INCLUSIVE

INNOVATION

CONFERENCE

2 October 2018SOFITEL HOTEL

SEC. RAMON M. LOPEZDepartment of Trade and industry

Source: World Development Indicators, The World Bank

Macro Performance

• Amid economic & global uncertainty, PH grew 6.4% from 2010 to 2017• 2017: China 6.9%, Vietnam 6.8%, Philippine 6.7%, Malaysia 5.9%, Indonesia 5.1%,

Thailand 3.9%• PH: 2018 Q2 growth: 6%, 2018 H1 growth: 6.3%

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

CHN IDN MYS PHL THA VNM

GDP Growth in %

High industry growth driven by manufacturing

-20

-10

0

10

20

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Industry Growth in %

CHN IDN MYS PHL THA VNM

7.08.6

11.914.4

0.0

10.0

20.0

2016 2017

Manufacturing Growth, Selected Asian Countries (%)

China India Indonesia Malaysia Philippines

PH experiencing a manufacturing resurgence

• rising costs in China; growing domestic market, growing middle class, good macro

performance; young English speaking workforce

• 2018 Q2 growth: 5.6%, 2018 H1 growth: 6.6%

Period Manufacturing Services Agriculture, fishing, forestry

2000-2009 3.2 5.2 3.2

2010-2017 7.6 6.7 1.4

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

20

10 Q

1

20

10 Q

2

20

10 Q

3

20

10 Q

4

20

11 Q

1

20

11 Q

2

20

11 Q

3

20

11 Q

4

20

12 Q

1

20

12 Q

2

20

12 Q

3

20

12 Q

4

20

13 Q

1

20

13 Q

2

20

13 Q

3

20

13 Q

4

20

14 Q

1

20

14 Q

2

20

14 Q

3

20

14 Q

4

20

15 Q

1

20

15 Q

2

20

15 Q

3

20

15 Q

4

20

16 Q

1

20

16 Q

2

20

16 Q

3

20

16 Q

4

20

17 Q

1

20

17 Q

2

20

17 Q

3

20

17 Q

4

20

18 Q

1

20

18 Q

2

Quarterly Growth in %

AGRICULTURE, HUNTING, FISHERY & FORESTRY SECTOR MANUFACTURING SERVICE SECTOR GROSS DOMESTIC PRODUCT

39.6%

Steady export growth and BOI Approved Investments

Merchandise Exports

10.13%higher than 2016

2017: US$63.23 billion

14.1%

higher than 2016

2017: US$35.605

Service Exports

Electronic, other manufactured

goods, equipment, metal

components, ignition and other

wiring sets

other business services as top

export with 47.4% share of total

exports

The Philippines: One of the

Best Performing Economies in Asia

Philippines is the BEST COUNTRY to invest in Manufacturing

30.1

4th Industrial Revolution: impact on industries

• spur development of new production techniques & business models that would transform global production systems

• drive new, more distributed & connected value chainso trigger selective reshoring,

nearshoring & other structural changes in GVC

o certain skills & capabilities will be required at each stage of the GVC

• add another layer of complexity to the challenging tasks of developing globally competitive industrieso put at risk the viability of low cost

manufacturing & services exports as source of growth & development

Mechanization

via water &

steam power

Mass

production via

assembly line &

electricity

Automation

through

electronics &

information

technology

Cyber-

physical

systems

18th

CenturyLate 19th

Century

20th

Century

2010

Onwards

Securing the Future of Philippine Industries

Innovation is at the front & center of our new industrial policy

Underlying Framework of PH industrial strategy

COMPETITION- INNOVATION-PRODUCTIVITY NEXUS

Innovation Entrepreneurship

ProductivityCompetition

New Industrial StrategyGLOBAL & DOMESTIC CONTEXT

➢ Build innovation & entrepreneurship

ecosystem

-> upgrade & develop new industries

➢ Remove obstacles to growth

-> attract investments, create jobs

➢ Strengthen domestic supply chains &

participation in global/regional value chains

-> link manufacturing with agriculture & services

Role of Government: address coordination & market failures; create proper

environment for private sector growth

New Industries,

clusters: supply/value

chain gaps; domestic &

export market; trade &

investment promotion;

incentives

Human Resource

Development

upgrading education

curricula, skills training

programs, improving

digital skills

Innovation &

Entrepreneurship

: government-

academe-industry

linkage, market-

oriented research;

R&D centers,

innovation

incentives; shared

facilities & support

for startups,

regional inclusive

innovation hubs

MSMEs: access to

finance, markets,

skilled labor,

technology

7Ms: mindset,

mastery, mentoring,

money, machine,

market, models

Ease of Doing

Business:

simplification of

processes,

automation; power,

logistics,

infrastructure

New

industr

ies

clu

ste

rs

Hum

an r

esourc

e d

evelo

pm

ent

Ease o

f doin

g

busin

ess

MS

ME

, sta

rt-u

p d

evelo

pm

ent

Innovation &

entr

epre

neurs

hip

C O N N E C T E D CREATIVE COMMUNITIES

GovernmentAcademe

Industry

Strong government-academe-industry collaboration

Top 12 Priorities for Both Domestic & Export Markets

Electrical & Electronics

Auto & Auto Parts

Aerospace Parts

Chemicals

Shipbuilding

Furniture, Garments

Tool & Die, Iron

& Steel

Agri-business

IT BPM, E-Commerce,

Creative

Innovation, R&D,

Climate change

Transport, Logistics,

Construction, Tourism

Parts & Components Supply

Criteria: Hi-technology, innovation/R&D, infrastructure, regional imbalance, labor-intensity,

