Competitive and Innovative Industries in a Low Carbon … · Competitive and Innovative Industries...
Transcript of Competitive and Innovative Industries in a Low Carbon … · Competitive and Innovative Industries...
Competitive and Innovative Industries
in a Low Carbon Economy
Rafaelita M. Aldaba
Department of Trade and Industry- Board of Investments
Regional Business and Climate Summit 2017
Business Opportunities and Climate Change
21 August 2017, Cebu City
Securing the Future of Industries
PH strong growth driven by manufacturing & services
• Amid economic & global uncertainty, PH has grown by 6.3% in the last 7 years (‘10 to ‘16)
• 2016: China 6.7%, Vietnam 6.2% , Philippines 6.8%• Manufacturing resurgence: 7.5% (‘10 to ‘16); 7% in 2016• 2017 Forecasts: WB 6.9%, IMF 6.8%, ADB 6.4% • PH impressive growth: a new growth area, Asia’s new economic
tiger
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Quarterly Growth 2009-2017
AGRI., HUNTING, FORESTRY AND FISHING MANUFACTURING
SERVICE SECTOR GROSS DOMESTIC PRODUCT
Manufacturing Structure
• Dominated by food manufacturing; radio, TV, & communication equipment; chemical & chemical products; furniture; & beverage
• Food manufactures and radio, TV & communication equipment & apparatus driving manufacturing growth
% Share Growth (%) % Share Growth (%)
Industry Sector 2015 2016 2015 2016 Industry Sector 2015 2016 2015 2016
Food 34.3 34.7 1.6 8.5 Rubber & plastic 1.4 1.7 3.4 24.4
Beverage 4.1 4.2 -1.0 10.5 Non-metallic mineral 2.4 2.3 9.4 -2.2
Tobacco 0.3 0.3 27.2 10.4 Basic metal 2.0 2.6 6.2 39.1
Textile 1.8 1.6 6.4 -8.2 Fabricated metal 1.2 1.2 8.2 0.1
Wearing apparel 1.8 1.7 -2.3 0.1 Machinery ex electrical 1.8 2.1 18.3 25.5
Footwear, leather 0.4 0.4 4.8 5.4 Office, accounting, computing
1.2 1.6 -13.9 44.0
Wood, bamboo 1.0 1.1 28.0 17.0 Electrical machinery 2.1 2.2 8.4 12.3
Paper 0.9 0.9 14.5 6.0 Radio, tv, comm’nequipment
17.7 16.2 12.5 -1.7
Publishing, printing 1.0 1.0 17.0 3.7 Transport equipment 1.8 2.1 8.4 25.0
Petroleum 2.8 2.6 -1.3 0.0 Furniture & fixtures 5.1 4.7 -4.6 -1.0
Chemical 12.5 12.8 15.5 8.8 Miscellaneous 2.3 2.1 -0.3 -1.1
Services Performance
Source: National Income Accounts, Current Labor Statistics. Philippine Statistics Authority
*Growth rates and value added share at constant 2000 prices
MAJOR SECTOR
Share to Total GVA (%) Growth Rate (%)
2013 2014 2015 2016 2013 2014 2015 2016
Agriculture, Forestry and Fishing 10.5 10.0 9.5 8.8 1.1 1.7 0.1 -1.3
Industry 32.9 33.3 33.4 33.8 9.2 7.8 6.0 8.0
Services 56.7 56.6 57.1 57.5 6.8 6.2 6.8 7.5
Construction 5.7 5.7 5.9 6.2 9.6 7.2 9.4 12.6
Electricity, Gas and Water Supply 3.3 3.3 3.2 3.3 4.7 3.6 5.5 9.6
Transport, Communication and Storage 7.5 7.5 7.7 7.6 4.8 6.5 8.0 5.9
Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods
16.6 16.5 16.7 16.8 6.2 5.8 7.1 7.3
Financial Intermediation 7.1 7.2 7.2 7.3 12.6 7.2 6.1 7.7
Real Estate, Renting & Business Activity 10.9 11.2 11.3 11.6 8.9 8.7 7.2 9.1
Public Administration & Defense, Compulsory Social Security
4.2 4.1 3.9 3.9 2.7 4.0 1.2 6.9
Other Services 10.3 10.1 10.3 10.4 4.9 4.0 7.9 7.5
Agriculture, Forestry, & Fishing Performance
Source: National Income Accounts, Philippine Statistics Authority
• Food manufacturing performance has not been matched by the AFF sector• Growth in agriculture has remained low (negative in 2016); declining share to GDP • Except palay, livestock, poultry, fishing; marginal contribution of other crops despite large
potentials for high value crops (rubber, cacao, coffee, coconut, mangoes, etc)
MAJOR SECTORShare to Total GVA (%) Growth Rate (%)
