Propelling Jobs, Investments, and Shared Prosperity for All DR. - - PowerPoint PPT Presentation

Inclusive Innovation Industrial Strategy (i3S) Propelling Jobs, Investments, and Shared Prosperity for All

• DR. RAFAELITA M. ALDABA

ASSISTANT SECRETARY, Department of Trade and Industry (DTI) 29 November 2017, Fairmont Hotel, Makati City

Presentation Outline

AIM: PH strategy for industrial development to create more & better jobs, innovation challenges to industry growth & government academe industry linkages

• Response to Japan’s Inputs to Philippine Industrial Vision
• 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

Part 1: Response to Japan’s inputs industrial development vision of no one left poor

• Focus on employment generation
• Large scale employment: foreign companies, spill-over to local

companies, foreign SMEs, new industries, GVC participation

• High value added employment: promotion of entrepreneurship,

startups, innovation, university incubation base

• Employment thru local industry development: agriculture, IT/BPO led

by LGUs

• PH: sustainable & inclusive growth, more & better jobs, shared

prosperity for all

Part 2: New Industrial Strategy GLOBAL & DOMESTIC ENVIRONMENT

• 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

• 4.0
• 2.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 200020012002200320042005200620072008200920102011201220132014

PH as Asia’s Emerging Economic Tiger

PH TH INO VN PRC MAL

Industry 4.0: driving force is technology, disrupting business models at an accelerated pace

• 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

Underlying Framework of PH industrial strategyw COMPETITION- INNOVATION-PRODUCTIVITY

• Innovation is at the heart of the PH Industrial Strategy
• Innovation is an important ingredient for long-run growth
• Globalization, ASEAN integration, Industry 4.0, competition increases, role of

innovation is crucial

6

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

COMPETITION INNOVATION Entrepreneurship PRODUCTIVITY

EXTERNAL FACTORS INTERNAL FACTORS INDUSTRIAL SECTOR UNDERLYING FRAMEWOK

agriculture, fishing, forestry mining construction manufacturing services

Inclusive Innovation Industrial Strategy i3Sw

Integrating PH industries, Closing value/supply chain gaps

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

INDUSTRIAL STRATEGY

INNOVATION- LED

SUSTAINABLE INCLUSIVE

• Global Value Chain-focused
• INNOVATION &

ENTREPRENEURSHIP-centered

• Industry cluster-based

Building new industries, clusters, agglomeration Capacity building HRD Ease of doing business Investment environment MSME growth, development Innovation Entrepreneurship

i3SFive Major Pillars Inclusive Innovation Industrial Strategy Strategic Actionsw

Academe Government Industry

• Address supply/value chain gaps; Expand domestic market,

attain economies of scale, export hubs; investment promotion; incentives; domestic ecozones

Building new industries, clusters agglomeration

• HRD, training programs to improve skills; tie-ups with

universities & training institutions

Capacity 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 AT 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

Electrical & Electronics Auto & Auto Parts Aerospace Parts Chemicals Shipbuilding RORO Furniture, Garments, Creative Tool & Die Iron & Steel Agri-business IT Business Process Management, E-Commerce Tourism Transport & Logistics Construction

• 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

Connecting Industries AUTO: The future prospects of the industry remains bright

• 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
• 10

10 20 30 40 50

50000 100000 150000 200000 250000 300000 350000 400000 450000 500000

Total Industry Growth

Vehicle Sales

Electronics: PH largest source of exports

10 20 30 40 50 60 70 80

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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

• 2015-2016: 72% share
• Jan-June 2017: 71.53

growth

• Auto electronics, consumer

electronics, medical, telecommunications

0.00 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 ELECTRONIC DATA PROCESSING MEDICAL/INDUSTRIAL INSTRUMENTATION OFFICE EQUIPMENT TELECOMMUNICATION

IT-Business Process Management: Current State & Key trends

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 1071 1200 1345

5 10 15 20 25 200 400 600 800 1000 1200 1400 1600

Employment

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

56 13 11 20

Revenue by Sector: 2016

Animation & Game Development Contact Center & BPO IT Services Healthcare Information Management Global In-House Centers

IT-BPM Roadmap: Priority Sectors

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

• PH IT-BPM’s growth will be driven by high-value services (IoT, ESO) in the next 6

years

• 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-
• ffice transactions

IMPACT OF AUTOMATION

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

as we enter the 4th Industrial Revolution, PH industries being positioned by connecting auto, electronics, IT-BPM

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

Part 3: Current State of Innovation

How does the Philippines fare in terms of innovation efforts?