sustainability, spill-over/multiplier effects, value/supply chain linkage

I. coffee, cacao, processed

fruits, processed meat,

tourism

II. processed fruits, processed

meat, coffee, furniture, cacao,

agribusiness

III. bamboo, furniture, aerospace,

processed meat, shipbuilding,

aerospace

IV-A. auto, electronics,

petrochemical, IT-BPM,

chemicals, aerospace

IV-B. seaweed, tablea,

rubber, coco coir, tourism

V. metal casting, coco

coir, health care,

agribusiness

VI. processed meat,

processed shrimp, tourism

VII. seaweed/carrageenan, dried

mangoes, furniture, IT-BPM,

shipbuilding, tourism

VIII. processed meat, copper,

processed marine, processed fruits,

natural health, agribusiness

IX. Rubber & rubber prods,

coconut & coconut prods, fish &

fish prods, mango & mango

prods, seaweed & seaweed prods

X. rubber, bamboo, cacao, coco

coir, coffee, agribusiness, tourism

XI. processed meat,

seaweed/carrageenan, cacao/tablea,

agribusiness, tourism

XII. rubber, palm oil, processed

fish/aquamarine, tourism,

agribusiness

XIII. processed marine, palm oil,

rubber, agribusiness

CAR: coffee, processed

vegetables, aerospace,

electronics, tourism

ARMM: coffee, rubber, cacao,

palm oil, agribusiness

Regional Industry Priorities

I N C L U S I V E

F I L I P I N N O V A T I O N &

E N T R E P R E N E U R S H I P R O A D M A P

B R I D G I N G T H E G A P S ,

S E T T I N G T H E

M I L E S T O N E S

Innovation Journey: November 2016 to present

Need to craft an

innovation strategy

DTI & DOST should

lead the roadmap

formulation

2016 Manufacturing

Summit

DTI-DOST MOU

STRIDE: Innovation

assessment

Voices from the

Regions: FGDs

Validation workshops

Filipinnovation &

Entrepreneurship

Roadmap

2017 Innovation Conference

Research,

IPR

Inclusive

Innovation &

Entrepreneurshi

p Ecosystem

Vision: Inclusive Innovation & Entrepreneurship Ecosystem

• Strong

collaboration:

connected

country

• Strong business

& policy

environment:

innovation, jobs,

investment

• Creative talent

pool

• Incubation of

innovation

• Academe industry

partnerships to

conduct basIc,

applied, market

oriented research

• Support by

government &

funders

• Involve

researchers &

experts &

industries across

the country

How do we

create an inclusive

innovation &

entrepreneurship

ecosystem?

hard & soft

infrastructure,

acceleration of

commercialization:

incentives, enabling

environment

entrepreneurial

culture, support for

start-ups: mentors,

advisors, incubators,

accelerators,

professional services

How to make SMEs

innovative

relationships,

market driven

research, job-

ready

graduates,

entrepreneur-

specific

trainings

Family & friends,

private equity,

venture capital,

angel investors,

access to capital

HRD for innovation,

innovation-ready

workforce: technical &

management talent

Position

innovative

industries for

rapid growth

Innovation

Policy &

Commercialization

Skilled

Workforce

Industry

Clusters

Government-

Academe-

Industry

Entrepreneur-

ship, startups

SMEs

Funding &

Finance

1

2

3

4

6

5

INNOVATION & ENTREPRENEURSHIP ECOSYSTEM

Accelerators/Incubators/

Innovation hubCo-Working

spaces

Support Organizations/

Communities

Events

Meetups

Service

Providers

Universities

Large, Small,

Medium

Enterprises,

Start-ups

Government

Funders

Regional Inclusive Innovation Centers (RIICs)

• Regional & local inclusive innovation hubs: cornerstone of i3S, lie at the heart of our economic transformation

• Bridge gap between industries & academe

• Create regional ecosystem: virtual & physical made up of universities, R&D labs, S&T parks, incubators, fab labs, co-working spaces, investors, & LGUs, start-ups, SMEs, LEs

• DOST & other agencies, industry, & academe

• Innovation focus on electronics, auto, aerospace, chemicals, IT-BPM, agribusiness

R&D Labs,

S&T Parks

Expand DOST-DTI Innovation MOUMarket-oriented research grants,

R&D, commercialization support

To promote collaboration & closer coordination within

government

Physical

innovation

infrastructure

Market-oriented research

grants, commercialization

support

Innovation policy

monitoring

evaluation

of implementation

Coordinator linking

industries with academe

& other government

agencies

support for

innovation & R&D;

DILG: LGUs

Market-oriented research

grants: commercialization

support, HRD & curricula,

balance between automation &

labor intensive activities

Securing the Future of Philippine Industries

RIICs and Innovating the 7Ms

CALL TO ACTION

The ultimate goal of the Inclusive Filipinnovation and

Entrepreneurship Roadmap is to activate innovation and

entrepreneurship as the main levers to reduce, if not

completely eliminate poverty in the country. Let us all work

together to make this happen.

“Kaya natin yan!”

Thank you!

INCLUSIVE

INNOVATION

CONFERENCE

2 October 2018SOFITEL HOTEL

SEC. RAMON M. LOPEZDepartment of Trade and industry