The Philippines needs to invest more in infrastructure while adopting a cluster approach to develop its competitiveness in the manufacturing sector, a World Bank (WB) official said.

To undertake the country’s industrial policy, WB country director for Philippines Ndiamé Diop said the country can leverage on electronics, business process outsourcing (BPO), and skilled workforce like nurses, and develop clusters around these sectors.

“The country is catching (up) very fast (in infrastructure) and I think if that continues, that will really, really sort of help businesses here to be more competitive in those clusters. But beyond that, the good thing about infrastructure is that it helps all the sectors, it helps agriculture, it helps services, and it helps manufacturing,” he said during the UN Philippines’ ThrivePH discussions.

Diop said infrastructure is among the elements crucial to countries that have “very rapid” economic growth.

He added opening sectors to competition is also important.

Diop particularly cited the implementation of the Ease of Doing Business Act in the country which he considered as “very helpful”, and some economic bills in Congress aimed at opening the sectors.

He also underscored the importance of building skills and retaining them in the country.

Diop said the involvement of the private sector in monitoring and implementation of any industrial strategy is likewise imperative.

“It’s really important to really bring in the private sector spectrum and to jointly implement strategy because the private players in all these industries that the country wants to develop, they are on top of what is happening globally and regionally,” he added.

Diop said adjustments to industrial strategy should take into account changing global value chains amid the rise of technology and automation, and given the pandemic.

“The good news is that Covid has also created new opportunities; e-commerce is booming and digitalization, there are new opportunities that are emerging. I think one challenge for policymakers is how do you help instead of reallocation of resources from the sector that we know will be growing less fast or will be in overcapacity in the next
two years. How do you help the redeployment of those resources to all the sectors so that people can get jobs?,” he said.

“I think, it is not just about skills, upskilling or reskilling or helping the mobility of labor. It’s also about looking at the regulation, to see whether some of the regulation can be across trends or not in terms of labor redeployment but also capital redeployment,”
he added.

Khalid Hassan, director at International Labor Organization (ILO) Country Office for the Philippines, said the next challenge countries will be facing is Industry 4.0.

”Jobs of the BPOs, new skills jobs will be automated very soon. So what needs to be done is that we need to invest in skills in research development and skills upgrading programs,” he said during the same event.