Dr. Ernesto M. Pernia, PhD

Secretary of Socioeconomic Planning

Harnessing the Fourth Industrial Revolution:

Creating Central Visayas’ Future Today

Bohol Tropics, Tagbilaran City, Bohol

March 6, 2019

First of all, warmest congratulations and thanks to the organizers of this conference.

Philippine Institute for Development Studies (PIDS) President Dr. Celia Reyes,

Bohol Island State University President Dr. Regucivilla Avenido-Pobar,

NEDA Region VII Director Efren Carreon,

Dr. Fr. Francisco Estepa,

Dr. Christopher Bernido,

Dr. Ma. Victoria Carpio-Bernido,

Coworkers in government,

To our friends from the private sector,

Ladies and gentlemen, good morning.

I am happy that we are once again talking about the Fourth Industrial Revolution, appropriately called FIRe – this time in Bohol. I commend PIDS for bringing this conference to the Visayas. I hope we can have one as well in Mindanao and maybe in Northern Luzon.  We need to get the people talking, thinking, and being agog about FIRe.

FIRe is such a burning issue – a consuming subject – and a global phenomenon that we cannot resist. Yes, it is often seen as a disruptive shock to our normal ways of doing things, extending to our country’s and local community’s long-term economic growth. But, at the same time, it is an opportunity that we can harness to our advantage. We have had revolutions in the past and this— the Fourth Industrial Revolution—could not be more real. And, certainly, like the other revolutions, it will bring change, either favorable or adverse. Whatever change it will be will depend on our actions today or how we prepare for it.

The Philippine economy seems, for now, in a good position to respond to the Fourth Industrial Revolution. In 2018, the economy grew 6.2 percent. Our economy has been growing 6 percent or better for 15 straight quarters, and at an average rate of 6.5 percent during the first 10 quarters of this administration. This shows that we are on a higher growth trajectory.  In comparison with other countries, the Philippines remains one of the fastest-growing major economies in Asia—after India, Vietnam, and China, and ahead of Indonesia, Thailand, and Malaysia.

However, much needs to be done to sustain the country’s economic growth, and make it broad-based and inclusive, especially in the face of the Fourth Industrial Revolution. The Philippines ranked 73rd out of 126 countries in the 2018 Global Innovation Index (GII), barely improving from its 74th rank in 2016. We have been lagging behind other countries in the region such as Thailand, Malaysia, and even relative newcomer Vietnam. What the 2018 Global Innovation Index tells us is that our country has been consistently weak in terms of spending on research and development (or R&D).  Government spending on R&D remained below standard in 2018, only 0.44% of GDP, as opposed to the international norm of at least 1% of GDP.

The Philippine Development Plan 2017-2022, the country’s socioeconomic blueprint over the medium-term, discusses at length the key strategies we should employ in vigorously advancing Science, Technology and Innovation (or STI).  A major task is the establishment of an STI ecosystem. For the ecosystem to work, new knowledge, which is dependent on solid general education, advanced higher education, and knowledge capital, must translate into commercial applications. Thus, the government must direct investments, not just to physical capital formation through the Build, Build, Build program, but also to human capital formation, specifically through quality health, nutrition, and education.

A piece of good news is that the Philippine Innovation Bill is now in the advanced stages of legislation, currently with the Bicameral Committee for ironing out the differences between the House and Senate versions, then onward to ratification. The NEDA will be the lead agency in crafting its IRR once signed into law and in its implementation.

Another piece of good news is that, even before the implementation of the Innovation Act, there was already the signing of an MOU to develop an Inclusive Filipinnovation and Entrepreneurship Roadmap among government agencies late last year. We have started working on this STI ecosystem. The Department of Trade and Industry (DTI) has recently created a Competitiveness and Innovation Group, which will be led by Undersecretary Fita Aldaba –our PIDS colleagues here know her very well – and announced the establishment of Regional Inclusive Innovation Centers (RIICs) to address the weak and highly concentrated innovation performance of the Philippines.

These RIICs will be the hubs where productive collaborations take place between and among industries, universities, government agencies, startups, incubators, and investors, among others. Located in the regions, these centers consider the variety of regional and local conditions throughout the country. Undersecretary Aldaba has told us that there will be pilot centers in Cebu, Davao, Cagayan de Oro, and Legaspi.   Hopefully, these innovation hubs, which foster collaboration linkages, would address the information asymmetry in STI on the regional level.

At the national level, an interagency committee or council composed of relevant agencies must be formed to create coherence in STI-related policies, plans, and programs in the government. The NEDA will work closely with PIDS, DTI, Department of Science and Technology (DOST), Department of Education (DepEd), Technical Education and Skills Development Authority (TESDA), Commission on Higher Education (CHED), as well as with the Philippine-American Academy of Science and Engineering (PAASE) in cultivating an STI ecosystem in the country. We are collaborating with Filipino-American scientists and engineers based in the US, and their counterpart scientists and engineers based in the Philippines. They are all keen to give back – or pay forward – to our country.

Another suggested measure is the establishment of a database of university and industry research and knowledge resources. We must admit there is a dearth of up-to-date data on STI—such as R&D expenditure per sector; budget utilization rate; and number of researchers, scientists, and engineers, among others. Without these baseline data, it is a challenge to map out a plan for the STI sector. The absence of STI indicators makes it difficult not only to track STI contribution to growth but also to predict potential problems and assess needed government interventions for the sectors.

NEDA is currently working to address this by formulating a statistical framework to improve STI statistics. We have commissioned the Orient Integrated Development Consultants, Inc. to conduct a scoping study to identify concerns on STI statistics. They will be recommending initiatives to improve the availability of STI statistics for tracking the implementation of the PDP chapter on STI.

We should also not forget that, for us to manage the impacts of the Fourth Industrial Revolution, we need to prepare tomorrow’s workforce and cultivate innovation and entrepreneurship among the people. In the 2017 Investment Priorities Plan, which serves as a blueprint in guiding Filipino and foreign investors in matching entrepreneurial and financial capacities with opportunities, the preferred investment activities include innovation-building activities and the establishment of training and learning facilities.

Similarly, DepEd, TESDA, and CHED are formulating programs and curricula that aim to produce graduates who are adaptable to the needs of emerging industries.

In closing, let me stress that the Fourth Industrial Revolution is real and it is here and now. We need to work together to overcome the challenges that this phenomenon will bring and, at the same time, create new opportunities for sustained economic prosperity. The government cannot develop an STI ecosystem alone. For this to work, we need a buy-in from local industries and universities.  We need regional champions. This is why I also commend the presence here of Governor Edgar Chatto and Bohol Island State University.

Now, let us get to work. I hope you will find this conference stimulating and one that will result in actionable plans and programs.

Thank you and have a great day ahead.