inclusive innovation industrial strategy (i s) propelling ...inclusive innovation industrial...
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Inclusive Innovation Industrial Strategy (i3S) Propelling Jobs, Investments, Exports and Shared Prosperity for All
DR. RAFAELITA M. ALDABAASSISTANT SECRETARY, Department of Trade and Industry (DTI)
4 December 2017
Presentation Outline
AIM: PH strategy for industrial development to create more & better jobs, relationship with exports and trade, innovation challenges to industry growth & government academe industry linkages
• New Industrial Strategy: inclusive, innovation industrial strategy (i3s)
- Framework: competition innovation productivity
- Top 12 Industries
- Five Pillars and Strategic Actions
• Innovation at the front and center of PH industrial strategy (i3s)
- Current state of innovation
- Inclusive Innovation & Entrepreneurship Journey: Regional FGDs
• Philippines as Asia’s emerging economic tiger, manufacturing resurgence, Industry 4.0, GVCs, global slowdown, creeping protectionism, Brexit, Make in India, Made in China, Thailand 4.0, US TPP pull out, bring back jobs to America, RCEP
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PH as Asia’s Emerging Economic Tiger
PH TH INO VN PRC MAL
Part 1: New Industrial StrategyGLOBAL DOMESTIC ENVIRONMENT
• Impact on PH industries
• Opportunities &
challenges
• Future skills needed:
human capital
development critical
Science, Technology,
Engineering
Mathematics
• Innovation-led
technologies to improve
productivity, transform
PH economy
Industry 4.0: Driving Force is TechnologyDISRUPTING BUSINESS MODELS AT AN ACCELERATED PACE
• Globalization, ASEAN integration, Industry 4.0 competition increases, role of innovation is crucial
• Innovation is at the heart of the PH Industrial Strategy, an important ingredient for long-run growth
5
GOVERNMENT POLICIES &PROGRAMS, INSTITUTIONS, INFRASTRUCTURE, MACRO STABILITY,
RULE OF LAW,PEACE & ORDER, POLITICAL CLIMATE
GLOBALIZATION, INDUSTRY 4.0, FREE TRADE ARRANGEMENTS, GLOBAL VALUE CHAINS,
REGIONAL PRODUCTION NETWORKS
COMPETITIONINNOVATION
EntrepreneurshipPRODUCTIVITY
EXTERNAL
FACTORS
INTERNAL
FACTORS
INDUSTRIAL
SECTOR
UNDERLYING
FRAMEWOK
agriculture, fishing,
forestrymining construction manufacturing services
Underlying Framework of PH Industrial StrategyCOMPETITION-INNOVATION-PRODUCTIVITY
0.0
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40.0
60.0
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100.0
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0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Trade Openness Indicator, 2000-2016
Total Trade (current prices, in million PhP) Total (% of GDP)
Average Growth 2001-2005 2006-2010 2011-2016
Exports 7.5 4.2 4.5
Imports 9.0 2.9 8.5
ARE WE BECOMING LESS OPEN?
