Keynote Speech for Session 2:
Embracing Industry 4.0 Technologies
Ernesto M. Pernia, PhD
Secretary of Socioeconomic Planning
DTI Inclusive Innovation Conference 2019
“Bridging the Digital Transformation Divide: Fostering Regional Inclusive Innovation Centers & Start-up Ecosystems”
Sofitel Philippine Plaza Manila, Pasay City
September 23, 2019
Distinguished speakers and guests,
Colleagues in government,
Our friends from the private sector,
Our partners in the academe,
Ladies and gentlemen, good afternoon.
We in NEDA are very grateful to the Department of Trade and Industry for organizing this event.
This is a great platform for key movers in industry and academia to meet and put our heads together to realize one important dimension of the Ambisyon Natin 2040 – a smart and innovative society. We are all here to share our ideas for empowering Filipinos to embrace Industry 4.0 and its technologies that will transform our economy into a fully digital one.
I was at the 5th Annual Public Policy Conference organized by the Philippine Institute for Development Studies (PIDS) just late last week, and there I learned a lot about the new globalization we are facing today. The new globalization is characterized by VUCA — volatility, uncertainty, complexity, and ambiguity. But then PIDS has a response to this, which is also VUCA – voice, unity, consultation, and agreement. That should be our answer to this challenge. I also expect to learn a great deal today on how we can concretely address the new challenges we are facing.
These challenges are formidable. Technological disruptions have reached our shores for some time now. While Industry 4.0 technologies will drive the Philippine industries forward, any significant digital transformation will require new business models and workforce re-skilling.
It is therefore critical for the country to be proactive in dealing with these challenges. This is not to say that we have not made progress.
Recent improvements put the Philippines to rank 54th out of 129 economies in the 2019 Global Innovation Index, leaping 19 places from the previous year. This year, we are part of the “innovation achievers” cluster in the ranking.
In this vein, NEDA together with DTI and DOST have been engaged with several Philippine-American Academy of Science and Engineering (PAASE) members—based here and in the U.S.—in building our country’s Science, Technology and Innovation (STI) ecosystem toward the PDP’s objective and pillars. Specifically, “a globally competitive knowledge economy,” and Patuloy na Pag-unlad or “enhancing the economy’s growth potential.”
Academics—that is scientists and engineers—can work on the supply side of the STI ecosystem. But to make the ecosystem live and functional, there must be demand for what scientists and engineers produce—that is, the demand on the side of the private sector—business people including industrialists, entrepreneurs, and capitalists. The government’s role, besides crafting the country’s development plan, is to provide the wherewithal (e.g., funding for graduate studies, including scholarships, and for R&D, and ease of procurement) for the academic sector, and to foster a stable and favorable business climate for the private sector, as well as to catalyze the relationship between the two sectors.
Given an interactive supply and demand sides or sectors, the STI ecosystem can become vibrant, mature, fully functional, and self-sustaining. This suggests the need for higher trust and respect between the academic and business sectors, and among the members of both sectors. Which is consistent with the objective of the medium-term PDP, namely, “…to lay the foundation for…a high-trust society…” Underpinning, and resulting from a high-trust society is Malasakit—strengthening the social fabric (or, in a word, solidarity)—the first pillar of the PDP.
Solidarity is needed between and among the academic, private, and public sectors—not to mention the citizenry in general—for our country to achieve the objectives of the PDP 2017-2022 and the goal of AmBisyon Natin 2040, where everyone will live a Matatag, Maginhawa at Panatag na buhay para sa lahat where there is zero poverty by 2040. A small step we’ve taken was to bring together several PAASE members to meet with some government officials at NEDA (as venue) and in UP Diliman in October last year. And just last May, UPD PAASE veterans managed to gather a similar group of academics and key persons from the business sector.
What remains is a trilateral substantive gathering of a critical mass of members from the three sectors—academe, private sector, and government. Such meetings should be held periodically, if not frequently as needed.
Key legislations have recently been enacted that will provide further impetus to the establishment of the STI ecosystem.
First is the Philippine Innovation Act that will establish the National Innovation Council. This will address the current gaps in the STI sector governance framework.
A long-term strategic vision for STI or the National Innovation Agenda Strategy Document will also be crafted. This will help the country to progress towards becoming a globally-competitive, knowledge-based economy.
Second, there is also a new Act that will cater to the establishment of innovative and technology-based start-ups. This Act, called the Philippine Innovative Start-up Act, will create opportunities for entrepreneurs with innovative ideas to gain access to capacity building, exchange programs and link them to potential investors, collaborators and markets, both local and overseas.
We also anticipate a scaling up of Regional Inclusive Innovation Centers (or RIICs), across the regions, apart from those already established in four pilot cities, namely, Bicol, Cebu, Cagayan de Oro and Davao.
By providing physical infrastructure, and critical support, such as access to venture financing, these centers will hopefully extend practical support to our start-ups.
To spur our local businesses to innovate, we need to understand what drives establishments to innovate. Based on the 2015 Survey on Innovation Activities conducted by the PIDS, large establishments are more inclined to conduct activities that will improve products or enhance their operations and systems. This includes embarking on daring projects that disturb the status quo and investing in R&D.
On the other hand, the study also points out that small firms hardly access technical assistance from the government and research institutions. This is something that both the government and the private sector can work on given that we share the same goals.
We also need to improve the country’s overall digital adoption. The potential for e-commerce in the country is high. However, online participation (of both business and consumers) is hampered by digital connectivity problems. The high cost of broadband and internet services explains the low business density in the digital space and untapped potential for enhanced consumer participation. What we need is to establish secure infostructure (or information infrastructure), and strengthen our critical support services by bringing logistics costs down.
Emerging technologies will be needed to relevantly situate our country in the ever competitive global value chain. The real enabler will be the people who will implement these rapidly evolving technologies.
Overall, we see an exciting and encouraging future for digitally-savvy millennials and entrepreneurs. We hope that they will turn concepts into start-up businesses, and identify social needs that can be solved through digital solutions, innovative products and services.
In fact, the Philippines is gearing up to harness the opportunities brought by the Industry 4.0 by investing in our most critical asset – our human capital. Chapter 10 of the Philippine Development Plan 2017-2022 focuses on Accelerating Human Capital Development. We are currently doing our Medium-term Update of the Plan. This will help us strategize how to move forward in preparing our people and the different sectors for the future. Ultimately, we see that our country’s edge will be our talented people. We see Filipinos as life-long learners, digitally-smart, and confident adapters to the nature of future work.
NEDA, DTI, DOST and the entire government welcome hearing ideas and feedback. We look forward to the synthesis of practical solutions to these pressing concerns. We wish all the participants and guests a productive discussion and engagement.
Maraming salamat at mabuhay tayong lahat!