Industry Vision of the Philippines Industrial Development Scenario - - PowerPoint PPT Presentation

Japan’s Inputs towards the Formulation of Industry Vision of the Philippines

Industrial Development Scenario for “No One Left Poor”

29 November, 2017

Kunihiko Shinoda

Deputy Director-General Ministry of Economy, Trade and Industry, Japan

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“Philippine ambition: No more poor Filipinos by 2040,” “Philippine Development, Plan (PDP) 2017–2022,” mentions "To become a middle- income country with poverty alleviated completely" as a goal until 2040. “Philippine ambition” has started promoting reform for enhancing the social structure and correcting unfair inequality as well as enhancement

• f economic growth potential in order to achieve the goals such as:

establishing a clean and “Filipino first” government; realizing a society where even socially-handicapped and alienated people can actually feel the economic growth, and ensuring economic safety and stability by increasing the national welfare.

Background

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Global competition is becoming severer, especially after the full enforcement of AFTA in 2018. There are export pressures from China and India, while ASEAN member states have to identify their comparative advantages.

Make in India = Promotion of manufacturing and export Influx of over produced goods

Full enforcement of AFTA in 2018

Competition among Asian countries

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One of the advantages of the Philippines is a growing domestic market and population.

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Indonesia Malaysia The Philippines Thailand Viet Nam

Indonesia Viet Nam The Philippines Malaysia Thailand

Source: IMF World Economic Outlook Source: UN Population Division、2015 estimation

GDP growth rates and estimates for major ASEAN countries Population dividend for major Asian countries

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The Philippines is ranked number 8 of potential business destination of Japanese manufacturing companies.

Source: JBIC questionnaire survey data 77% 32% 23% 21% 19% 0% 20% 40% 60% 80%100% Growth potential of the local market

Inexpensive labor The size of the market as

• f today

Supply base to assemblers Export base to other countries Source: JBIC questionnaire survey data

Ranking of prospective investment destination by Japanese manufacturing companies Reasons of prospectivity of the Philippines as investment destination

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the Philippines has faced some challenging issues for creating the above- mentioned employment.

Survival among countries due to ASEAN economic integration Insufficient domestic industry accumulation, outflow of highly skilled HR Oligopoly of industry, unfair business circumstances, governmental capacity

This vision indicates a scenario of creating stable employment for “No One Left Poor” and the policy direction, and introduces successful cases in other countries, including Japan.

Role of Industrial Development Vision

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Scenario for Realization：Pillar1

Pillar1 Creation of Large-scale Employment - Establishment of Domestic Industrial Base - <Step 1> Introduction

• Necessity of competitiveness in both quality and cost for domestic production

increase

• Lack of capital, technology, human resources, know-how
• Introduction of foreign capital / technology → Necessity of activating domestic

demand <Step 2> Spillover to local industry

• Invitation of foreign SMEs, supporting industries → Spill over of technology and

management know-how to local companies → competitive local SMEs <Step 3> Participation in global value chain

• Improvement of industrial infrastructure and creation of large-scale employment

→ Strengthening industrial competitiveness. Forming foundation of export industry

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Direction of Policy & Proposal for Pillar1

Identification of Industry Groups to be Focused on and Strategy Formulation Expansion of Support for Local Supporting SMEs Ensuring Fair Competition Developing Supporting Industries and Industries for Domestic Demand through Attracting Foreign Capital Development of Infrastructure and Cross-Agency Industrial Development System Introducin g foreign capital for domestic demand

Formulation of industrialization strategy by public-private partnership Creating Domestic PEZA Political leadership remediation campaign Attracting foreign Supporting Industries

Industry-Oriented Human Resource Development

Developing supporting industry by benchmarking CARS program Expanding financing for SMEs Interagency coordination through IDC Consolidation / transition support of existing industries Deregulation of foreign investment in retail Expanding retail financing Expansion of vocational training schools

Introduction of Framework for Promoting Domestic Trade Further Activation of Domestic Demand

Direction of Policy Proposal

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Importance of supporting industry and attraction of foreign investments by companies with technology and cutting-edge processing equipment.

For Example…

44 618 228 100 200 300 400 500 600 700 The Philippines Thailand Indonesia

Number of member companies of auto-parts industry associations

Source: NRI based on hearing from each association

Support for local business development in human resource development and capital investment. Incentive scheme and improvement of ease of doing business for promoting investments aiming the domestic market.