Brunei Darussalam
Indonesia
Lao PDR
Myanmar
Malaysia
Philippines
Singapore
Thailand
Vietnam
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Trade Openness: ASEAN Countries(IN CURRENT US$)
Overall Goal: globally competitive & innovative industries
• Growth oriented action to upgrade industries
• Remove obstacles to growth attract investments
• Build inclusive innovation ecosystem
• Strengthen domestic supply chains
• Deepen participation in global value chains
Role of Government: Enabler & facilitator
• Address coordination & market failures -- the most binding constraints preventing industries from growing
• Create proper environment for private sector development• Global Value Chain-focused
• INNOVATION & ENTREPRENEURSHIP-
centered
• Industry cluster-based
Inclusive Innovation Industrial Strategy i3SINTEGRATING PH INDUSTRIES, CLOSING VALUE / SUPPLY CHAIN GAPS
Inclusive Innovation Industrial Strategy Strategic Actions
• Address supply/value chain gaps; Expand domestic market, attain economies of scale, export hubs; trade& investment promotion; incentives; domestic ecozones
Building new industries, clusters agglomeration
• HRD, training programs to improve skills; tie-ups with universities & training institutionsCapacity building, HRD
• Link government, academe, & industry; strengthen collaboration towards market oriented research; R&D incentives; shared facilities
Innovation, Entrepreneurship
• 7Ms: mindset, mastery, mentoring, money, machine, market, models; SSFs; access to finance & technology; linking with large enterprises
MSME Growth & Development
• Address corruption, smuggling, bureaucratic practices, streamlining, automation, single mechanism for coordinating registration, permits
Ease of doing business, investment environment
Five Major Pillars and Strategic Actions
Opportunities
Challenges
S K I L L S T R A I N I N G , H R D , I N N O V A T I O N & R & D , G R E E N
G R O W T H ,
M S M E D E V E L O P M E N T
• New high level
growth trajectory
• Growing market,
middle class
• Political stability
• Young, English
speaking workforce
• Stable business
confidence
• AEC & FTAs
• Complex
regulations
• High cost of power
• Lack of ports,
airports, roads
• SME access to
finance
• Supply chain gaps
N E W I N D U S T R I A L P O L I C Y , B O L D E R T R A D E P O L I C Y
I N C R E A S E I N F R A S T R U C T U R E S P E N D I N G , I N T E N S E
I N V E S T M E N T P R O M O T I O N
PH Inclusive Innovation-led Industrial Strategy: Top 12 Priorities
100 Million Consumer Market
• Sales reached 400K units in 2016 (4x the sales a decade ago) and grew by 24%
• 3rd wave of motorization already taking place
- PH: high population with low vehicle ownership, motorization rate in PH: 35; VN:20;
INDO:73; THA:200; MAL: 395
- Significant market potential as the share of households who can afford to buy vehicles
increased from 26% to 36%
• Rising trend is expected to continue as PH high growth trajectory is sustained: 1 M by 2027
-50-40-30-20-1001020304050
0
100000
200000
300000
400000
500000
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
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99
20
00
20
01
20
02
20
03
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04
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20
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20
17
F
Total
Industry Growth
Vehicle Sales
Connecting IndustriesAUTO: THE FUTURE PROSPECTS OF THE INDUSTRY REMAINS BRIGHT
0
10
20
30
40
50
60
70
80
19911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016
Electronics Exports vs. Total Exports 1991-2016 • Electronics: 51% of total exports in 2016 ($29B)
• 50% of total exports in the first half of 2017 ($15B)
• Average growth in the 2000s: 2%; 1990s: 37%
• Semiconductor components/devices comprise the bulk of electronics exports
o 2015-2016: 72% share
o Jan-June 2017: 71.53 growth
• Auto electronics, consumer electronics, medical, telecommunications0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
STRUCTURE OF ELECTRONIC COMPONENTS: % Share
AUTOMOTIVE ELECTRONICS
COMMUNICATION RADAR
COMPONENTS/DEVICES (SEMICONDUCTORS)
CONSUMER ELECTRONICS
CONTROL & INSTRUMENTATION
Electronics: PH Largest Source of Goods Exports
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Revenue (US$B) 3.4 4.5 6.1 7.1 8.9 11 13.2 16.1 18.9 20.5 22.9
