’re part of this global value chain, either the finish goods part or the assembly or mid-stage part. Ang importante dito, higher value ‘yung kino-contribute.
Everything we do in trade and industry will be contributing as well to infrastructure, health, poverty alleviation, creating more jobs, and the environment. The goal as we increase the production capacity is that we will be able to do many of the products that we import. Soon, we should be able to reduce the trade deficit—increase exports, lower imports.
Increase value creation, kasi higher value, higher price for our products, consciously moving towards filling in the gaps. Moving backward at tsaka forward linkages. Backward means you’re doing the basic material. For example, in steel products you don’t do the final steel products, you do the basic—the steel sheets and the steel slabs. Ngayon, ‘di ginagawa dito except during the time of national steel corporation for some time, but it didn’t prove to be feasible so nahinto rin siya. Hindi nakahabol sa modernization and that’s the importance of keeping innovation and modernization in mind towards a modernized Philippines industries.
We follow a simply macroeconomic formula, but this translates up to the sectors below. CIGXM is consumption, investment, and government to revitalize consumption, and exports minus imports in the trade part. May program bawat consumption investment, government, exports, imports. So ‘yung demand na ‘yan will entice the production sector to produce and power production capacity in the Agricultural Industry Service or AIS. ‘Pag may demand, may current supply, iikot na ‘yung economy natin.
Coming out of the pandemic, we have to support the companies that save jobs and income. Income that will create the demand and demand that will entice companies to produce more.
We’re doing these economic stimulus packages to keep jobs. In the DTI, we started the Php1 billion “Pondo sa Pagbabago at Pag-asenso” program called CARES or “COVID-19 Assistance to Restart Enterprises. Marami nang na-approve beyond the 1 billion, 500 million coming again from our budget for medium enterprises.
It’s good that in the Bayanihan II, thank you to our hardworking Senators and Congressmen, that SB Corp. would be given an additional Php10 billion package, but this would be going to certain sectors. MSMEs din, but the cooperatives of the tourism sector will get the half of that and OFWs. Pinadaan lang sa SB Corp. SB Corp. is not the only GFI or government financial institution doing this. We have the Landbank, DBP, and the Philippine Guarantee Corporation that can provide guarantee to loans, so that the banks will be encouraged to lend the companies. These are the other institutions helping the SME sector.
We will continue with all these non-financial efforts. We are all part of this—entrepreneurship training, and mentoring. We’re now into heavy transforming business model types of seminars, e-commerce, we have a lot of webinars here, financial advisory, innovation, upskilling. Ang TESDA ay kasama natin diyan. The DOLE is helping us with flexible work arrangements, which we hope to extend. This flexible work arrangement is meant to save jobs.
The CARES program—1.3 na ang approve out of the Php1 billion loan. Hopefully, with the budget now 10 billion, we’ll be able to proceed in processing. Huminto kami ng processing dito kasi ang application more than Php3.5 billion, eh ang alam natin Php1 billion pa lang ang pondo so we will be able proceed with the processing. 24,000 na ang nag-apply diyan.
CIGXM. Under the C—consumer expenditure, ibig sabihin economic stimulus saves jobs, creates the demand, and we start the economy. Under this program, we also have ‘yung promotion natin ng “Buy Local, Go Lokal.” I hope you’ve seen the short video clip on this “buy local, go local para maging buyani sa sariling bayan” campaign. We continue to promote our “One Town, One Product”, the Go Lokal stores, and OTOP also has hubs or stores.
We’ve been able to include in the Bayanihan II this very important provision on domestic preference in government procurement. What we’re saying is that if its coming from government tax, as much as possible, we prefer local manufactured. When you prefer local manufactured products, you help domestic economy, you help create jobs locally. If you buy imports, ‘yung tinutulungan natin ay ‘yung employment abroad and not here in the Philippines. In every fora na nasasalihan ko sa mga meetings namin, even in the government in the economic cluster, I continue to push for this. If we push for domestic preference, it is a restarting type of program without government money. You don’t subsidize anything, you just create domestic preference and it creates demand. ‘Di mo na kailangan mag-budget ng Malaki, eto lang malaking bagay na.
Now we’re talking of the Bayanihan II, with the PPEs, hopefully domestic preference masama sa provision sa Bayanihan II. Meron kaming program that repurposed some of manufacturers. Increase accessibility to market online—again ‘yung training natin diyan. At the same time, strengthening consumer protection to bring back consumer confidence. Ensure safety of consumers, COVID-proofing businesses malls, commercial centers, everywhere pinag-iingat. Meron silang ini-install para safe ang operations. Even in offices, we have the health and safety protocols in workplaces issued by DOLE, DOH and DTI.
