Our esteemed guests— UNIDO Director General Gerd Muller, ADB Philippine Country Director Kelly Bird, JICA Representative Sakamoto Takema, USAID Mission Director Ryan Washburn, Schneider Electric Philippines President Ireen Catane, Siemens Philippines President and CEO Enrico Buergo, colleagues in government, guests—a good day to all.

This Industrial Digital Transformation Congress 2022 is the culmination of our industry consultations. In these consultations, we present DTI’s industrialization strategy and solicit views on the development of industries in our country. We thank you for participating in the consultations and recommending how government can help advance priority industrial sectors.

DTI has set out on a path to industrialization for the next six years. Our goal is to support the current administration’s efforts to lead the country toward an inclusive economic transformation. DTI is pursuing an industrial policy driven by science, technology, and innovation (STI). Through STI and digital technologies, industries can be better positioned to transform and face competition in domestic and export markets. Dynamic industry ecosystems further serve as the platform for stimulating foreign and local investments.

DTI’s industrial strategy comprises several vital strategic actions. Let me discuss a couple of them.

One of DTI’s strategic actions is to embrace Industry 4.0. The Fourth Industrial Revolution brings unprecedented change as it merges our biological, physical, and digital worlds, further shifting our approach to developing our economies. Industry 4.0 technologies such as artificial intelligence (AI), robotics, and smart manufacturing can help advance enterprises and industries. These technologies can lead to productivity improvement,  energy use efficiency, industrial competitiveness, and linkage to supporting industries. As our country enters a post-pandemic future, globally competitive and innovative industries would mean environmental sustainability, inclusive growth, and shared prosperity for Filipinos.

DTI is setting up two facilities to nurture innovation: a Center for Artificial Intelligence Research and an Industry 4.0 Pilot Factory.

Last September, DTI, in partnership with the UnionBank of the Philippines and Global Learning Solutions, launched the AI research center in Laguna province, Just south of Metro Manila. The Center will be a hub where data scientists and researchers can perform collaborative AI R&D. It can lead new AI products and services, provide AI training programs, and support the digital transformation of industries, particularly small enterprises.

In putting up the Industry 4.0 Pilot Factory, we have as partners Siemens of Germany and a conglomerate in Bonifacio Global City. The pilot factory shall serve as a hub of cutting-edge Industry 4.0 solutions. It is a space for micro, small, and medium enterprises (MSMEs), researchers, and universities to learn robotics, automation, and other technologies. It can also be a co-working space and prototyping sandbox.

Another DTI strategic action is to upgrade, upskill, and upsize MSMEs. As this event highlights, we see the immense potential of digital technologies to transform and develop MSMEs.

With digital mindsets and technologies, MSMEs can operate efficiently, reduce costs, reach bigger markets, and earn profits. There are digital platforms that connect sari-sari stores to manufacturers. The platforms can accumulate digitized cashflow data on sales and other transactions of participating MSMEs, use enterprise data for credit scoring, and provide client MSMEs access to cashflow-based credit. 

DTI, in partnership with DICT, will soon launch an e-commerce platform that will serve as an incubator for initiating MSMEs into the digital economy. This platform will support MSMEs in their digital transformation and provide access to the national and global markets. 

A significant aspect of our industrialization strategy is prioritizing certain industry clusters.

In line with a recent World Bank study done in collaboration with DTI, we are taking advantage of megatrends, including disruptive technologies, servicification of manufacturing, and strategic adjustments in supply chains, shaping global trade and value chains (GVCs) even before the pandemic. At the same time, we will avail of an opportunity to diversify into three global value chain (GVC) clusters that are being restructured by the COVID-19 pandemic, namely: the industrial, manufacturing, and transportation (IMT) sector; technology, media, and telecommunications (TMT) sector; and health and life sciences (HLS) sector.  

First, the Industrial, Manufacturing, and Transport cluster covers aerospace, automotive, and semiconductors. 

In 2020, the country moved up five spots to 34th place in the Aerospace Manufacturing Attractiveness Index Ranking. The same year, at the height of the pandemic, we also exported around USD407 million of aerospace parts. The world’s number one aircraft interiors company (Collins Aerospace) and the world’s leading aircraft maintenance-repair-overhaul company (Lufthansa Technik) are headquartered here. In August, we joined Lufthansa Technik’s inauguration of its expansion, Hangar A1.