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Scenario for Realization：Pillar2

Pillar2 Creation of High Value-Added Employment -Retaining Highly Skilled Industrial Workers within the Philippines-

• Leak out of human resources with advanced knowledge, skills, ability to
• verseas
• Creating high value-added / advanced industrial groups to secure HR, in

addition to utilizing HR in foreign companies ＜possible perspective＞

• Utilization of industries already having strengths (IT industry etc.) → High value

added by expanding business (design, etc.) and cooperating with other industries

• Creation of new industries → Promotion of entrepreneurship such as start-up,

Promotion of cross-sectoral integration projects, innovation, university incubation base, etc.

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Direction of Policy & Proposal for Pillar2

Business Expansion of Existing Industry and Cooperation with Other Industries Integration of IT and electronics industry by Embedded IT Promotion of collaborating project Promoting start-up companies Promoting FinTech Creation of high added value/advanced industrial group Creating New Industries and Promotion of Entrepreneurship for Innovation Promotion of Projects for Creation of New Industries and Innovation Making university incubation base Formation of industry, government and academe consortium Attracting highly skilled industrial human resources to return to the country

Direction of Policy Proposal

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Full utilization of Filipino who are capable of English and IT.

ASEAN regional engineer hub ASEAN regional ESO hub

Promotion of innovation to increase start-ups and enhance hybrid sectors of IT and other sub-sectors.

For Example…

Start-ups at ASEAN-JAPAN Fair in Manila Ministers at ASEAN-JAPAN Fair

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Scenario for Realization：Pillar3

Pillar3 Creation of Employment through Local Industry Development – Agriculture, IT/BPO industry, etc.-

• Focusing on specific industries by taking advantage of the characteristics of

rural areas (Central Luzon, Calabarzon, Mindanao), → Providing incentives to enterprises in rural areas ＜Potential Target area＞

• Promoting agriculture, forestry and fishery industries using attractive products

/ upgrading logistics system

• Promoting IT / BPO industry that can overcome geographical division
• Ripple effect for tourism and retail

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Direction of Policy & Proposal for Pillar3

Increasing Added Value by Clustering and Modernizing of Agriculture Development of IT-BPO industry Incentives for Company Location in Regional Areas Supporting Local Governments to Make Industrial Policies Improving fishing ports / seaports Presentation of regional incentives Upgrading Logistics Enabling Freshness Maintenance Support for expanding business into food processing industry Formulation of support for local governments Improving cold chain Regional brand certification system Attract IT-BPO industry to provincial areas Promotion of agriculture Creating derivative effects on tourism / retail

Direction of Policy Proposal

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Food value chain: Value chain linkage is weak between mega consumer market such as Manila NCR and other agricultural areas.

Bridging agriculture and food processing sectors and establishing distribution channel and cold chain network.

Vitalization of service industry including retails that will be stimulated by the development of above mentioned sectors and tourism. IT/BPM can conquer the geographical disruption, create a large employment and utilize the English ability of the Filipino.

For Example…

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For Example…

Bacolod Manila Cagayan De Oro Cebu Davao Dumaguete Iloilo Laoag Legazpi Naga Puerto Princesa Roxas Tuguegarao Zamboanga

Source: NRI, based on National ICT Confederation of the Philippines

Clark Baguio Dagupan Dasmarinas Lipa Malolos Sta Rosa Taytay Balanga Iriga Tarlac

Centres of Excellence Top Ten Next Wave Cities Emerging Cities

IT/BPM is widely spread throughout the

• country. Four out of six centers of excellence

are located in Mindanao and Visayas.

Next Wave Cities of IT/BPM

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Thrusts of infrastructure development. Policy coordination among governmental agencies towards effective implementation.

For Example…

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Japan will cooperate for Philippines industrial development and Philippines industrial policy For example･･･ For the foundation of Large-scale Employment, assisting for promoting local supporting industries, and assisting Industry human resource development For creation of High Value-Added industry, cooperating for start-ups and funding pilot project for innovative business Provision of information for policy making and support for capacity building utilizing various dialogues. Japan will cooperate for realization of Philippines industrial vision