Reconfiguration of PH participation in GVCs pushed

The Philippines needs to reconfigure its participation in global value chains (GVCs), particularly electronics, as it develops industries to stimulate economic growth amid the pandemic.

“Although Covid-19 (coronavirus disease 2019) significantly affected GVCs in terms of trade, FDI (foreign direct investment) and jobs, they also showed some resilience that provides an opportunity for the Philippines to reposition itself,” Board of Investments (BOI) Executive Director Corazon Halili-Dichosa said.

Halili-Dichosa cited the current megatrends which have the potential to change the role of developing countries like the Philippines in international production networks.

“The rise of automation and AI (artificial intelligence) has eroded traditional comparative advantage based on low wages. The increased use of services in manufacturing has resulted in growing demand for high-skilled labor and there will be more regional concentration of goods production,” she said.

Halili-Dichosa said firms have to deal with challenges around supply risks and diversification amid the pandemic, including enhanced supply chain digitalization, supplier diversification, and building redundancy in their supply chains by holding larger inventory, or building redundancy in transportation networks.

“The opportunities for us lies in upgrading our participation in electronics value chains which are a common threat among the industrial manufacturing and transportation sub-sectors,” she added.

Moreover, Halili-Dichosa said the health and life science cluster will have to play a strategic role in all countries, including the Philippines, given the health crisis.

“Over the next decade, making medicines faster and cheaper will continue to be the mantra of multinational companies. The sector will also witness smaller, innovative, more agile companies taking a more important role in bringing medicines to the market,” she said.

Halili-Dichosa said the development of the industrial, manufacturing and transportation (IMT) and the technology, media and telecommunication (TMT) clusters could facilitate the emergence of a life science cluster in the Philippines.

This, as the pharmaceuticals, medical devices, and healthcare services move to be more integrated, and the management of information becomes as important as the management of products, she said.

“The IMT cluster, through electronics parts and components, can reach the medical device sector. The TMT cluster, through the healthcare IT (information technology) services, can reach the healthcare service sector and the pharma(ceutical) sector attracting lead multinational companies for promoting a domestic suppliers network,” she added.

Halili-Dichosa said the big data and analytical needs associated with healthcare represent additional growth opportunities also for the country’s IT-BPM (business process management) sector.

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