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

• Remove barriers to innovation

in regulatory frameworks

• Meaningful

support to innovators especially MSMEs

• Invest in required technology,

research infrastructure, R&D researchers

• Reforms

in education, investment climate & trade

• National

Innovation Framework & Plan of Action to facilitate innovation ecosystem

PH innovation ranking has improved, gradually catching up

• 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

• 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 83 74 73 71 52 59 47 20 40 60 80 100 120 2014 (143) 2015 (141) 2016 (128) 2017 (127) PHILIPPINES VIET NAM (achiever) THAILAND INDONESIA INDIA (achiever)

Global Innovation Index 2017: more needs to be done

20 40 60 80 100

Institutions Human capital & research Infrastructure Market sophistication Business sophistication Knowledge & technology

• utputs

Creative

• utputs

Philippines Vietnam Thailand Indonesia India Malaysia Singapore

PH obtained the lowest scores in

• Creative outputs: intangible assets (trademarks,

industrial designs, ICT & business model), creative goods & services (cultural & creative services exports), online creativity (video uploads

• n YouTube)
• Human capital: education, tertiary education

(enrolment), R&D expenditure, global R&D)

• Market sophistication: credit (ease of getting

credit, microfinance loans), investment (ease of protecting minority investors, venture capital deals) More needs to be done in ICT infrastructure (access #89, ICT use #88) & Innovation linkages (#95)

Tech In Asia Mashable Asia Techcrunch The Bobbery E27 Science.ph Startups.ph Media Nix Nolleda Enrique Gonzales Benjamin Joffe Yobie Benjamin Chris Evdemon Ravi Agarwal Paul Rivera

Angel Investors

Corporate

Pacific Global One Globe PPCI Microsoft Voyager Innovation PLDT Real Estate PWC Consultants IP Lawyers/Agents Accountants Banks CROs (for clinical trial) Recruiters NXTLVL Academy Marketing DTI and other Regulatory Bodies

Service Providers Accelerators/ Incubators/ Innovation Hubs

Plug & Play Launch Garage QBO Ayala TechnoHub A Space Spring Valley BNEFIT Acceler8 DOST-TBI Network Endeavor Philippines La French Tech PH UP Innovation Hub Startup PH

Development/Design Symph Mashup Garage

Events

FFC- Web Design/Development Conference Geeks on a Beach Webgeek Conference AngelHack Startup Weekend Hackathon PyCon DevCon RubyCon SoftCon Echelon Philippines/e27-Pitch Competition Philippine Startup Challenge ON3 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 Center 500 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 8 Workplays Social Space

Support Organizations/Meetups / Communities

Techtonic Startup Summit Founder's Institute Endeavor US Stride Microsoft Bristish Embassy (Newton Fund) Government Private Design Center of the Phil DTI DICT DOST Negosyo Center Techtalks.ph Meetups Tech Planter Demo Slingshot 1000 Angels Google Philippines Tech Transfer Day Philippine Software Industry Association Game Developers Association of the Philippines Philippine Web Designers Organization SPARK Series at AIM (Monthly) Smart Devnet Digital Commerce Group Ignite GDAP IPOPhil Phackers-Slack Channel User Experience Philippines PhilVenCap Forum Be Fast: Way to Silicon Valley Startup Open Challenge

FUNDERS Government

DTI EMB SETUP Seed.ph Venture Financing Technicom Startup Research Grants/Loans DOST DOLE DENR PCAARRD DA CHED Kickstart Ventures Angel Investors MFT Group of Companies 1000 Angels Private 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 Enterprisen AIM Dado Banatao GTBI (WVSU) Universities UP Cebu INIT Animo Labs CDO Bytes (MUST) Ideya (MSU-IIT) Batangas State U DOST iTech (Caraga State U) PITBI (PSU)

Voices from the Regions

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

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.