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Keynote Address of Secretary Ramon M. Lopez at the 2nd Manufacturing Summit (29 November 2017, Makati City)

KEYNOTE ADDRESS OF SECRETARY RAMON M. LOPEZ
MANUFACTURING SUMMIT 2017
29 November 2017, Makati City


[Acknowledgments]
Usec. Rowel Barba, Usec. Nora Terrado [and other DTI officials, Asec. Aldaba, Asec. Perez…;
Mr. Kunihiko Shinoda, METI Deputy Director-General;
Mr. Susumu Ito, JICA Country Representative;
Mr. Clay Epperson, USAID Deputy Mission Director;

Distinguished speakers and panelists; participants from other government agencies; industry associations; and the academic community;

Ladies and gentlemen, good morning!

Macroeconomic performance & economic transformation
These are indeed exciting times for the Philippines. Amid the global economic volatility, the outlook for the country remains positive as we have maintained our strong macroeconomic position.

Our first-to-third-quarter growth in 2017 stood at 6.7%, securing our position as the fastest growing economy in Asia. We outpaced our ASEAN neighbors such as Vietnam, which grew by 6.3%, and Malaysia which registered 5.9%. Our country’s impressive growth has only been eclipsed by China, which grew by 6.9% for the first three quarters of 2017.

Clearly, our recent performance demonstrates remarkable economic resilience, thanks to a resurging Philippine manufacturing industry. This year, manufacturing has been the country’s main economic driver, exhibiting a Q1 to Q3 growth of 8.3%—the highest among the main economic sectors.

The Philippines is now on the verge of economic transformation. While services was the main driver of growth in the past decades, manufacturing has been contributing more substantially to the nation’s economic growth since 2013.

Consider this: from 1999 to 2012, services registered an average annual growth of 5.4%, while manufacturing was growing at an average of 4.0%. But from 2013 to 2016, the average third quarter growth of manufacturing stood at 7.8% while services posted an average of 6.8%.

Another transformation is taking shape as economic expansion is being driven by investments, with capital formation accelerating by 8.6% in the first three quarters of this year. Compare this to consumption and government spending, which rose by only 5.4 and 5.3%, respectively.

With a growth rate of 10.4% in Q1 to Q3 last year (2016), fixed capital formation has remained robust. Durable equipment grew by 11.6%, driven mainly by growth in general industrial machinery and equipment (12.0%) and transport equipment (11.4%).

Meanwhile, net FDI inflows remain strong, amounting to US$5.1B from January to August 2017. With positive investor confidence, approved investments by the Board of Investments (BOI) from January to September 2017 increased by 33% to PhP408.7B from PhP296B during the same period in 2016. Manufacturing sub-sectors covering food, motor vehicles, fabricated metal, and wood products amounted to PhP38.5B, or 9.4% of the total.

High level growth & the employment challenge

Though manufacturing growth has been contributing significantly to our country’s economic growth, its share to GDP of 23% and contribution to total employment of 8% have remained quite unchanged in the last decade.
While our unemployment rate slightly worsened to 5.9% during the first three quarters of 2017 from 5.8% during the same period in 2016, our underemployment rate declined to 15.2% from 17.4% in the same period. Meanwhile, our poverty incidence also improved to 21.6% in 2015 from 25.2% in 2012.

Still, our employment challenge remains: we have 2.5M unemployed and 6.5M million underemployed fellow Filipinos.

The mandate of “Trabaho at Negosyo”

Last year, the Department of Trade and Industry (DTI) organized the first Manufacturing Summit that brought together stakeholders from the government, industry, and academe. The aim of the Summit was to discuss policy directions and strategies to revitalize our manufacturing sector.

With the theme “Trabaho at Negosyo,” the Summit was a venue for the fruitful exchange of ideas on the opportunities and challenges in the manufacturing industry, as well as the steps we could take in shaping its future.

Based on the panel discussions and breakout sessions in the Summit, we identified the following steps to sustain the resurgence of manufacturing and further expand the sector:

  • First, as an initial step towards putting innovation and R&D at the center of our industrial strategy, we will establish innovation centers in the country. This will be done in close coordination with the Department of Science and Technology (DOST) and in collaboration with the academe and industry stakeholders.
  • Second, we will revise and update our industrial policy to consider emerging disruptive technologies, like robotics, AI, and 3D printing. We will coordinate closely with the industry, academe, and other government agencies to discuss these and refine our industry priorities and targets.
  • Third, we will continue the collaboration among government, academe, and industry. In particular, we will focus on the implementation of the priority measures recommended during the Summit’s breakout sessions.