On I—investments. To mprove investment climate, we continue doing these reforms. Hopefully, mapasa na ‘yung CREATE bill that will lower the corporate income tax rate, benefitting all of you. From 30% to 25% corporate income tax rate immediately and 5% in the following years. There is also the Retail Trade Act that will encourage more competition, retail trade, and modernize the operation of retail trade. The Public Service Act that basically opens foreign equity in public service industries. Structural reforms, infrastructure developments, the “BUILD, BUILD, BUILD”.
We promote IP generation and commercialization ng mga intellectual property. As long as may protection diyan, mas nae-encourage ang innovation kasi hindi makokopya ang kanilang mga invention or copyright or trademarks. To implement policies on rural development, there is the Balik Probinsya Program by Senator Bong Go. We see the prime proponent there this is really the way to go if we want to empower the bottom of the pyramid and encourage nationwide, rural development, creating opportunities. Ginagawa dito, more incentives to locators and investors outside Metro Manila, outside the urbanized cities. Also, national and local fiscal incentives, as well as non-fiscal incentives. Ibig sabihin, lahat ng pwedeng itulong sa mga investors. Reprieve on some rentals, local taxes and other help.
G—Continue the “BUILD, BUILD, BUILD”. We’ll be doing strategic stockpiling. Remember, noong nagka-shortage because nobody expected the pandemic, we started with zero capacity in producing face masks or PPEs. Now we can produce 57 million in a month. We’re producing also 3 million PPEs in a month, dati zero. We will continue to strategic stockpile and at any given point in time, we will have millions of supply of this so that, hopefully matagal pa, in the next pandemic we are more prepared in terms of health gears and equipment.
X—On exports, we’ll continue to maximize free trade agreements and generalized system of preferences. These are trade product arrangements where products can enter at zero duty in many markets that we are part of in the FTAs. We have FTAs with Japan and we are working on one with Korea right now. We have FTA in EFTA or the European Free Trade Area—these are Netherlands, Iceland, Liechtenstein and Switzerland. Ang point natin is to maximize our FTAs. For GSPs we have with EU and US. And the EAEU, this is Russia and parts of Europe, our commercial attaces are working on strengthening trade.
M—Imports, ito malaking tulong sa ating local manufacturers by simply ensuring that products coming in follow standards. So we make it a point na may mga testing tayong nangyayari dito para hindi tayo malusutan ng substandard products. Substandard products can be offered at lower prices, which is unfair competition to local manufacturers that are offering above standard. This one key area of protection that we’re doing. We also ensure consumer safety in doing this.
On the supply side, what we are saying here is this will accelerate investment sectors. So na-divide ‘yung iba-ibang sectors: meron on basic, hindi lang food, products and services that help in health because of the concerns now, and education. We’ll continue to support 4th industrial revolution. Ito ‘yung pinag-uusapan din ngayon pushing for more smart manufacturing in our companies, digital technologies. Technologies can be imported and it goes with the machine. Once you have the machines, in a way, you are already upgrading in modernizing your operation. Many of the technologies would be in the machines and equipment that we buy. Sa ating mga entrepreneurs that are really wanting to be part of the 4th industrial revolution and benefit from the Internet of Things, AI technology, and machine learning, improvement in processes would be key in businesses.
In addressing supply chain gaps, like I mentioned earlier, some parts of value chain will have to do here also. Develop a more modern Philippines with modern infrastructure with the “BUILD, BUILD, BUILD”. The transport sector is very aggressive diyan, sila Sec. Art Tugade and Sec. Mark Villar.
Generate high value job creation. Sa ating businesses we’ve been saying this in our seminars na talagang moving towards higher value operation. Andiyan ang margins. Intensified implementation, widen coverage of supplier development. So what we are trying to do as we are promoting MSMEs is connected din sila sa big operations. For example, auto industry ‘yung auto parts at ‘yung SMEs in Region IV-A, dapat related sa kotse ‘yung gagawin nila para pwede silang maging supplier dito sa mga auto parts industry.
