14 TRADE & INVESTMENT INTERVIEW
Ramon Lopez
Ready for competition
Ramon M Lopez, Secretary, Department of Trade and Industry
(DTI), on the Inclusive Innovation Industrial Strategy (i3S)
How will the i3S address the potential challenges
that come from globalisation and digitalisation?
LOPEZ: The i3S aims to transform the Philippine econ-
omy in the new digital age. With this strategy, we are
ready to face the challenges brought about by free
trade arrangements, regional production networks,
global value chains and Industry 4.0.
To achieve this transformation, the i3S highlighted
competition, productivity and innovation as drivers
of industrial and entrepreneurial development. Com-
petition stimulates innovation, and the other way
round. Similarly, innovation spurs productivity growth,
and vice versa, which will have an impact on major
industries such as agriculture, fishing and forestry;
mining; construction; manufacturing; and services.
Innovation is the animating force behind the future
of production. As we upgrade our technology platform
and upskill our workers, we boost our readiness for
competition. This in turn is expected to sustain GDP
growth and ensure that the Philippines remains an
emerging economic hub in the region.
How can large businesses support local innova-
tors, start-ups and smaller enterprises?
LOPEZ: Multinationals and large enterprises are
essential in catering to the robust economy of the
country. We continue to advocate for the advance-
ment of inclusive business by encouraging large enter-
prises to nurture start-ups, local innovators and small
and medium-sized enterprises (SMEs) as part of their
value chains. In terms of production capacity, most
of the large corporations can help SMEs in meeting
demand by providing expertise and machinery, as
well as enabling them to penetrate bigger markets.
What can be done to further promote the entry of
new companies into the manufacturing industry?
LOPEZ: The i3S involves collaboration between gov-
ernment, academia and industry, and it identifies five
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main pillars: building new industries, clusters and
agglomeration; human resource development; micro-,
small and medium-sized enterprises; innovation and
entrepreneurship; and the ease of doing business. The
i3S sees the DTI as facilitator and coordinator of other
government agencies in addressing the constraints
that prevent entry or hinder integration of new firms
into the global value chains of multinationals.
It is important to have the right policy framework to
encourage development of the private sector. This will
entail programmes and policies to address the high
cost of power, and domestic shipping and logistics;
inadequate infrastructure; and complex rules and
regulations that affect business operations.
Manufacturing resurgence is crucial in generating
jobs not only for skilled workers, but for semi- and low-
skilled workers. The transformation of the manufac-
turing industry would allow the movement of workers
from the informal to the formal sector, as well as from
low value-added activities to high value-added ones,
where wages and compensation are much higher.
Of the 12 major industries prioritised by the i3S,
which has shown the most growth?
LOPEZ: Manufacturing has been a bright spot over
the past couple of years. The Philippines experienced
significant industrial growth in 2013, 2014 and 2016,
driven by the manufacturing sector. Growth also
extended into 2017, with the manufacturing indus-
try expanding by a rate of 8.6%. Averaging annual
growth of 7.6% between 2010 and 2017, compared to
a 3.2% average yearly growth rate between 2000 and
2009, we can see that the Philippines is experiencing
a resurgence in manufacturing.
The leading manufacturing segments in terms of
growth are food, electronics and chemicals. Food
manufacturing in particular dominated with an aver-
age annual growth rate of 33.5% from 2010 to 2017. Its
growth rate was 5% in 2017, compared to 8.2% in 2016.