Updates on the Manufacturing Summit 2016

Let me share with you some updates on the priority recommendations proposed in last year’s Summit:

As most of you here know, DTI is actively promoting innovation as key to the competitiveness of Philippine industries. We have modernized the BOI’s Investment Priorities Plan (IPP) towards this direction by providing for incentives for innovation and R&D economic activities.

  • Back in May, we conducted the Inclusive Innovation Conference to launch the roadmapping for innovation in the country. This has been followed by a series of regional innovation workshops conducted in Metro Manila, Cebu, CDO, and Davao. A last one is set to be conducted in December in Clark. Through these workshops, we are soliciting inputs from stakeholders from the regions and we are aiming to formally launch the roadmap in the first half of next year.  The conduct of these innovation fora and formulation of the roadmap resulted in a Memorandum of Understanding (MOU) that DTI signed with DOST to closely collaborate on our innovation initiatives. Both DTI and DOST intend to bring in the relevant national government agencies moving forward.
  • The Intellectual Property Office of the Philippines (IPOPhil) is also formulating our National Intellectual Property Strategy (NIPS), and this will be a key part of our innovation roadmap.
  • Through the Manufacturing Resurgence Program (MRP), DTI and BOI continue to promote collaborative agreements between industry associations, government, and academe in support of inclusive and innovative manufacturing.
  • We also continue to consider human resource development as an essential element of our industry development programs. Towards this, we are closely coordinating with the Commission on Higher Education (CHED) and the Technical Skills and Development Authority (TESDA) with regard to reforms and programs for human capital development.
  • We have been engaging as well various higher educational institutions from all over the country, both private and public, to do our part in bridging the industry-academe divide.
  • With regard to infrastructure, DTI and BOI have been coordinating with the Department of Public Works and Highways (DPWH) in our convergence program on road connectivity for industry and trade development. Called “Roads Leveraging Linkages for Industry and Trade (ROLL IT) Program,” the goal of this program is to prioritize and implement road access infrastructure that leads to various industries and economic zones. Through ROLL IT, we are proposing Php12.3B worth of road infrastructure across the country under the proposed 2018 budget.
  • We are actively supporting the amendment of the Public Service Act, which we hope will finally be done by Congress. And of course, we are supporting the government’s massive “Build Build Build” Program.
  • Notwithstanding the recent dip in our Ease of Doing Business (EODB) ranking, the National Competitiveness Council (NCC) remains determined to push reforms in our business environment and improve our competitiveness.
  • Regarding the development of Micro, Small, and Medium Enterprises (MSMEs), we launched earlier this year our money lending program called the Pondo sa Pagbabago at Pag-asenso (P3). President Rodrigo Duterte had also announced during the ASEAN Summit to pour as much as Php50B for SME development in the coming years.
  • With regard to incentives and other forms of government support, we are coordinating with the Department of Finance (DOF) to ensure that these are performance-based, time-bound, transparent, and easy to administer. We maintain that incentives can be effective tools for industry development and ensure our competitiveness.
  • And finally, regarding trade, we expressed our intention during the meeting between President Duterte and US President Donald Trump on the sidelines of the ASEAN Summit to negotiate and forge a free trade agreement (FTA) with the US.


The Inclusive Innovation Industrial Strategy (i3S)

After a year, we have refined our industrial strategy.

The Inclusive Innovation Industrial Strategy (or i3S) is the new industrial policy formulated by DTI-BOI that aims to grow globally competitive and innovative industries, with innovation at the front and center of industrial policies and programs.

With i3S, there are 12 sub-sectors that are top priorities for industry development, with a focus not only on manufacturing but linking together activities particularly through the servicification of manufacturing. This would connect services activities like design, R&D, engineering, and after-sales with manufacturing.

These sub-sectors and programs include:

  • Auto and auto parts: Auto electronics, CARS Program, Public Utility Vehicle Modernization;
  • Electronic manufacturing services: Auto electronics, medical devices, telecommunications equipment, power storage, civil aviation/ aerospace;
  • Semiconductor manufacturing services: Integrated circuit (IC) design;
  • Aerospace parts and aircraft Maintenance, repair, and overhaul;
  • Chemicals: Petrochemicals, acyclic alcohols & derivatives, metallic salts & peroxy salts of inorganic acids, cyclic hydrocarbons, oleo chemicals;
  • Shipbuilding & Ship-repair: Roll-On Roll-Off (RORO)m as well as small- and medium-sized vessels;
  • Furniture, garments, creative industries: Manufacturing and design;
  • Iron and steel, tool and die: Manufacturing and design;
  • Agribusiness food & resource-based processing: Cacao, coffee, mangoes, bananas, coconut, rubber, bamboo, fruits & nuts, and other high value crops;
  • Construction: Roads, railways, bridges, ports, airports, and low-cost housing;
  • IT-BPM and e-commerce: Higher-earning and more complex non-voice services BPO, Knowledge Process Outsourcing (KPO) in medical, financial, and legal services; game development; engineering services outsourcing (ESO), software development, and shared services;
  • Transport and Logistics: Land, air, and water transport, warehousing, and support facilities for transport given that huge services investments in infrastructure and logistics would boost the competitiveness of industries and improve connectivity within the country; and,
  • Tourism