2013 2014 2015 2016 2013 2014 2015 2016
Agriculture, Forestry and Fishing 10.5 10.0 9.5 8.8 1.1 1.7 0.1 -1.3Agriculture, Hunting, and Forestry 8.5 8.2 7.8 7.2 1.2 2.1 0.6 -0.7
a. Agriculture 8.5 8.1 7.7 7.2 1.0 2.1 0.8 -0.6
Palay 2.1 2.1 1.9 1.7 2.2 2.8 -4.3 -2.9
Corn 0.6 0.6 0.5 0.5 -0.4 5.1 -3.3 -4.0
Coconut including copra 0.4 0.4 0.4 0.3 -2.8 -4.6 0.1 -6.1
Sugarcane 0.2 0.2 0.2 0.2 -6.9 1.7 -7.4 -0.7
Banana 0.5 0.5 0.4 0.4 -6.3 2.7 2.3 -2.0
Mango 0.2 0.2 0.2 0.2 6.2 8.1 4.5 -10.1
Pineapple 0.2 0.2 0.2 0.2 2.8 2.2 2.7 1.2
Coffee 0.0 0.0 0.0 0.0 -11.7 -4.2 -5.3 -4.9
Cassava 0.1 0.1 0.1 0.1 6.3 7.6 6.9 1.6
Rubber 0.0 0.0 0.0 0.0 0.4 1.9 -11.3 -8.6
Other crops 0.6 0.6 0.6 0.5 0.2 0.7 0.8 -2.9
Livestock 1.4 1.3 1.3 1.3 1.8 1.0 3.8 4.6
Poultry 1.2 1.1 1.1 1.0 4.2 0.4 5.7 1.3
Agricultural activities and services 0.7 0.7 0.7 0.7 0.6 4.5 6.2 3.8
b. Forestry 0.1 0.1 0.1 0.0 39.8 2.6 -26.7 -14.7
Fishing 1.9 1.8 1.7 1.5 0.7 -0.2 -1.8 -4.0
ARMMMIMAROPA
SOCCSKSARGEN
CAGAYAN VALLEY
CAR
EASTERN VISAYAS
CARAGA
CENTRAL VISAYAS
ILOCOS
CENTRAL LUZON
NORTHERN MINDANAO
CALABARZON
NCR
ZAMBOANGA PENINSULA
DAVAO REGION WESTERN VISAYAS
BICOL
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
-1.00% 1.00% 3.00% 5.00% 7.00% 9.00%
GR
DP
as
% o
f G
DP
(2
01
5, a
t co
nst
ant
pri
ces)
GRDP growth rate (2014-2015, at constant prices)
Regional AnalysisGross Regional Domestic Product
• Geographically, contribution to GDP is highly concentrated in a few regions
• NCR, CALABARZON, & Central Luzon account for 63 % of GDP• Poverty-stricken regions in Mindanao have the lowest contribution
(ARMM 0.66%, CARAGA 1.3%)
Agriculture
NCR
CAR
ILOCOS
CAGAYAN VALLEY
CENTRAL LUZON CALABARZON
MIMAROPA
BICOL
WESTERN VISAYAS
CENTRAL VISAYAS
EASTERN VISAYAS ZAMBOANGA PENINSULA
NORTHERN MINDANAO
DAVAO REGION
SOCCSKSARGEN
CARAGA
ARMM
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
-10.00% -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00%
Agr
icu
ltu
re a
s %
of
GR
DP
(2
01
5, a
t co
nst
ant
pri
ces)
Agriculture growth rate (2014-2015, at constant prices)
• Except for NCR, our regional economies are still dependent on agriculture, forestry, and fishery
• In terms of size, the largest contributors are led by Central Luzon (16.3%) followed by Northern Mindanao( 9.6%,) CALABARZON (9.3%), Western Visayas (8.2%), & Cagayan Valley (7.9%)
Manufacturing
• Manufacturing activities have been largely confined in CALABARZON (40%) followed by NCR (20%) and Central Luzon (14%)
• Central Visayas (7%) and Davao (4%) trying to catch-up
NCR
CAR
ILOCOS
CAGAYAN VALLEY
CENTRAL LUZON
CALABARZON
MIMAROPA BICOL
WESTERN VISAYAS
CENTRAL VISAYAS
EASTERN VISAYAS
ZAMBOANGA PENINSULA
NORTHERN MINDANAODAVAO REGION SOCCSKSARGEN
CARAGAARMM
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%
Man
ufa
ctu
rin
g as
% o
f G
RD
P (
20
15
, at
con
stan
t p
rice
s)
Manufacturing growth rate (2014-2015, at constant prices)
Services
• Huge imbalance among the regions in terms of services; services is highly concentrated in highly urbanized NCR accounting for 52% of total
• Outside NCR, services is quite high only in relatively large economic areas led by CALABARZON (9.8%) followed by Central Luzon (6.5%), & Central Visayas (6.4%)
NCR
CAR
ILOCOS
CAGAYAN VALLEY
CENTRAL LUZON CALABARZON
MIMAROPA
BICOLWESTERN VISAYAS
CENTRAL VISAYAS
EASTERN VISAYASZAMBOANGA PENINSULA NORTHERN MINDANAO
DAVAO REGION
SOCCSKSARGEN
CARAGA
ARMM
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00%
Serv
ice
s a
s %
of
GR
DP
(2
01
5, a
t co
nst
ant
pri
ces)
Services growth rate (2014-2015, at constant prices)
