the philippine new industrial policy for ... -...
TRANSCRIPT
The Future of Philippine Industries
The Philippine New
Industrial Policy for
More Competitive
Regional Economies
Rafaelita M. Aldaba
Industry Development
Group
Baguio Country Club
27 May 2015
The Future of Philippine Industries
Outline of Presentation
Objective: PH new industrial policy
1. Why the Need for A New Industrial
Policy
2. PH Manufacturing Industry Roadmap
3. A Roadmap to Build A More
Competitive CAR Economy
Transforming CAR: manufacturing as
engine of growth
Part 1. Motivations: Why
promote industrial policy?
Inclusive growth, creation of more & better jobs Jobless growth: unemployment 7.5% (’06-’10);
underemployment 18-20% (late 2000s) Stagnant manufacturing & failure to create jobs,
services cannot provide all the needed jobs Persistently high inequality: poverty incidence has
declined but inequality hardly changed even worsened in 1997 and 2000
Globalization, rising regional economic integration, global value chains (GVCs) AEC 2015
Competitiveness is crucial: innovation ability; R&D into innovative technologies; green manufacturing
Growth Performance
PH growth rate: 6.8 (‘12), 7.2% (’13, 2nd to China 7.7%), 6.1%
(‘14)
Impressive growth performance of the Philippines: Asia’s
new economic tiger
2015 Forecasts- Government: 7-8%, IMF: 6.7%, ADB: 6.4%,
OECD: 6.2% (to lead growth in ASEAN), JPMorgan: 6.4%,
Fitch Ratings: 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
GDP Growth
PH TH INO VN PRC MAL
Manufacturing Resurgence
Industry growth: 7.3% (‘12); 9.3% (’13, highest)
Manufacturing resurgence: 5.4% (‘12); 10.3% (‘13); 8.1%
(‘14)
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
in %
Year
Industry Growth
PH
TH
INO
VN
PRC
Growth ChallengesArea Major Constraints
Regulation • Complex/costly business procedures
• Policy consistency, transparency, predictability
• 60-40% foreign equity rule, competition law
Infrastructure • High cost of power, domestic shipping
• Lack of ports, airports, road infrastructure
SME • Access to finance, technology, support for start-
ups, product standards, network links
HRD • Lack of skilled workers, limited standards &
certifications, quality of teachers
Innovation • Industry-academe linkages, R&D facilities
Supply/value
chain
• Weak linkages among manufacturing,
agriculture, & services
Manufacturing • Required Components: Materials, Skills, Energy,
Capital, Digital technology
Part 2: Strategic Industrial Policy
Goal: improving competitiveness & productivity
Growth oriented action to upgrade industries, move up
the value chain, low productivity to high productivity
Remove obstacles to growth Investments
Deepen participation in regional production networks
Role of Government: Coordination/facilitation
Proximate cause of growth: private sector, investment
& entrepreneurship
Government: create proper environment for private
sector development
GVC-focused industrial policy
Define position in the GVC, how do we plug into
global/regional production networks
Cluster-based industrial strategy to build strong &
competitive regional economies
Manufacturing Roadmap
-Strengthen existing capacity, strengthen emerging industries maintain competitiveness of comparative advantage industries
-move to high
tech activities;
-Participate as
manufacturing
hubs in regional
& global
production
networks for
auto,
electronics,
machinery,
garments, food
-Shift to high
value added
activities,
investments in
upstream
industries, move
up value chain
Link & integrate
industries, SMEs
& large firms,
Innovation
ecosystem; R&D
Phase I
2014-2017
Phase II
2018-2021
Phase III
2022-2025
Vision: globally competitive industries with strong
forward & backward linkages
To Make Manufacturing An Engine Of Growth
30% value added
Horizontal measures
Coordination mechanism
Vertical measures
• Close supply chain
gaps
• Expand domestic
market & exports
• HRD & skills trainings
• SME development
• Innovation
• Green growth
• Promotion
• Power, smuggling,
logistics,
infrastructure
• Improve regulation,
reduce cost of
doing business
• Competitive
exchange rate
open trade regime, sustainable macro policies, sound tax policies &administration, efficient bureaucracy, secure property rights, institutions
Strategic Actions
Sector Action
Copper Institutional mechanism to fully integrate the industry
Furniture Supply hubs for raw & natural materials
Tool & die Access to raw materials, equipment, & software
Paper Fiber raw material base, develop massive tree
plantations, commercial agro forestry with virgin wood
pulp production
Iron &
steel
Full integration of industry upstream-mining, reliable
supply of iron ore & coal
① Close Supply/Value Chain Gaps
Complex product, 30,000+ parts & components, different
production processes: large multiplier effect
Auto investments: foundation for broad-based industrial growth
CARS Program: jumpstart industry development to enable PH to
deepen its integration into global production networks
Basic Industries
Parts & Components Manufacturing
Vehicle Manufacturing
Auto Supporting Industries
3rd Tier Supplier
(Raw
Materials)
2nd & 1st Tier Supplier(Intermediate & semi-
finished)
Mining
Iron & Steel
Petrochemicals
Textile
Machinery & Equipment, Dies & Moulds, Metal Stamping, Die Casting,
Machining
Rubber
Chemicals
② Expand domestic market export platform
