My esteemed colleagues in FINEX, distinguished guests, a pleasant afternoon to you all. I last saw several of you in November last year when we launched the second FINEX ethics book at the DTI office. It is a pleasure to be with you again as we begin this new year, 2023.
The past six months have enabled us in DTI to plot our strategic priorities and strategic actions. In line with the administration’s socioeconomic agenda, we at DTI have defined the breadth of our mandate and devised our efforts around key goals. Over the medium term, we need to create more quality jobs – higher paying and more stable jobs. I believe an integrated industrial policy approach is critical to achieving and accelerating inclusive and sustainable growth.
We at DTI seek to generate more quality jobs, help reduce poverty and inequality, and enable shared prosperity for all. To achieve this goal, we must revitalize our industries by expanding the domestic market and supplier base, moving up the value chain, and enhancing linkages across sectors. Moving up the value chain can be achieved by improving the competitiveness of industries and by creating a dynamic industry ecosystem. A dynamic industry ecosystem will enable better access for firms, particularly MSMEs, to science, technology, and innovation or STI, which are key drivers of industrialization. Our endeavors align with the FINEX 2023 theme: To Forge Ahead and Accelerate Inclusive and Sustainable Growth.
Science, Technology, and Innovation will define our industrial policy.
As the Philippines moves towards post-pandemic future, inclusive and sustainable industrial development is imperative to build a more competitive economy. Industries will be better positioned to transform and face competition in domestic and export through STI, including essential digital technologies.
Innovation—and the new technologies it entails—leads to the creation of new goods and services in the market. Innovation results in the emergence of new industries and the expansion of productive capacities, which in turn creates more quality jobs.
To achieve our goal of inclusive and sustainable growth that raises the quality of life for all Filipinos, we will build a dynamic industry ecosystem on six pillars. DTI cannot and will not do this job alone. We shall take a whole-of-government and a whole-of-society approach to pursue these six strategic actions.
The first strategic action is to embrace Industry 4.0.
The Fourth Industrial Revolution brings unprecedented change. It is merging our biological, physical, and digital worlds. And it is shifting our approach to developing our economies. Industry 4.0 technologies, such as artificial intelligence (AI) and smart manufacturing, can help advance enterprises and industries.
The second strategic action is to develop innovative micro, small, and medium enterprises (MSMEs), as well as entrepreneurial startups.
This strategy will accelerate MSMEs’ growth by enabling them to scale from micro to small, from small to medium, and from medium to large. We will further prepare MSMEs for digital transformation.
For new, promising entrepreneurs, we are building a robust startup ecosystem.
The third strategy is to integrate trade, investment promotion, and industry development activities.
For instance, we will integrate our production systems by linking manufacturing, agriculture, and services. We shall deepen our participation in global value chains, and expand and diversify our exports, trade, and investment partners.
The fourth strategic action is to develop human capital and capacity-building programs to prepare our workforce for the future.
This was a big discussion that I participated in at the recently concluded World Economic Forum in Davos—the future of work and generation of jobs for the future.
While many jobs will be lost due to automation, new jobs will emerge by adopting technologies that will increase worker productivity. Tapping this opportunity will require increasing investments in skills development. We also would like to persuade and support companies to upskill their workforce, so that workers can perform newer and higher-order roles that complement the work of machines. That’s the new world.
Current systems of learning and signaling job-fit are not enough to provide the agility that lifelong learners will require. We, therefore, need to shift to a skills-based approach that can provide more efficient mechanisms.
The fifth strategic action is to promote regional industrialization through innovation and entrepreneurship.
In our effort to be responsive to nuances in the country’s regional growth, we acknowledge the inequalities among our various regions. How we can respond to this, is the big question. One direction is to support regions and urban centers to specialize where they have the most competitive advantage. We know this, that different regions have different crops and we shall help them to promote these crops and industries.
In focusing our efforts on regional industrial transformation, we aim to use science, technology, and innovation and entrepreneurship as means, for example, to modernize our agro-industrial activities.
The sixth strategic action is to create and foster an enabling economic environment to attract more investments.
This action entails policies that attract investors and entrepreneurs to the Philippines. Aside from rationalizing regulations, it will also cover building competitive physical and digital infrastructure. Doing so reduces the cost of doing business and attracts more investments.
