By Othel V. Campos, August 29, 2022;

The pandemic ushered in a new normal—a working lifestyle that features innovations, greater reliance on digital technology, and a reconfigured supply chain.

It is a new normal that will stay on for a much longer time and an affirmation of the adage that necessity is the mother of invention.

The Department of Trade and Industry plans to build on the ruins of COVID-19 by encouraging all industries to embrace and pivot to the new normal and use the pandemic as an opportunity for economic transformation.

“As we have experienced in the last two years, the pandemic has marked a shift toward digitalization, hybrid working setups, and reconfigured supply chains. We view these structural changes as an impetus for accelerated growth and inclusive development,” said Trade Secretary Alfredo Pascual.

The DTI is keeping tabs on a set of strategic priorities as it leads trade and manufacturing industries to transform toward increasing the share of science, technology, and innovation (STI) sectors in the country’s gross domestic product (GDP).

The DTI stressed the importance of implementing an inclusive, sustainable, and resilient industrial policy to build a more competitive economy, as the country enters the post-pandemic future.

“By adopting science, technology, and innovation, as well as digital technologies, industries will be better positioned to face competition in both domestic and export markets and pave the way for industrial transformation,” said Pascual. “We will push for upgrading to high-value-added activities, shifting to clean and efficient production, and addressing gaps in the local and global value chains.”

Emerging industries

The DTI will support a leapfrog into emerging industries by modernizing the country’s manufacturing base, implementing innovation and digital transformation plans for manufacturing development, and upgrading the nation’s participation in global technological platforms, leveraging fourth industrial revolution (4IR) technologies and existing industrial strengths and competencies.

It committed to focus on promoting three strategic clusters that are currently undergoing global reconfiguration. These clusters –industrial, manufacturing, and transport; technology, media, and telecommunication; and health and life science—will allow the Philippines to upgrade, diversify and reposition its global value chain participation.

The industrial, manufacturing, and transport cluster provides the country with upgrading opportunities in aerospace, automotive, and semiconductors.

The Philippines already hosts the number one aircraft interiors company in the world—Collins Aerospace—and the world’s leading aircraft maintenance, repair, and overhaul company—Lufthansa Technik. The DTI recognizes the need to attract other suppliers and expand the cluster.

“We will initially bank on foreign investments that bring in technology and capital to spawn the growth of our industrial base with local companies as component suppliers. For instance, the transition to electric vehicle (EV) production will fundamentally transform the automotive global value chain. We will encourage local companies to enter the EV global value chain with components supply,” said Pascual.

On the other hand, the semiconductor industry can benefit from the recent boost in digitalization amid the COVID-19 pandemic. Outsourced Semiconductor Assembly and Test, or OSAT, is vulnerable to disruptive technologies and, thus, needs to be supported by improving the skills set for research and development.

More value-added

Since the common thread among all the three industrial, manufacturing, and transport subsectors is the electronics and electrical parts and components global value chains, the DTI plans to attract foreign direct investments to design capacity, so that more value-added is captured and manufacturing is expanded in the country.

The second cluster—technology, media, and telecommunication—gives the Philippines opportunities for digitalization of services.

One of the key players in the sector, the business process outsourcing (BPO) industry, follows a key trend, which is to switch from cost saving to value addition. It is expected that the next decade will be notable to the BPO segment as a cross-cutting contributor to the competitiveness and efficiency of other global value chains it supports.

Since 82 percent of BPOs and shared services centers in the Philippines serve global markets, the DTI said BPOs can be channeled and used to leverage the country’s participation in the technology, media, and telecommunication global value chain.

The third cluster is health and life science, where the DTI aims to make the Philippines self-sufficient in pharmaceuticals, medical devices, healthcare services, personal health wellness technology products, therapeutic systems addressing chronic diseases, telemedicine solutions, and AI-assisted diagnoses.

Pascual noted the DTI is well aware that this particular cluster plays a strategic security role and opens income-generating opportunities in the country.

The DTI is working at having smaller, innovative, more agile pharmaceutical companies taking a more critical role in bringing medicines to the market.