RegionPoverty Incidence
(2015)Unemployment
(2015)
PHILIPPINES 21.6 6.3
NCR 3.9 8.5CAR 19.7 4.9
I - Ilocos Region 13.1 8.4
II - Cagayan Valley 15.8 3.2III - Central Luzon 11.2 7.8IVA - CALABARZON 9.1 8.0IVB - MIMAROPA 24.4 3.3V - Bicol Region 36.0 5.6VI – W.Visayas 22.4 5.4VII – C. Visayas 27.6 5.9VIII – E.Visayas 38.7 5.4
IX – Zamboanga 33.9 3.5
X – N. Mindanao 36.6 5.6
XI - Davao Region 22.0 5.8
XII - SOCCSKSARGEN 37.3 3.5
CARAGA 39.1 5.7ARMM 53.7 3.5
Poverty incidence & Unemployment
• Poverty incidence remains high in ARMM, CARAGA, Eastern Visayas, Soccsksargen, Northern Mindanao, Bicol, & Zamboanga
• Unemployment rates are highest in NCR, IlocosRegion, Central Luzon, & CALABARZON
Where do we want to go and How do we get there?Integrate industries via the Comprehensive National Industrial Strategy
• Overall Goal: create globally competitive & innovative industrieso Growth oriented action to upgrade
industries, move up the value chaino Remove obstacles to growth attract
more investmentso Deepen participation in regional
production networks/global value chains (GVCs)
• Role of Government: Enabler & facilitator to address coordination failureso Address the most binding constraints
preventing industries from growingo Create proper environment for private
sector development
Inclusive sustainable
growth
Free Trade Agree-ments
Jobs, Competitiv
eness
• GVC-focused • Fosters innovation &
entrepreneurship• Cluster-based
industrial strategy
‹
COMPREHENSIVE NATIONAL INDUSTRIAL STRATEGY
TOP FIVE PRIORITIES
Opportunities• New high
level growth
trajectory
• Growing
middle class
• Political
stability
• Young,
English
speaking
workforce
• Rising
business
confidence
• AEC & FTAs
Challenges
• Complex
regulations
• High cost
of power
• Lack of
ports,
airports,
roads
• SMEs’
access to
finance
• Supply
chain gaps
Manufacturing
Tourism
IT BPM
KPO
From voice to
non-voice
Agribusiness
• High value
crops
Infrastructure
& Logistics
NEW JOBSHIGHER GDP
• 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 T E N S E I N V E S T M E N T
P R O M O T I O N
• S K I L L S T R A I N I N G & H U M A N
R E S O U R C E D E V E L O P M E N T
• I N N O VAT I O N & R & D
• G R E E N G R O W T H
• M O D E R N S M E P O L I C Y
Strategies to make manufacturing an engine of growth & source of more & better Jobs
30% value added; 15% employment
Horizontal measures
Coordination mechanism
Vertical measures
• Close supply chain gaps
• Expand domestic market & exports
• HRD & skills• SME development• Innovation• Green growth
• Promotion• Power, smuggling,
logistics, infrastructure
• Improve regulation, reduce cost of doing business
• Competitive exchange rate
open trade regime, sustainable macro policies, sound tax policies & administration,efficient bureaucracy, secure property rights, institutions 13
Priority Industries• Electronic manufacturing services : auto electronics, medical devices,
telecommunications equipment, power storage, civil aviation/aerospace); Semiconductor manufacturing service: IC design
• Automotive & auto parts: CARS, Eco PUV Program – alternative energy vehicles
• Aerospace parts & Aircraft Maintenance, Repair, & Overhaul• Chemicals: petrochemicals, acyclic alcohols & derivatives, metallic salts &
peroxy salts of inorganic acids, cyclic hydrocarbons, oleochemicals• Shipbuilding & Ship-repair: RORO as well as small- and medium-sized vessels• Furniture, garments, GDH manufacturing & design• Tool & die manufacturing and design• Agri-business: Food & resource-based processing (cacao, coffee, mangoes,
