April 22, 2021

Innovation in agriculture and human capital will facilitate the Philippines’ structural transformation to upper middle-income status, said the National Economic and Development Authority (NEDA).

“We continue to persevere to achieve our 2040 vision where no one is poor and everyone is living in a more comfortable middle-class society. The Philippines has great potential, but to sustain our next level of development, we have to innovate and further improve the way we do things,” said Socioeconomic Planning Secretary Karl Kendrick T. Chua.

In the First National Innovation Day celebration held on April 21, 2021, the World Bank launched the Innovation Report on the Philippines, which tackled the achievements, challenges, and policy recommendations for the country to achieve an innovation-led growth. This is anchored on the broader ‘Innovation Imperative for Developing East Asia’ report.

The NEDA chief said that instead of simply assembling products and using ideas that were generated from other countries, the Philippines should gradually shift to a new framework where the ideas are coming from within the country and contributed by our human resources.

For the Philippines to have sustained structural transformation to upper middle-income status, Chua said that the two sectors that need the most innovation are agriculture and human capital.

“Innovation should not skip these two sectors. There is a temptation to jump to high skill manufacturing and services, but we cannot sustain our growth without strengthening agriculture and human capital. If skipped, it would just create a divide where only a few benefit from the latest research and technology,” Chua said.

Chua also explained that while the country has advanced strongly in macro-fiscal policy, we need to address the microeconomics by pursuing foundational reforms in agriculture and human capital development.

The government has passed laws to further develop our human capital, such as Universal Health Care act, the Philippine Identification System or National ID law, and the Enhanced Basic Education or K-12 act. The government has also enacted the Philippine Innovation act, Innovative Startup act, Philippine Space act, and the Balik Scientist program to encourage more innovation.

On agriculture, the government has passed the Rice Tariffication Law and is removing the remaining tariff and non-tariff barriers that reduce food security. All these bring down food prices for consumers.

Moreover, the newly-passed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act also provides more performance-based tax incentives with high priority on research and development.

“The key challenge now is proper and strategic implementation. In NEDA, we have to determine where we have the highest comparative advantage and allocate resources to support these sectors,” he said.