METRO MANILA, Philippines – The Department of Trade and Industry (DTI) and its attached agency for investment promotion and industry development, the Board of Investments (BOI), in partnership with the Federation of Philippine Industries (FPI), the Voice of Philippine Industry, successfully conducted the Manufacturing Summit 2018 at the Philippine International Convention Center (PICC) on November 22 to 23.

In what was a well-attended and insightful Summit, participants from the government, academe and industry engaged in active discussion on domestic issues affecting industry growth – such as pending reforms in the Philippine incentives regime and the efforts to improve the ease of doing business in the country – as well as global concerns impacting the future of manufacturing, particularly the ongoing trade tensions between the US and China and the advent of the Fourth Industrial Revolution.

Trade and Industry Secretary Ramon M. Lopez, in his keynote address, emphasized that, “Holding the yearly Summit is part of the DTI’s continuing commitment to sustain the resurgence of the manufacturing sector as a major pillar in our pursuit to become an industrialized nation and achieve inclusive growth in the country.”

FPI Chair Dr. Jesus Lim Arranza, for his part, underscored the importance of a thriving manufacturing sector as he mentioned that, “companies can only be competitive in the world market if (they) have a strong domestic base.”

The first day of the Summit kicked off with a fruitful discussion on fiscal incentives reforms. The Tax Reform for Attracting Better And High-quality Opportunities (TRABAHO) bill, sponsored by Quirino Representative Dakila Cua, targets more job opportunities across the country by lowering corporate income tax rates from 30 percent to 20 percent by 2029, while expanding the tax base. DOF Undersecretary Karl Kendrick Chua highlighted the uniqueness of this tax reform as it is the first time that such reform is being proposed neither as a response to external forces nor due to an economic crisis, but as investing for the country’s future. DTI Assistant Secretary Rafaelita Aldaba presented how the Strategic Investments Priorities Plan (SIPP) is being crafted to ensure that incentives will be performance-based, targeted, time-bound, and transparent. Economic activities to be included in the SIPP should, among others, bring forth a substantial amount of investments; considerably generate employment; adopt inclusive business activities and value-added production; use modern or new technology; adopt adequate environmental protection systems; address missing gaps in the supply/value chain or move up the value chain or product ladder; or promote market competitiveness. Through TRABAHO and the SIPP, the government aims to make the country’s corporate tax and fiscal incentives system simple, equitable, and efficient, while at the same time ensuring support for the development of local industries and enhancing Philippine competitiveness.

The impact on the Philippines of the trade tensions between the United States and China, the country’s major trading partners, was the topic for the second session. Dr. Abdul Abiad of the Asian Development Bank (ADB) talked about the implications of the trade war, sharing that there is opportunity for some manufacturing sub-sectors to upscale operations as a result of trade redirection. DTI Undersecretary Ceferino Rodolfo, on the other hand, discussed the crucial importance of a robust national industrial strategy to guide Philippine trade policy. He emphasized that the country’s industrial policy – one that deepens and expands local value chains – drives its trade strategy at the multilateral, regional, and bilateral levels. With a growing domestic market, the country’s major challenge is addressing the expanding trade deficit by building the economy’s industrial capability.

Capping off the first day, the third session saw DTI Assistant Secretary Mary Jean Pacheco enlighten participants on recent government efforts to reduce red tape and improve the ease of doing business in the country. She imparted that while there is still a long way to go to be at par with model nations in the region, the Philippines is definitely making strides in improving its ranking in various competitiveness and ease of doing business indices, with the continuous support of other national government agencies.

On the second day of the Summit, the fourth and fifth sessions covered innovation, Industry 4.0, and industrial upgrading in the Philippines. Dr. Olga Memedovic of the United Nations International Development Organization (UNIDO) talked about the implications of Industry 4.0 to businesses operations and the current role being played by the government, while Mr. Henry Ling of The Dow Chemical Company presented the view from a multinational company. Dr. Satish Lele of Frost & Sullivan (F&S) discussed how small and medium enterprises (SMEs) can adopt and benefit from Industry 4.0 technologies, while Mr. Arthur Tan of AC Industrials told the story of how a Filipino company, Integrated Micro-electronics, Inc. (IMI), innovated their firm operations and seized opportunities under the Fourth Industrial Revolution in order to become a successful global Filipino company. Furthermore, potentials and challenges for engineering services outsourcing and manufacturing electric vehicles in the country were also covered, as well as the impact of Industry 4.0 on jobs and the labor market.

The final session sought to present the prospects for the Philippine manufacturing industry in 2019 and the coming years. It was shown that the country’s economy will sustain its growth (6% to 8% in 2019) and maintain its stable macroeconomic fundamentals. Deputy Director Dennis Lapid of the Bangko Sentral ng Pilipinas (BSP) stressed that a continuous and healthy policy environment should be present to help solidify sound macroeconomic fundamentals. Dr. Alvin Ang of Ateneo’s Center for Economic Research and Development (ACERD) stressed the critical importance of the agricultural and services sectors, which can significantly affect the performance of the manufacturing sector and the Philippine economy. Lastly, Dr. Jesus Felipe of ADB shared that the country has entered a phase of rapid growth in recent years, despite a less than 10% share in employment of the manufacturing sector, and proposed that government policy focus on productivity growth at the level of the firm, within each sector, and across the country’s regions.

In closing the Summit, FPI President Mr. George Chua reiterated the industry’s continued support to build a strong manufacturing sector in the country. For her part, DTI Assistant Secretary Aldaba emphasized that, “Though the future is hard to predict, we need to act and innovate than to wait and do nothing.”

Now on its third year, the Manufacturing Summit is the annual gathering of stakeholders from government, industry, and the academe to discuss the state of the manufacturing sector and consider ways to maximize opportunities and address current challenges faced by the country’s industries. It is held as part of implementing the government’s Inclusive Innovation Industrial Strategy (i3S).

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Date of Release: 10 December 2018