Type Sectors
Design, tool making, prototyping,
molding, die casting
Auto parts, Tool & Die
Chemical engineering, Materials
Engineering
Chemical, Rubber,
Plastics
Supervisory, managerial, productivity Furniture
Foundry technology, Metallurgical,
Mechanical, Industrial, Metal casting
Engineering
Metal casting
Die design, Tool & Die Engineering Tool & Die
Vocational trainings (TESDA) Iron & steel, Furniture
③ HRD & Skills Trainings
Cooperation with TESDA, CHED
Investment in skills & education
④Other Strategic Actions
STRATEGIC ACTIONS
• SME Development: Finance access, compliance
with product standards, Clusters, Incubation, Shared
Services Facilities (Quality testing facilities, Fablabs)
• Innovation: Industry-academe linkages, R&D,
adoption of green processes, green products,
technology extension services esp. to SMEs; metrology,
standards testing, quality control; incubation; information
& communication
• Marketing & promotion: attract investments
• Horizontal issues: high cost of power &
domestic shipping, smuggling & streamline &
automate government procedures
The Future of Philippine Industries
Comprehensive National Industry
Strategy (CNIS) FRAMEWORK
THREE IMPORTANT CHANNELS AFFECTING INDUSTRY GROWTH: COMPETITION, INNOVATION, PRODUCTIVITY
MANUFACTURING SERVICES
AGRICULTURE
FISHING,
FORESTRY
MINING
INTERNAL FACTORS: GOVERNMENT POLICIES &PROGRAMS,
INSTITUTIONS, INFRASTRUCTURE, MACRO STABILITY, RULE OF LAW,
PEACE & ORDER, POLITICAL CLIMATE
EXTERNAL FACTORS: GLOBALIZATION,
REGIONAL/BILATERAL/MULTILATERAL TRADING ARRANGEMENTS,
GLOBAL & REGIONAL PRODUCTION NETWORKS
Implementation Mechanism
Industry Development Council mechanism for discussion of industry strategies,
policies & programs coordination, monitoring of roadmap implementation
Technical Working Groups champions from BOI & industry, relevant
government agencies
Manufacturing Resurgence Program: enhance manufacturing competitiveness; budget P182.6B Lead Implementing Agency: DTI
Participating Agencies: DOST, DOLE, DOLE-TESDA, CHED, DOE, DA, NPC, NEA, PCA
Industry Development
Council (IDC) IDC Secretariat
IDC Technical Committee
DTI - Chairman• DTI, NEDA, DA, DOF, OP; Private sectors representatives
IDC Executive Committee
DTI – Chairman• 11 representatives from government
• 7 representatives from private sector
• 1 representative of academe
• 1 representative of research institute/think tank
• 1 representative of labor
• 1 CSO representative
Ch
em
ica
ls,
pla
stic
s,
pe
troc
he
mic
al
Eminent Persons
Group (EPG)
5 industry
leaders
Philippine Industry Development Council
Ele
ctro
nic
s
Ma
ss
ho
us
ing
IT-B
PM
Fu
rnitu
re
Ce
ram
ic tile
s
Bio
die
se
l
Ae
ros
pa
ce
Au
tom
otiv
e
Co
pp
er
Me
tal
ca
stin
g,
Ru
bb
er
Iron
& s
teel
Mo
torc
yc
le
Na
tura
l
he
alth
Re
tirem
en
t
To
ol &
die
Pa
pe
r
Part 3: Transforming CAR Economy CAR: electronics, coffee, mining, healthcare & wellness,
IT & ITES, tourism
Competitive Products: Revealed Comparative
Advantage >1
Products ‘91-’95 ‘96-’00 ‘01-’05 ‘06-’10 2011
FRUIT, VEGETABLE JUICES 4.00 1.38 1.68 1.75 3.00
FRUIT,NUTS EXCL.OIL NUTS 7.12 2.56 2.75 2.86 5.67
FRUIT,PRESERVED,PREPARED 12.04 4.19 4.07 4.55 7.22
FISH PREP’D, PRESERVED NES 8.28 2.36 1.93 3.41 4.83
VEGETABLE TEXTILE FIBRES 24.28 9.24 3.68 6.60 7.56
COFFEE,COFFEE SUBSTITUTE 0.30 0.04 0.08 0.04 0.02
VENEERS, PLYWOOD, ETC 1.10 0.15 0.12 0.16 0.31
WOOD MANUFACTURES, NES 6.62 2.15 1.45 9.51 27.08
Limited access to quality seedlings, high cost of inputs, inadequate
transportation from farm to warehouse, inadequate post-harvest,
high cost of organic certification
Steps in Roadmap formulation
STEP 1: What are the existing & future growth potentials of
the industry in both domestic and export markets?
• Identify dynamically growing tradable industries; not picking
winners, self-discovery by firms
STEP 2: See if private sector is already in these industries;
are there existing or nascent activities? if none, seek FDI
STEP 3:What are the obstacles preventing firms from
upgrading quality of their products? new firms from
coming in?
STEP 4:Take action to remove constraints
• Horizontal: protection of property rights, business &
investment environment, industrial clusters, eco zones
• Vertical: tax incentives for a limited time, direct credits,
access to raw materials & capital equipment
• Coordination mechanisms: RDCs
CAR Industry Roadmaps For Structural
Transformation
Industrial policy to upgrade industry
Private sector: ownership of the roadmaps, leadership
Government: facilitator & coordinator
Remove binding constraints to competitiveness
o Physical infrastructure
o Administrative infrastructure: trade facilitation, FTAs
o S&T infrastructure
o Supply/value chain gaps: collective action
o HRD & skills trainings
Get mix of incentives right (farmers/processors)
Support for SMEs’ inclusion in clusters
Cluster upgrading & moving up the value chain
Implementation Plan, close coordination
The Future of Philippine Industries
We cannot leapfrog industrialization, we need to
upgrade & transform our industries.
With or without AEC, we need to pursue a new industrial
policy to make our industries competitive and create an
environment conducive to private sector development.
This could lead to more investments, & more & better
jobs, sustainable & inclusive growth.
THANK YOU!