World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand Ndiame Diop; other World Bank officials with us today; colleagues from government; partners in the private and nonprofit sectors; and the academe—a pleasant morning to all.

Congratulations to the World Bank on launching its report, “A New Dawn for Global Value Chain Participation in the Philippines.” As the report notes, the post-pandemic future brings forth an opportunity. For the Philippines, this is an opening to embark on industrial transformation, reconfigure our exports into industry clusters and strengthen our global value chain (GVC) participation; and make the Philippines a more attractive investment destination.

We in the New Administration are committed to steering the country back to its high-growth path and keeping the momentum toward an inclusive and resilient society.

We see encouraging indications of economic recovery. For the second quarter of this year, the Philippine economy grew by 7.4%—marking the fifth consecutive quarterly growth since the start of 2021.

But, challenges remain. Inflation stood at 6.9% this September, and increasing costs and supply chain disruptions slowed the country’s economic momentum.

Amid these challenges, the government is focused on fully reopening the economy and its goals to reduce costs, stabilize prices, and ensure health, food, and energy security.

As the country enters the post-pandemic future, implementing an inclusive, sustainable, and resilient industrial policy is imperative to build a more competitive economy. By relying on science, technology, and innovation (STI) and essential digital technologies, industries will be better positioned to face competition in both domestic and export markets and pave the way for industrial transformation.

Aligned with our STI-driven thrust, we recently launched the Center for Artificial Intelligence Research (CAIR). CAIR will be instrumental in boosting AI’s contribution to the economy. With the support of private sector partners, CAIR will be a hub where data scientists and researchers can perform collaborative AI R&D. It will provide AI training programs and support the digital transformation of industries.

Complementary to the CAIR, we are establishing an Industry 4.0 Pilot Factory that will host pilot, demonstration, and learning laboratories for relevant technologies. These include robotics, intelligent manufacturing, and cyber-physical systems. This Pilot Factory will serve as a hub where MSMEs, researchers, and universities will have hands-on lessons on robotics, automation, and smart factory, among others. Siemens of Germany is helping us put up this Pilot Factory.

We will prioritize four industry clusters to drive our country’s growth. The selection of these clusters is guided by the World Bank’s analytical report on the reconfiguration of GVCs last year and is affirmed through the report being launched today.

The report provides recommendations on the same industrial clusters we seek to prioritize: (1) Industrial, Manufacturing, and Transport (IMT) cluster; (2) Technology, Media, and Telecommunication (TMT) cluster; and (3) Health and Life Science (HLS) cluster. We have added the Modern Basic Needs and Resilient Economy cluster, fostering economic resilience and long-term sustainable and inclusive growth.

Supporting the country’s enhanced participation in reconfigured GVCs is a long-term pursuit that entails addressing structural, systemic, and sector-specific constraints to growth.

In terms of policies to make the Philippines an attractive destination for FDI, we are implementing recently-passed laws that either ease foreign ownership restrictions or incentivize investments. These include the CREATE Act, amendments in the Public Service Act and Foreign Investment Act, and the Retail Trade Liberalization Act. These policy reform initiatives accord with the recommended policy actions in the World Bank report. The CREATE Act, in particular, is supported by the Strategic Investments Priorities Plan (SIPP). Through SIPP, CREATE serves as a tool for innovation, digital transformation, and industrialization.

To follow through, DTI is advocating for legislation that will further trade and industry development.

For one, we are adopting export measures to promote domestic processing for greater value addition from our reserves of green metals, such as nickel, cobalt, and copper. These measures should complement our effort to enable 100% foreign equity ownership in solar, wind, tidal, and other renewable energy projects by amending the Implementing Rules and Regulations of our Renewable Energy Act.

We note the World Bank report’s postscript on the adverse effects of the war in Ukraine on semiconductor production and cobalt supply sustainability. We turn our attention, too, to the opportunity to add value and produce nickel sulfate for battery manufacturing.

The country is also working to adopt a national position for a nuclear energy program. Initial interest is in deploying small modular reactor (SMR) technologies.

While DTI is pushing for the Senate ratification of the Regional Comprehensive Economic Partnership (RCEP), we continue to engage in negotiations such as the Indo-Pacific Economic Framework for Prosperity Agreement (IPEF).

We also participate in the WTO Joint Statement Initiative on Investment Facilitation for Development. We are working with other WTO members to conclude the agreement by year-end.

Our Industry Development Program supports economic transformation to reposition the Philippine industries in GVCs successfully.       

Part of the program works on the aerospace of the IMT cluster. Since 2017, we have collaborated with the Department of Science and Technology (DOST) and the Aerospace Industries Association of the Philippines toward the Aerospace Quality Management System Training Program for AS9100 Certification. This effort aligns with the Aerospace Industry Roadmap, which envisions the Philippines as a hub for aerospace parts manufacturing and allied services in Asia.     

Finally, part of the report’s main finding is our opportunity to “motivate operators in GVCs to develop the domestic skills needed for more advantageous GVC participation.”  The report notes that some challenges in this area are insufficient skills upgrading and a lack of workers with skills required by innovation firms.

I am pleased to share that the Board of Investments (BOI) is working with the Commission on Higher Education (CHED) on the National Skills Mapping and Survey on Human Resource Development. BOI is promoting Academe-Industry Matching or “AIM!” These projects shall identify appropriate interventions to minimize skills mismatch at the regional or provincial level; they foster interest among university students to take future-ready programs.

DTI is also working with the Department of Education, CHED, and TESDA to implement the Philippine Skills Framework, which employers can use to identify the necessary skills and competencies. At the same time, job seekers can define ways forward or upward in a particular industry. For educational institutions, the framework is used to revise existing curricula and design new courses to bridge the skills and competencies of the workers as they upgrade to desired occupations.

Sharing our strategies and initiatives to strengthen the country’s participation in GVCs will help in the panel discussions later this morning and contribute to the appreciation of where the Philippines stands in GVC participation.

          Thank you, and good day to all.

Date of Release: 06 October 2022