bananas, coconut, rubber, bamboo, fruits & nuts, & other high value crops)• Construction: roads, railways, bridges, ports, airports, & low-cost housing • IT-BPM: more complex non-voice services BPO, KPO in medical, financial, &
legal services; game development; engineering services outsourcing, software development, shared services
• Transport and Logistics: land, air, water, warehousing, support facilities• Tourism, Creative Industries, and E-Commerce
MANUFACTURING FOR STRUCTURAL CHANGE
-automotive, aerospace parts electronics, garments, food & resource-based industries, chemicals, furniture, tool & die, shipbuilding
-move to high tech transport equipment, chemicals, electrical machinery-manufacturing hubs in regional & global production networks for auto, electronics, machinery, garments, food
-high value added activities upstream industries (chemicals, iron & steel), med-tech basic & fabricated metal
Phase I 2014-2017
Phase II 2018-2021
Phase III 2022-2025
VISION: globally competitive & strongly linked with other
sectors, a main growth driver
AGRIBUSINESS: CATALYST TO DRIVE
REGIONAL ECONOMIC TRANSFORMATIONTransform & upgrade agriculture from traditional farming to a
globally competitive agribusiness sector
-rubber, coconut, mangoes, coffee, cacao, banana, palm oil & other high value crops; supply chain gaps: strengthen agro-processing & its linkages to production
-deepen participation in GVC -PH as agribusiness regional hub
- strengthen supply chains, upgrade commodity clusters; R&D, access to technologies, finance; regulatory & certification system
Phase I 2014-2017
Phase II 2018-2021
Phase III 2022-2025
SERVICES: GLUE THAT BINDS ALL
SECTORS TOGETHER
-labor-intensive sectors: tourism, construction, ship repair, MRO-infrastructure investments -move up ITBPM GVC
- PH as regional services hub: training - upgrade services especially manufacturing related services to sustain growth & job creation
-education, design, R&D, finance, infrastructure-engineering & services embedded in manufacturing-HRD & skills training, innovation ecosystem
Phase I 2014-2017
Phase II 2018-2021
Phase III 2022-2025
Globally competitive services, create quality jobs, move up
the value chain
New Industrial Policy &
transition to a low carbon economy • Along with skills, materials, capital and digital technology;
manufacturing requires reliable supply of energy at affordable prices – Wafer fabrication, textile, iron & steel not pursued due to high power
costs
– High power costs being cited as major factor affecting competitiveness
• Gradual shift to green manufacturingo Improvements in the energy efficiency of manufacturing
o Replacement of fossil fuels with renewable energy sources
• Green processes, practices, & productso Energy-efficient technologies
o Green goods & services
o Clean energy technologies: resource recovery and reuse, renewable feedstocks, electricity storage, fuel cells, renewable energy (solar, wind, geothermal, bioenergy, hydro), nuclear fission and fusion, advanced vehicles
• Enabling environment for the adoption of energy efficiency measures: laws, regulations, incentives, finance, education &training
Greening the Industry Roadmaps
• Integrated green policies in 6 industry roadmaps ( through
GIZ support)
Industry Green Measures: Energy Efficiency
Auto Resource efficiency strategy – reduce energy consumption
Pulp & Paper
25% of production costs are energy-related, industry needs to invest in new plants & to retrofit existing plants
Plastic With rising energy costs, the industry’s major focus is on process optimization & technological innovation to reduce production costs & reduce emissions; emphasis on the implementation of sustainable technologies for energy generation, storage & recovery