Given our industrial strengths and competencies, and emerging trends and technologies, we see four industrial clusters as sources of growth for the country:
1. The Industrial, Manufacturing and Transport (IMT) cluster;
2. The Technology, Media and Telecommunication (TMT) cluster;
3. The Health and Life Science (HLS) cluster; and
4. The Modern Basic Needs of a Resilient Economy cluster.
The first three industrial clusters align with trends in the global reconfiguration of the global value chains due to the pandemic, the emergence of disruptive technologies, and the servicification of manufacturing. These three clusters provide an opportunity for the Philippines to upgrade, diversify, and reposition in its participation the global value chain. The fourth cluster reinforces the foundations for the country’s economic recovery, and long-term sustainable and inclusive growth. Let me discuss the individual clusters.
The first cluster—Industrial, Manufacturing, and Transport or IMT—includes aerospace; electric vehicles; advanced electronics, chips and products; semiconductors; and advanced manufacturing technologies, among others.
Across these IMT subsectors that I have discussed, the common thread is that the electronics and electrical parts that are now part of the global value chains in which the country participates. Let me add one more opportunity that we are taking in IMT. This is on mineral processing.
Mineral processing is crucial, given our resources of green metals such as nickel, copper, and cobalt. These minerals can be used for downstream industries such as EV battery manufacturing, hyperscaler data centers, and renewable energy projects. The Philippines can be a vital partner for these critical minerals not as an exporter of raw ores, which is what is happening now, but as a processor and producer of semi-finished and finished products. We have Indonesia as a model.
The second cluster—Technology, Media, and Telecommunications or TMT cluster— includes IT-BPM or what we know as BPOs; hyperscale data centers; the digital economy; and products using AI, robotics, 5G, and the Internet of Things.
The third cluster—Health and Life Science or HLS cluster—plays a strategic role following the COVID-19 pandemic and provides a turning point for economic recovery. The cluster includes healthcare services and therapeutic systems; pharmaceuticals; biotechnology; medical devices; and digital health products and services.
One of the members just asked me, whether this is a priority, and it is.
Over the next decade, multinational companies will aim to manufacture medicines faster
and cheaper. The sector will also witness smaller and more agile pharmaceutical companies taking a more critical role in bringing medicines, including generics, to the market. As pharmaceuticals, medical devices, and healthcare services become more integrated, this facilitates the emergence of an HLS cluster in our country.
Finally, the fourth cluster—Modern Basic Needs and Resilient Economy—this refers to modern basic needs such as food, shelter, infrastructure, and education. This along with activities that foster economic resilience.
We want to prioritize the cluster, given the need to pursue food security, in fact in the World Economic Forum, they’re not talking of food security but nutrition security; modernization of our agricultural and fishing sectors, and important goals in basic needs, quality education, and clean energy.
In the push for industrialization and economic growth, there are essential factors to consider aside from encouraging investments.
For example, our strategic industries need secure, sustainable, and resilient energy source. This is where our efforts to advance sustainable development become more relevant.
DTI also supports the transition to renewable energy in the Philippine Energy Plan for 2020 to 2040. Our National Renewable Energy Program (NREP) seeks 50% renewable energy generation by 2040.
Our recent Presidential state visit to China generated USD22.8 billion in investment pledges. More than half of the investment pledges, in the amount of around USD14 billion, are for renewable energy.
DTI is cognizant of the vital role of micro, small, and medium enterprises (MSMEs, which are instrumental to inclusive development.
Many Filipinos, around 63% of our workforce, depend on MSMEs for their livelihood. MSMEs are the backbone of our economy, and they comprise 99.5% of about a million registered businesses in the country. And they contribute almost half of our gross domestic product.
One of DTI’s strategic initiatives to accelerate inclusive growth is by upgrading, upskilling, and upsizing MSMEs.
To scale MSMEs, it is critical to assist them in overcoming constraints to access to finance, technology, and the market. Part of DTI’s measures to assist MSMEs is to build Negosyo Centers around the country. These centers serve as mentoring hubs and provide links to business development services. As of October 2022, there is a total of 1,344 Negosyo Centers all over the country. DTI also assisted about half a million MSMEs nationwide out of these Negosyo Centers.