Employment('000) 236 298 371 424 527 640 777 917 107112001345
0
5
10
15
20
25
0200400600800
1000120014001600
Emp
loym
en
t
Revenue & Employment Performance
• In the past 10 years, PH has become a strong participant in the IT-BPM GVC
• In voice BPM, PH is #1 destination for voice related services
• PH is rapidly growing its capability for non-voice IT-BPM services
• Industry revenue forecast for 2022: annual growth of 9.2% & US$38.9B in 2022
• Employment: from 1.15M in ‘16 to 1.8M in ‘22 (more technology-enabled high value jobs)
• Slower growth: maturing sector & anticipated impact of technology
0
5613
11
20
Revenue by Sector: 2016Animation & Game DevelopmentContact Center & BPO
IT Services
Healthcare Information ManagementGlobal In-House Centers
IT-Business Process Management:MAJOR SERVICES EXPORT
Contact Center & Business
Process Outsourcing
• Engineering Services
Outsourcing (ESO)
• Data Analytics
• Performance Management
• Legal Process Outsourcing
(LPO)
IT Services
• Application Development
Management (ADM)
• System Integration
• Automation Enablement
• IoT-enablement Languages
(Python programming)
Health Information Management
• Preventive Health
• Remote Healthcare Management
• Provider Services
Animation & Game Development
• 3D Animation
• Augmented & Virtual Reality
(AR/VR)
• Gamification
Global-in-House
• Industry specific services for
telecom, healthcare, insurance,
pharmaceutical
• Analytics & optimization engines
• Automation enablement• Clinical data analytics• Remote health management• VR/AR enabled animation• Supply chain optimization
• Medical transcription• Simple contact center services• Basic 2D animation services• Parts of IT technical support• Transactional mid & back-office
transactions
IMPACT OF AUTOMATION
IT-BPM Roadmap: Priority SectorsPH IT-BPM’s GROWTH WILL BE DRIVEN BY HIGH-VALUE SERVICES (loT, ESO) IN THE NEXT 6 YEARS
ESO
• Denso PH: meter cluster, air-con, compressor, smart
key, sonar sensor
• Denso Techno: software development for auto
products like instrument clusters
• PH is one of design centers of Denso providing
global engineering capacity
• 2 companies cooperate in designing electronics
products
ADAS & Electric Powertrains
• PH auto/electronics/IT capabilities
• systems/components related to ADAS & electric motor
powertrains like battery for E-vehicles, E-jeepneys, E-
buses, E-trikes
• Filipino multinational IMI is manufacturing complex safety
& control systems (auto camera modules) for ADAS
applications
As we enter the 4th Industrial Revolution, PH Industries being positioned by connecting auto electronics, IT-BPM
ASEAN
7. Singapore
37. Malaysia
47. Viet Nam
51. Thailand
73. Philippines
Top 5: Leaders in
Innovation
1. Switzerland
2. Sweden
3. Netherlands
4. US
5. UK
PIDS Innovation Survey
o Remove barriers to innovation in
regulatory frameworks
o Meaningful support to innovators
especially MSMEs
o Invest in required technology, research
infrastructure, R&D researchers
o Reforms in education, investment
climate & trade
o National Innovation Framework & Plan
of Action to facilitate innovation
ecosystem
Part 2: Current State of InnovationHOW DOES THE PHILIPPINES FARE IN TERMS OF INNOVATION EFFORTS
o STRENGTHS: graduates in science & engineering; market capitalization; trade, competition & market
scale; firms offering formal training; knowledge absorption; research talent; knowledge impact, high &
medium high-tech manufactures; knowledge diffusion; ICT services exports
o WEAKNESSES: ease of starting a business; education (#113); expenditure on education (#106);
government expenditure/pupil (#99); pupil-teacher ratio (#99); tertiary inbound mobility (#105) global
R&D companies; science & technical articles (#120); new businesses/’000 population; creative goods
& services (#115)
100
8374 7371
5259
47
0
20
40
60
80
100
120
2014 (143) 2015 (141) 2016 (128) 2017 (127)
PHILIPPINES
VIET NAM (achiever)
THAILAND
INDONESIA
INDIA (achiever)
PH Innovation ranking has improved, gradually catching up
0
20
40
60
80
100
Institutions
Human capital & research
Infrastructure
Market sophistication
Business sophistication
Knowledge & technology
outputs
Creative outputs
Philippines Vietnam Thailand Indonesia
India Malaysia SingaporePH obtained the lowest scores in