To attract other suppliers and expand the cluster, we aim to be the Asia-Pacific hub for manufacturing and aftermarket services in the aerospace industry. We are also developing the aerospace value chain. The airports in Bulacan and Clark, as well as the kick-start of the Philippine Space Agency, are creating investment opportunities.

As climate change prompts the shift to electric vehicles, we are keen to enter the global EV value chain. We welcome foreign direct investments (FDIs) that bring relevant technologies, such as for developing green vehicles, IT in vehicles, and precision metal components.

We see vast opportunities for value creation in the downstream mining industry. We are exploring instituting trade policy interventions, coupled with programs, to develop the downstream mining sector to capitalize on the extraction of our abundant reserves of such green metals as nickel, cobalt, and copper minerals. These metals are needed for batteries and energy storage for electric vehicles.

On semiconductors, we seek FDIs that capture added value; and research and development (R&D) that improve business in Outsourced Semiconductor Assembly and Test.

Second, the Technology, Media, and Telecommunications cluster includes IT-BPM, hyperscale data centers, the digital economy, and AI products.

The IT-BPM boom was evident last year in its 10.6% revenue rise to USD29.5 billion and its 9.1% headcount climb to 1.44 million.

With the pandemic, interest in data centers has also increased worldwide. Our country’s strong BPO record and hyperscale roadmap are drawing the attention of hyperscalers. We consider hyperscalers as our next engine of growth.

In July, we launched the PLDT Jupiter Cable System. This subsea cable system will serve as an added superhighway for digital data, attracting hyperscalers to the country. 

The pandemic has expedited the adoption of cloud-based services. GlobalData, a leading data and analytics company, forecasts that Philippine enterprise spending will grow from USD 1.8 billion in 2020 to USD 2.6 billion in 2024.

The next decade will witness the BPO segment as a cross-cutting contributor to the competitiveness of global value chains. With 82% of BPOs and shared services centers in the Philippines serving global markets, this becomes a good area for leverage.

Among our policy priorities is to maximize Republic Act (RA) No. 11904 or the Philippine Creative Industries Development Act (PCIDA). We aim to develop a robust creative goods sector and enable it to upgrade into high-tech and ICT-enabled creative services. The sector includes software and game development, digital animation, creative services utilizing AI, and mixed and augmented reality, among others.

Third, the Health and Life Science cluster includes pharmaceuticals; biotechnology; medical devices; and digital health products and services. With a health crisis at the root of the current global economic distress, this cluster plays a strategic security role, opening income-generating opportunities in all countries, including the Philippines. Over the next decade, manufacturing medicines faster and cheaper will continue to be the mantra of multinational companies. DTI will encourage international pharmaceutical companies operating domestically to outsource to local players. Our goal is to make the Philippines self-sufficient in pharmaceuticals, healthcare services, and therapeutic systems.

On top of the foregoing three industrial clusters, we are adding a fourth one — the Modern Basic Needs of a Resilient Economy cluster. This cluster refers to basic human needs and supporting sub-clusters. We promote long-term sustainable and inclusive growth through food security and the development of green ecosystems. We will also link manufacturing and agriculture.

To revitalize the country’s agri-business sector, we aim to enable it to adopt digital and cost-efficient farm management solutions as they reach domestic and export markets. Our regional innovation and entrepreneurship ecosystems focus on agri-based products to drive regional industrialization. The growth and development of the agri-business sector would also support the country’s agenda on food security.

We will foster industries geared to the basic needs of our domestic market, whose consumer demands are now being met by imports. Our country has a population of 110 million – a sizeable consumer market with a growing middle class. Such a large customer base should attract the establishment of industries that target the gains and benefits from the potential domestic demand from the country’s consumer market.

To end, I would like to emphasize that our strategic actions and policy priorities are means to a competitive, robust, and resilient economy. Our ultimate goal in the next six years is to provide more and better jobs for our people, enable them to earn a higher income and provide a higher quality of life. We will rely on the active collaboration among government, industry, the academic and training community, and development partners. By embracing innovation in our industries and preparing our workforce for the future of work, we will achieve a more prosperous, inclusive, and sustainable economy.

Thank you! ♦

Date of Release: 6 December 2022