Major pillars and strategic actions

From this i3S policy, we have now laid out strategic actions to help us achieve our goals. These include:

Building new industries, clusters, and agglomeration via:

  • Addressing gaps and linkages in industry supply and value chains;
  • Expanding the domestic market base to allow industries to attain economies of scale and realize their export potential;
  • Pursuing green policies in industries to make them more competitive, innovative, environment-friendly, and climate smart;
  • Implementing aggressive promotion and marketing programs to attract more foreign direct investments especially those that would bring in new technologies;
  • Addressing market failures by providing fiscal incentives that are well-targeted, performance-based, and time bound;
  • Creating industry clusters to address agglomeration, economies of scale, and coordination issues; and,
  • Promoting the establishment of domestic ecozones that would allow activities catering to both domestic and export markets.

Capacity-building and human resource development via:

  • Designing human resource development and training programs to improve skills and establish tie-ups with universities and training institutions.

MSME growth and development via:

  • Supporting SME development by boosting their growth and profitability through the 7Ms (Mindset, Mastery, Mentoring, Money, Machine, Market, and Models) as well as programs focusing on the establishment of common service facilities, and improving access to finance, technology, and skilled workers;
  • Linking MSMEs with large domestic enterprises and multinationals;
  • Promoting inter-firm and academe collaboration; and,
  • Setting up efficient storage and logistics (like handling and cold storage).

Innovation and entrepreneurship via:

  • Establishing an inclusive innovation and entrepreneurship ecosystem that would link together academe, industry, and government;
  • Strengthening industry-academe collaboration that focuses on market-oriented research,
  • Revising engineering curricula, particularly manufacturing engineering and work related to industries;
  • Equipping universities to carry out research relevant to industries,
  • Ensuring intellectual property protection;
  • Setting up R&D incentives (like tax credit and accelerated depreciation); and,
  • Setting up shared facilities for rapid prototyping and demonstration

Ease of doing business and investment environment via:

  • Continuing to strengthen our institutional and regulatory framework by addressing corruption and smuggling, and eliminating bureaucratic red tape through streamlining and automation of government procedures and regulations;
  • Establishing a single mechanism for coordinating business registration, application for permits and licenses, and investment promotion with local government units (LGUs) and other national government agencies; and,
  • Continuing the big bang infrastructure investment to cover not only the building of physical infrastructure like roads, but also power, logistics, and a modern and efficient air and sea infrastructure.

Inter-agency collaboration

Going back to the collaboration between DTI and DOST, the two agencies agreed to work together to create an inclusive innovation and entrepreneurship ecosystem in the country. Currently, we are working together in formulating and implementing our innovation roadmap.
Based on the aforementioned consultative workshops in NCR, Cagayan de Oro, Cebu, and Davao we have conducted to date, the major recommendations include:

  • The establishment of shared services facilities (like FabLabs) and creation of innovation hubs;
  • Collaboration among government, industry, and academe through joint activities and the use of physical and shared spaces;
  • Capacity-building and skills training; and,
  • Funding support.

In DTI, we are studying the possibility of transforming our 3-hectare Center for Innovation and Technology for Enterprises (or the old CITC) in Marikina as a possible innovation center (like Plug and Play).

The location is appropriate, given that Marikina is home to the footwear industry as well as woodworking and jewelry enterprises. It is also very close to education institutions like UP, Ateneo, Miriam College, and the Marikina University.

Conclusion

To conclude, our vision is for the Philippines to have creative and connected communities (3Cs) of different stakeholders like innovators, start-ups, SMEs, and large enterprises that will collaborate to produce new products and services.

Moving forward, we firmly believe that it is crucial for us to form an innovation council composed of representatives from the government, industry and academe. This would ensure that our country’s innovation policies and programs will be properly implemented leading towards the sustained resurgence of Philippine manufacturing.

Ultimately, these efforts will help us create not only employment opportunities and address income inequality throughout the country, but also ensure that the economic growth resurgence our country is experiencing will be felt by all Filipinos.