Develop PPE Ecosystem. Just like in a war ‘yung mga bansa na noon they prepared ammunition, the guns to combat the enemy. This time ang enemy natin is COVID. To combat COVID, we also encourage local manufacturers to go into this. Essentially, industries, garments related, and electronics nasa line of business nila, in a way, ‘yung mga produkto na ito. These are the many companies that are into this: CONWEP is one major group, even ventilators electronic companies, EMS, IMI of Ayala, and NKG.
Encourage digital transformation. Everything that we do even on SMEs, making them online and developing innovative start-ups, we still have this program on the start-up sector.
Support businesses to provide necessities in the new normal. We see different forms of jobs, delivery models, and food modernization. Re-tooling and re-skilling the labor force with the help of TESDA, given the different forms of jobs. Improved market access will continue with that and high value exports.
Address smuggling and unfair trade practice. Matagal na problema na ito but we continue to hammer on this. Redirect highly affected businesses, those that need additional workforce like in healthcare, agriculture, manufacturing, IT-BPM and public schools etc. Promote greening of industries and waste management. Integration of anti-COVID measures.
Under agriculture, industry, services and other the different segments that I’ve mentioned earlier is basic addressing of supply chain gaps and other segments. Nandiyan ‘yung mga industries that we will be promoting and they are promoted in the IPP Investment Priorities Plan eligible for fiscal and non-fiscal incentives.
For other industries: auto parts, shipbuilding, even aerospace. We are a major exporter of aerospace parts. And then sa services, this is one of the growing segments. Tourism is a competitive advantage of the Philippines, naka-hibernate lang sila ngayon because of COVID but is already starting to slowly reopen. In Creative content, a lot of service exports are also in this area: graphics, game development, software, and IT-BPM is still a strong service industry for the Philippines.
‘Yung concern would be continuing the innovation, productivity, and competitiveness. By having smart manufacturing, you either help on the innovation or on the competitiveness. ‘Yun ‘yung iba-ibang benefits. All these will lead to inclusive, sustainable, industry development.
These are the other segments in the eco-system that we’re doing to attract business: upskilling, innovation entrep, building this eco-system, integrate production system, innovative SME start-up, encouraging and embracing industry 4.0, and doing everything where we can. This is the inclusive, innovation, industrial strategy.
These are the specific priority industries and we are all doing these already. The electronics, I’ve said that they are strong; autoparts, one of the major exports ‘yan, even the aerospace parts; metal products; machinery; equipment; and also the IT-BPM. ‘Yung sa metal parts nga lang kailangan integrated iron steel. We have 3 major proponents of that integrated iron steel. Hopefully before the term of President Duterte ends maumpisahan na ito. We were supposed to start this year, but because of COVID na move back ‘yung kanilang plans but there is one registered in the Board of Investments already for integrated iron steel.
These are the different products and solutions that we are also trying to develop here. Many of these companies would be having these also and also producing products and services in these different innovative sectors. And the different interventions sa plans, sa roadmap, having an academy, pilot factory, rebuilding an AI center, upskilling and reskilling our workforce with the DOLE and TESDA. To support this, we can provide soft loans, incentives, fiscal support—we are working on that. Hopefully in future legislation we can give more grants, subsidies, and standards pagka nakabangon na ang Pilipinas in terms of budget. Hopefully we can get more of this support because in other countries this support are basically given.
We were trying to put it in the Bayanihan II or ‘yung earlier stimulus package, but may strain tayo sa fiscal balance so limited ang ating budget at hindi pa ito mabigyan ng grant. New opportunities that we can leverage to discover new, better and more resilient ways of doing things. Ito ‘yung mga benefit, in a way, ng pandemic na na-fast track ang innovation. New and powerful technologies such as AI, IoT, and blockchain—we’re still moving in that direction with the machines that we’re getting. Enterprises, which have greater innovation, emerged resilient and emerged recorded gains amidst the economic slowdown and the role of Industry 4.0 in the post-pandemic landscape.
With Industry 4.0, industries can be scalable, leapfrog to inclusive, resilient and sustainable industrial development. We have to embrace Industry 4.0, use and adopt new technologies in our operation, strengthen competitiveness, and innovate. As we know sa lahat ng entrepreneurs, mawawala ang ating negosyo ‘pag walang innovation, so that’s really important. Academe training programs—we are prepared for this. They are now offering programs for these and there is a government, academe, industry collaboration to make the most of the advantages. As we shift towards industry 4.0, we need to ensure that no enterprise, especially MSMEs or region, is left behind. Let’s All Heal As One.
Salamat po.