• Creative outputs: intangible assets (trademarks,industrial designs, ICT & business model), creativegoods & services (cultural & creative servicesexports), online creativity (video uploads onYouTube)
• Human capital: education, tertiary education(enrolment), R&D expenditure, global R&D)
• Market sophistication: credit (ease of gettingcredit, microfinance loans), investment (ease ofprotecting minority investors, venture capital deals)
More needs to be done in ICT infrastructure (access #89,
ICT use #88) & Innovation linkages (#95)
Global Innovation Index 2017: More needs to be done
Tech In Asia
Mashable Asia
Techcrunch
The Bobbery
E27
Science.ph
Startups.ph
Media
Nix Nolleda
Enrique Gonzales
Benjamin Joffe
Yobie Benjamin
Chris EvdemonRavi Agarwal
Paul Rivera
Angel Investors
CorporatePacific Global
One
Globe PPCI
Microsoft
Voyager Innovation
PLDT
Real EstatePWC
Consultants
IP Lawyers/Agents
Accountants
Banks
CROs (for clinical trial)
Recruiters
NXTLVL AcademyMarketing
DTI and other Regulatory
BodiesService
Providers
Development/Design
SymphMashupGarage
Events
FFC- Web Design/Development Conference
Geeks on a BeachWebgeek
Conference
AngelHack
Startup Weekend
Hackathon
PyCon
DevCon
RubyCon
SoftCon
Echelon Philippines/e27-Pitch Competition
Philippine Startup ChallengeON3 Pitching Contest
UXPH Conference
Startup Grind
Tech Talks
Open TBI
VC’s
WaveMaker Labs
IMJ Investment Partners
Y Combinator ICCP Venture Partners
Ayala TBI
Network
Omidyar Network
Golden Gate Ventures
Blumberg Capital
Learn Capital
Kickstart Ventures
Ideaspace Foundation
UP Enterprise Center500
Startups
Accel Partners
Lumia Capital Ayala TBI
Network
Narra Venture Capitals
ENTREPRENEUR
A Space Manila
47 East
O2 Space Solutions
Acceler8
Builtable
vOffice
Penbrothers
A Clean and Well-Lighted Space for Work
Ignition Venture
Bitspace
FIRST Escolta
Arch Offices
ImpactHub
InnoVantage
MAPA Lab
13DTI Fablabs
Brain Sparks
Board Room PH
Racket Room
Collective
Co-working Spaces
@Lab
Co.labxchange
Honeycomb Manila
Cuago FoxHole
KMC Solutions
Launchpad
Mozilla Community Space
Palet Express Regus
The Common
Space
Virtual
Office
Pondr The Office
Project
Warehouse 8Workplays
Social Space
FUNDERS
GovernmentDTI EMB
SETUP Seed.ph
Venture Financing
Technicom
Startup Research
Grants/Loans
DOST
DOLE
DENR
PCAARRDDA
CHED
Kickstart Ventures
Angel Investors
MFT Group of Companies
1000 AngelsPrivate Individuals
PH Venture Capitals Investment Group (PhilVencap)
Brummer and Partners
IMJ Ventures
VCs
Kickstart Ventures
ICCP Ventures
Narra Ventures
Original Pitch
Private
JP Morgan
PhilDev
Engages Park
Plug &Play
Mabuhay Capital
Manila Angels
Kaizen
UPLB CTTE
UP EnterprisenAIM Dado Banatao
GTBI (WVSU)
Universities
UP Cebu INIT
Animo LabsCDO Bytes (MUST)
Ideya (MSU-IIT)
Batangas State U
DOST iTech(Caraga State U)
PITBI (PSU)
Integration of innovation and entrepreneurship in education curriculum
• Develop education modules to strengthen STEAM programs and align it with Industry 4.0
• Intensify faculty training on innovation and entrepreneurship; Provide government subsidy
Legislation and policies to strengthen R&D based on local industry needs
R&D collaboration and partnership between industry and the academe
• Establish research hubs / R&D collaboration centers at select HEIs by geographic location
• Test technologies and innovations developed by partner sector
Improved quality and utilization of government’s shared infra i.e., SSFs, FabLabs, FICs, etc.
• Strengthen S&T and innovation skills of personnel running shared infrastructure facilities
• Conduct MSME training on the use of the shared infrastructure facilities; access to SSFs
• Support passage of Philippine Innovation Act and the crafting of National Innovation Roadmap
• Craft policies enabling regional and cluster innovation, including increased R&D funds for LGUs
Voices from the regions
Guided by the i3s vision to transform the economy & uplift the lives of Filipinos, the Philippines is focused on creating globally competitive & innovative industries
With innovation at the core of its new industrial policy, Philippine industries will be in a better position to leapfrog to Industry 4.0
This would enable our industries to deepen our participation and play a more important roles in global value chains and regional/global production networks