Business growth and development are founded on wise financial leadership, backed by a sound and reliable financial system. Now that we are shaping a more innovative and creative economy, we trust that our financial sector will be able to support this economic transformation.
Financing innovation is often associated with risks and unattractive investments with
uncertain payoffs. Hence, industries, especially MSMEs, need help accessing financing with softer terms that could fund their technology adoption and business transformation.
DTI has this Small Business Corporation (SBCorp), which is our arm for financing MSMEs.
DTI, also has the National Development Company, that has recently organized a Startup Venture Fund to be able to support the expansion of new enterprises and start-up enterprises through equity finance.
Aside from helping MSMEs with financing, we also want to make it easier for them to embrace digital transformation. Digitalized MSMEs can conduct their business more efficiently, reduce costs, reach larger markets, and earn more profits.
Several days ago, I represented DTI at the public launch of USAID’s Strengthening Private Enterprises for the Digital Economy (SPEED). This is a five-year program of USAID. The program aims to help digitalize Philippine SMEs. It also aims to increase SMEs’ use of e-payment platforms. DTI, as an active partner of the Bangko Sentral ng Pilipinas, for instance, this is on Digital Payments Transformation Roadmap, is working with BSP to digitalize retail payments and promote financial inclusion among Filipinos.
DTI also has the Big Brother-Small Brother Digitalization Project. The project engages MSMEs in digitalizing supply chains with the support of big corporations.
To further enable MSMEs to reach markets, DTI, in partnership with the Department of Information and Communications Technology, has been developing an e-commerce platform that will help MSMEs pivot from offline to online.
The initial phase of this project will be the cataloguing of the productive MSMEs across the country. We don’t have a good database on what these MSMEs are doing, so we’ll start with that. And eventually, come up with a sort of a virtual department store of our MSMEs where the Filipinos, the national market, will be able to see what’s available from various MSMEs all over the different regions of the country. Eventually, my idea with this e-catalogue is to require mandatory purchase by government offices of products produced by MSMEs. We will use the e-commerce platform that we are preparing as a way for initiating micro, small, medium enterprises into the digital economy before they will go foreign into the global digital market.
In addition to developing the modern needs cluster, and creating more opportunities for inclusive growth through MSMEs, another way by which DTI accelerates inclusive development is by connecting cities, provinces, and regions.
By connecting communities, particularly those with differences in growth, more livelihoods may be created. Economic activity also attracts support services like logistics, financial services, and tourism. This creates wealth and prosperity in various localities, with local governments earning more revenues to develop their areas. Given the Mandanas ruling, the responsibility is now greater on LGUs. DTI is joining the government in its efforts to widen the network and local road infrastructure that connects our ecozones, trade centers, and logistics hubs.
For example, the DTI is working with the Department of Public Works and Highways for a logistics convergence program called ROLL IT (Roads Leveraging Linkages for Industry and Trade). The second phase will focus on contributing to food logistics, now
tagged as ROLL IT – LET’S EAT, or “Logistics Efficiency and Transport Seamlessness to Enhance Agribusiness Trade.”
A vital component of the work toward shared prosperity is helping ensure growth and development not only in urban and rural communities but across all regions.
To enable this, DTI has established and still establishing Regional Inclusive Innovation Centers (RIICs). RIICs connect innovation agents and other stakeholders in the regions. Together, they can advance innovation and entrepreneurship to drive regional industrialization. The approach I am introducing is to lodge the regional inclusive innovation center or RIIC in a selected university in the region, which will act as the knowledge hub of the region. And, we will invite DOST, that’s also giving support for innovation to work with us to improve and strengthen those regional inclusive innovation centers housing in selected regional universities.
With these strategic directions and initiatives, the DTI is positioned to contribute to accelerating inclusive and sustainable growth. In attaining the government’s industrial transformation agenda, we will rely on active collaboration among government, industry, academe, and training community, as well as development partners. We invite our partners in FINEX to work with us in pushing the country in that direction.
Thank you for this opportunity to speak before you. And congratulations in advance to the many inductees that we will induct into office this afternoon. Thank you! *
Date of release: 23 January 2023