Every posting carries with it the opportunity of immersion into a new environment. Soon after, the officer goes through the iron-in-the-fire process of empirically unraveling the significance of the myriad stimuli, to home-based needs and aspirations. Then we each face the challenge of defining our work space via the submission of an annual work program, have this approved by capital while remaining mindful of the prudent use of government resources.
To illustrate, more than 15 years ago, when valiant forces, both overseas (East Coast Philippine International Trade Centers) and at home (Board of Investments), worked determinedly to exploit North America’s appetite to outsource CRM processes to the Philippines, which led to the contact center boom and the placement of the Philippines as No. 1 in the world map for voice business-processing outsourcing (BPO), Department of Trade and Industry (DTI)-Silicon Valley was quietly looking at the prospects of another side of information-technology outsourcing—software development.
In the West Coast the active synergies between public- and private-sector forces led to decisions by a major California-based retail giant to establish a development center and a think tank to set up shop in the Philippines. It also set the stage for the early interface with DTI, of a promising wholly owned Filipino software and application development company. We are happy to see how the company has blossomed into what it is today, a multiawarded company holding its own beside foreign giants in the highly competitive space for IT-BPM.
But then again, like life, everything was not always coming up roses. In Silicon Valley the dream then was to forge a tripartite alliance between academe, industry and government to strengthen the science, technology and math curriculum and link this to industry, find ways to foster a culture of innovation and create an enabling environment for engineers and techno-entrepreneurs to thrive and grow. Save for occasional pockets of success here and there, we remain in active pursuit of this goal.
In the processed food-promotion front, the earlier outbound trade missions, which centered on B2B events and in-store promotion projects in oriental supermarkets in Southern California, have expanded (through the work of subsequent officers), to include DTI’s now institutionalized participation in one of the biggest international trade exhibitions for specialty food—the San Francisco-based Winter Fancy Food Show and, less I forget, the rise in popularity of Philippine coconut water as the health drink of choice for celebrities.
In succeeding postings, other patterns of threes, trade-investment/industry-agriculture linkages were mostly evident. In Taiwan the term “3C” alludes to computer, communication and consumer electronics. The DTI endeavors were thus focused on attracting Taiwanese investments from these sectors to fill up gaps in the supply chain—a program that continues to generate solid results to this day.
While earlier efforts to woo the world’s largest contract manufacturer into the nation now looms favorably in the horizon, the plan to put up an ITRI-like entity in the Philippines, where government and industry support for research and development leads to products with high-commercialization potential, remains encumbered by a host of issues. In addition, forays to connect Taiwanese and Filipinos either via equity, resource and technology sharing in agribusiness and aquaculture, resulted in projects that enhance productivity and value-added processing in the regions.
In Japan we work in cadence with the mantra, “For growth to be sustainable, the economy must walk on two legs—industry and service.” While the country has already established a firm foothold on BPO and related services, the DTI has seized the bull by its horns via its Manufacturing Resurgence Program—a positive signal of the administration’s drive to make products that will ultimately become an integral component of the global production network and value chain.
Under this strategy, the CARS Program was launched last year. Toyota and Mitsubishi Motors have registered and pledged to infuse requisite investments in desired operations, such as stamping, and contribute to the program’s bid for localization via partnerships between local and Japanese accredited suppliers, in new and expanded investment projects and technical agreements.
While all this is chugging along, we watch with excitement, the next moves of companies, like IMI, the sixth-largest automotive electronics manufacturing service provider in the world, to concretize its vision to build the car of the future, hopefully recruiting home-grown engineering talent along the way.
The team at home is also looking at a second industry—shipbuilding and repair. The Philippine domestic shipping industry is composed of general cargo (27 percent), fishing (20 percent), passenger (15 percent), tanker (11 percent), tug (10 percent), deck cargo (9 percent) and others. Seventy percent of these vessels are older than 30 years, which, in all respects, may have been the single biggest cause of maritime mishaps in the last few decades.
Purchase of low-priced, quick-delivery, secondhand vessels was the norm in the domestic marine-vessel market. If new vessels were purchased, demand was filled with low-priced, low-quality vessels.
This is all about to change, as the same team that worked together on automobiles has rolled up its sleeve to build a shipbuilding/ship-repair road map. Part of the plan is to review the current taxation and financial schemes for ship owners, to encourage local production. In fact, the 7th largest shipbuilder in the world in terms of volume, may be joining the bandwagon. The Japanese company recently expressed interest to enhance HR development, provide funds for infrastructure support such as rural development via the use of advance technologies in two projects: ship recycling and biomass fuel. Where it gets interesting is how the project gets to integrate traditional shipbuilding operations with agribusiness and renewable energy ventures.
Contract farming for pelletized feedstock for export to Japan will provide employment to marginalized sectors and at the same time, meet the energy needs of community and industries across the archipelago, using the latest in clean-energy technology. This project again neatly exemplifies the trade-investment/industry-agriculture relationship paradigm.
Further, in the past three years, we have seen industrial clusters emerge around Philippine Economic Zone Authority based Japanese anchor tenants, in printer and peripherals and medical devices. For us to become a legitimate regional and global hub for these two sectors, we must encourage investments that will build up the supply chain by among other things, riding the wave of Abenomics—a policy that encourages the migration of 10,000 Japanese small and medium enterprises (SMEs) to Asean. These SMEs can fill gaps in the supply chain, serve as technology providers, create diversity in the market for products and services and build value to the local economy.
Japanese SMEs most often do not have the administrative experience to operate competitively overseas nor the capital to set up under traditional arrangements of building factories from the ground up. Perhaps we should review the real-estate proposition that dominates current operations in our economic zones and industrial estates and see how this can be expanded to include special zones that cater to SMEs via affordable plug and play facilities. This is already being done with lucrative success, by Vietnam, Thailand and Indonesia.
To attract foreign investors in specialized industrial estate development, we may also consider a 75-year freehold land arrangement, with rent offset by investments in needed utilities and infrastructure for locators that bring in cutting-edge research and technology, new and sustainable industry clusters.
Previously associated anathemas notwithstanding, perhaps the time is ripe, for government to look into subsidies to investors in RD&E for ICT and green field technologies. Current incentives are directed mostly towards the provision of income tax holidays, duty free importation of capital equipment and raw materials to enterprises. Given that R&D work is primarily developmental and not income or profit driven, the scope has to be expanded. Another compelling reason is we cannot develop a pool of high tech workers who can help propel industries to more lucrative niches of the global value chain, without an environment that encourages local and foreign investments in RD&E. These are particularly important to integrated circuit design, next generation motors and micro-fabrication projects. A move in this direction might help actualize our own brand of Taiwan’s ITRI and Silicon Valley.
Lastly, there is another kind of 3C we want to promote in Japan, but this has nothing to do with electronics and high -echnology industries. It carries greater bearing with how we should exploit the country’s natural-resource abundance with the products of our soil—coffee, calamansi and cocoa. The prospects are exciting, but we reserve discussions on this for the next time.□
To be concluded
Dita A. Mathay, Foreign Trade Service Corps / Department of Trade and Industry