By working closely together, we can achieve our goal of generating inclusive growth and shared prosperity for our countrymen, especially for those at the bottom of the pyramid.

Thank you and mabuhay tayong lahat!

 

Opening Remarks of Secretary Ramon M. Lopez, Preparatory Regional Comprehensive Economic Partnership (RCEP) Ministerial Meeting (11 November 2017, Pasay City)

OPENING REMARKS OF SECRETARY RAMON M. LOPEZ
The Preparatory Regional Comprehensive Economic Partnership
Ministerial Meeting (Prep-RCEP TNC)

 

Fellow Ministers of ASEAN and our Dialogue Partners, we are gathered here today in preparation for the 1st Regional Comprehensive Economic Partnership (RCEP) Leaders’ Summit. But before anything else, it is my pleasure to welcome you all and your delegation once again to the Philippines.

For those of us who are tasked with providing guidance and vision in driving our respective economies forward in a constantly shifting global trade and economic landscape, we have our work cut out for us.

We have expressed our collective agreement to achieve a substantial conclusion to RCEP negotiations within the year. We emphasized this commitment during our meeting last September, and even expressed the hope that we will have something significant to report to our Leaders during the ASEAN Summit.

We have had 5 Ministerial level Meetings and 20 rounds of negotiations, with the most recent one hosted by Korea last month. We note the milestones and breakthroughs reached, especially those that yielded substantial outcomes like the conclusion of the Chapters on Economic and Technical Cooperation and the Small and Medium Enterprises.

We also welcome another encouraging development, which is that of Customs Procedures and Trade Facilitation (CPTF) and Competition Chapters that are nearing completion.

Meanwhile, we are still in negotiations to reach substantive agreements on key elements of the RCEP, a task which we have been engaged in since 2012. At this point, let us extend our full support to our negotiating teams, allowing them more room to navigate on contentious issues toward achieving resolutions. Equally, efforts must be further intensified in making this possible.

This is the challenge now facing us: we should be able to provide a concrete and tangible roadmap that our Leaders can agree to and endorse, which will lay the foundations for a binding agreement.

RCEP is of tremendous importance for our economies and the region, and our efforts today can bring about greater progress and economic sustainability for the coming years.

We therefore look forward to having substantial and fruitful discussions, and even solidify our positions in the process. It is imperative for us to finalize the Ministers’ Collective FINAL 12 November 2017 Assessment Report to the Leaders and the Joint Statement of Leaders in negotiating the RCEP.

To conclude, we would like to say that our hosting of this year’s ASEAN would never have been successful without your efforts, collaboration, and cooperation.

With this, I declare the RCEP Ministerial Meeting open. Again, thank you and mabuhay tayong lahat.

 

Opening Remarks of ASEAN Economic Ministers (AEM) Chairperson Ramon M. Lopez, 15th ASEAN Economic Community Council (AECC) Meeting (11 November 2017, Pasay City)

OPENING REMARKS OF
AEM 2017 CHAIRPERSON RAMON M. LOPEZ
15TH ASEAN ECONOMIC COMMUNITY COUNCIL (AECC) MEETING

 

Dear colleagues, we started this year with high hopes, and we are now concluding it on a high note. ASEAN has made tremendous progress and has had such a meaningful year this 2017. This was made possible with the dedication of our economic trade officials, who worked virtually non-stop to help us achieve our targets, and with the solid support and cooperation from our partners from the ASEAN Member States (AMS).

I recall 10 months ago, when the Philippines officially launched its Chairmanship of ASEAN bearing the banner theme: “Partnering for Change, Engaging the World.” Under this theme, our chairmanship had 6 thematic priorities, one of which was “Inclusive, Innovation-Led Growth” for the ASEAN Economic Community (AEC). This thematic priority affirms trade and integration as a powerful engine of economic growth and development for the AEC. In this regard, ASEAN has achieved a measure of success as we continue to link economies and pursue integration and cooperation with strategic external partners.

The establishment of the AEC in 2015 has engendered enormous opportunities in the form of a huge market worth US$2.5T. Vibrant flow of goods, services, investments, and skilled labor are among the benefits of this economic integration. Moreover, the ASEAN Vision and AEC Blueprint 2025 demonstrate that the region is making good progress in formulating a clear way on how to collectively address the opportunities that AEC present.

Nonetheless, we acknowledge that despite our efforts, the issue of development remains a pressing concern with inequity and inclusiveness remaining the biggest challenges within our economies and across the region. Without full participation in trade, growth cannot be truly inclusive and further progress in trade liberalization would be difficult if the benefits are not shared by all.