Housing Green housing schemes
Furniture Optimized process management & new technologies to reduce cost
Copper Green Manufacturing Zone in Leyte: resource efficiency in energy, materials, water, & transportation, cleaner production, use of RE
Sustainable energy for industry development
Climate Incentives for Manufacturing
• Focus on energy efficiency in manufacturing: cement, iron & steel, pulp & paper, chemicals
• CLIMA: fiscal incentives that are targeted, time bound, & performance-based
• BOI Incentives: Income tax holiday & duty free importation of capital equipment depending on magnitude of energy saving from project
• Help achieve PH NDC commitment
Eco-PUV Modernization ProgramObjective: produce safe, energy-efficient, eco-friendly PUVs to support the government’s PUV Modernization Program• DOTr & DTI: developing developing manufacturing program• Total PUVs for replacement: 200K• Reliable, sustainable supply of domestically-manufactured
PUVs with after-sales support & service• Participants: platform manufacturer or body builder• Mandatory local production: chassis, after-sales network,
common facilities• Prop. Shaft, rear axle, wheels, tires, batteries, radiator, wire
harness, fuel line, brake line, fuel tank, rubber hose, meter cluster, head/tail lights, horn, leaf & spring coild, shock absorbers, interior trims, body shell, seats, cabin lights, seatbelts, transmission
• Support package: 50% of capex, access to LTFRB franchise, government finance
E-Vehicle IndustryE-jeepney, E-quad, E-trike, E-bus/trucks, E-car
• 28 firms
• 11 parts & components
• Employment: 14,480
• 38,220 unit in 2013 to 69,145 units in 2017
Government Policies & Programs• PH government has been promoting the use of E-
vehicles across the country• Executive Order 488
– sustainable development & comprehensive industrial policy for the motor vehicle industry
– zero tariffs for E-vehicle components, parts & accessories for assembly of hybrid, electric, flexible fuel & CNG motor vehicles
• Board of Investments Investment Priorities Plan: listed as preferred activity– Establishment of charging stations: income tax holiday
• Department of Energy: E-trike project deploy 100K e-trikes nationwide to replace traditional gasoline-fed tricycles
The E-Vehicle Industry Roadmap:Strategic Action Plans
Support Electric & Hybrid Vehicle Bill (E & Hybrid Vehicles, Charging Stations Promotions Act 2016)
Form inter-agency task force for the promotion Electric & Hybrid Vehicles and the installation of Battery Charging and Swapping Stations nationwide
Encourage participation of foreign EV players in the development of the EV industry
Formulate standards for EV parts & components, vehicles & testing
Build more battery charging & swapping stations
Pursue research & development initiatives and application of newer EV technologies
Engage Automotive Original Equipment Manufacturers/Assemblers to participate in the EV market
Encourage private banks to offer cheaper and easier access to green financing
WITH GOVERNMENT ASSISTANCE WITH PRIVATE SECTOR INVOLVEMENT
• create globally competitive & innovative E-vehicle industry• conduct feasibility study on E-bus, E-jeepney
Thank you!
The new industrial policy can make our industries
competitive, facilitate transition to a low-carbon
economy, and create an environment conducive
to private sector development leading to
sustainable & inclusive growth.
For more information, visit our website at
industry.gov.ph