Interview: Ramon M Lopez

How will the i3S address the potential challenges that come from globalisation and digitalisation?

RAMON LOPEZ: The i3S aims to transform the Philippine economy in the new digital age. With this strategy, we are ready to face the challenges brought about by free trade arrangements, regional production networks, global value chains and Industry 4.0.

To achieve this transformation, the i3S highlighted competition, productivity and innovation as drivers of industrial and entrepreneurial development. Competition stimulates innovation, and the other way round. Similarly, innovation spurs productivity growth, and vice versa, which will have an impact on major industries such as agriculture, fishing and forestry; mining; construction; manufacturing; and services.

Innovation is the animating force behind the future of production. As we upgrade our technology platform and upskill our workers, we boost our readiness for competition. This in turn is expected to sustain GDP growth and ensure that the Philippines remains an emerging economic hub in the region.

How can large businesses support local innovators, start-ups and smaller enterprises?

LOPEZ: Multinationals and large enterprises are essential in catering to the robust economy of the country. We continue to advocate for the advancement of inclusive business by encouraging large enterprises to nurture start-ups, local innovators and small and medium-sized enterprises (SMEs) as part of their value chains. In terms of production capacity, most of the large corporations can help SMEs in meeting demand by providing expertise and machinery, as well as enabling them to penetrate bigger markets.

What can be done to further promote the entry of new companies into the manufacturing industry?

LOPEZ: The i3S involves collaboration between government, academia and industry, and it identifies five main pillars: building new industries, clusters and agglomeration; human resource development; micro-, small and medium-sized enterprises; innovation and entrepreneurship; and the ease of doing business. The i3S sees the DTI as facilitator and coordinator of other government agencies in addressing the constraints that prevent entry or hinder integration of new firms into the global value chains of multinationals.

It is important to have the right policy framework to encourage development of the private sector. This will entail programmes and policies to address the high cost of power, and domestic shipping and logistics; inadequate infrastructure; and complex rules and regulations that affect business operations.

Manufacturing resurgence is crucial in generating jobs not only for skilled workers, but for semi- and lowskilled workers. The transformation of the manufacturing industry would allow the movement of workers from the informal to the formal sector, as well as from low value-added activities to high value-added ones, where wages and compensation are much higher.

Of the 12 major industries prioritised by the i3S, which has shown the most growth?

LOPEZ: Manufacturing has been a bright spot over the past couple of years. The Philippines experienced significant industrial growth in 2013, 2014 and 2016, driven by the manufacturing sector. Growth also extended into 2017, with the manufacturing industry expanding by a rate of 8.6%. Averaging annual growth of 7.6% between 2010 and 2017, compared to a 3.2% average yearly growth rate between 2000 and 2009, we can see that the Philippines is experiencing a resurgence in manufacturing.

The leading manufacturing segments in terms of growth are food, electronics and chemicals. Food manufacturing in particular dominated with an average annual growth rate of 33.5% from 2010 to 2017. Its growth rate was 5% in 2017, compared to 8.2% in 2016.