The theme “Inclusive, Innovation-led Growth” acknowledges the socio-economic dimension of regional economic integration and its contribution to poverty alleviation. This priority urges us to strengthen our commitment for more inclusive participation in the process of community-building, where we all are partners and everyone contributes. This will likewise ensure that the gains presented by economic integration are fully realized and shared by everyone in the region.

I remember our President Duterte also highlighting this point at the recently-concluded APEC wherein for us, the leaders, the way globalization should work is that everyone should emerge as winners, and that globalization should not produce winners and losers but everyone as winners.

This year, we also put greater focus on reinforcing our Micro, Small, and Medium Enterprises (MSMEs) by providing an enabling environment for its development and to enable them to scale up and participate in the global value chain. Given the breadth and extent of the MSME sector in the region, its development would directly contribute to spreading the economic benefits more widely.

Micro SMEs must be full participants and beneficiaries that closer regional economic integration brings. This means further strengthening the role and contributions of micro SMEs so as to attain a dynamic, inclusive, and people-oriented AEC.

We pursued this theme through 3 strategic measures, namely: increasing trade and investment; integrating micro SMEs in the global value chains; and developing an innovation-driven economy. These measures, in turn, were supported by 11 priority economic deliverables related to trade facilitation, trade in services, connectivity, inclusive business, e-commerce, and innovation. These deliverables would ensure the participation of the micro SME sector, as well as the marginalized—like the women and youth—in commercial activities.

With this mind, we are convening today to exchange views on what we’ve done so far in moving the AEC forward. For 2017, we have made good progress in getting AEC 2025 off the ground. After the adoption of the AEC Blueprint 2025, we concentrated our efforts on the development of the Consolidated Strategic Action Plan (CSAP) that serves as the operational framework for the AEC Blueprint 2025. We adopted the CSAP earlier this year and completed additional action plans that are relevant to further increasing intra-regional trade, like trade facilitation and e-commerce.

We take this opportunity as well to prepare and firm up our deliverables and report to our Leaders who are set to meet few days from now. These include notable developments in our external economic relations like the completion of the negotiations for the ASEAN-Hong Kong, China Free Trade Agreement (or AHKFTA) and the Investment Agreement (AHKIA).

There is also the endorsement of the Terms of Reference (TOR) of the Feasibility Study for an ASEAN-Canada FTA Agreement and the subsequent undertaking of the study. Further, there is the convening of the Joint Working Group that is tasked to assess the possibilities for the resumption of the ASEAN-EU FTA negotiations. Lastly, the level of engagement that we had on the Regional Comprehensive Economic Partnership (or RCEP) this year is unprecedented, demonstrating and galvanizing ASEAN’s leadership in the negotiations process.

Ladies and gentlemen, ASEAN continues to progress year after year through our concerted efforts. The challenge of sustaining this and ensuring that we reach the kind of community that our forefathers envisioned us to become—a community that is secure, inclusive, prosperous, and stable—requires us to work even more closely.

My term as AEM Chairman comes to an end. Allow me to express my deep gratitude to everyone for your support and hard work to ensure that our Chairmanship, which coincides with the 50th Anniversary of ASEAN, is a success. I would also like to congratulate our fellow economic trade officials for a job well done.

Again, thank you very much and I wish a productive discussion ahead of us.

Mabuhay tayong lahat!

 

 

Statement of DTI Secretary Ramon M. Lopez, Chair 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting (11 September 2017, Pasay City)

Statement of DTI Secretary Ramon M. Lopez, Chair 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (10 September 2017, Pasay City)

Statement of DTI Secretary Ramon M. Lopez, Chair 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (9 September 2017, Pasay City)

Statement of DTI Secretary Ramon M. Lopez, Chair 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (8 September 2017, Pasay City)

Speech of DTI Secretary Ramon M. Lopez 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Opening Ceremony (7 September 2017, Pasay City)

Speech and presentation of DTI Secretary Ramon M. Lopez at the opening of the Manufacturing Summit 2016 (26 November 2016)

Statement of DTI Undersecretary Ceferino S. Rodolfo, Philippine Lead 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (10 September 2017, Pasay City)

Statement of DTI Undersecretary Ceferino S. Rodolfo, Philippine Lead 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (9 September 2017, Pasay City)

Statement of DTI Undersecretary Ceferino S. Rodolfo, Philippine Lead 49th Association of Southeast Asian Nations (ASEAN) Economic Ministers' Meeting Press Briefing (8 September 2017, Pasay City)

Opening Statement of Trade Undersecretary/BOI Managing Head Ceferino Rodolfo Press Conference on BOI Guinogulan Awards (25 April 2017)

 

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