Trade chief identifies 4 priority industry clusters to spur digital transformation

Trade Secretary Alfredo Pascual said the Department of Trade and Industry (DTI) will prioritize four industry clusters to strengthen the country’s participation in global value chains (GVCs) and support the digital transformation of businesses in the Industry 4.0 era.

In his speech at the launching of a World Bank (WB) report on boosting Philippine participation in GVCs, Pascual said the three industry clusters were selected based on the recommendations from the report, with the fourth cluster added by DTI.

The report, entitled “A New Dawn for Global Value Chain Participation in the Philippines” and launched October 6, notes that the country’s post-COVID recovery could benefit from the reconfiguration of its export sectors in three GVC clusters.

These clusters are industrial, manufacturing, and transportation (IMT); technology, media, and telecommunications (TMT); and health and life sciences (HLS).

“We have added another cluster and we have called this ‘modern basic needs and resilient economy cluster’, which will foster economic resilience and long-term sustainable and inclusive growth in the country,” Pascual said.

The official said that supporting the country’s enhanced participation in GVCs is “a long-term pursuit that entails addressing structural, systemic and sector-specific constraints to growth.”

He said that among the industries in the IMT cluster that are being repositioned is the aerospace sector.

“Since 2017 we have collaborated with the Department of Science and Technology and the Aerospace Industries Association of the Philippines toward the aerospace quality management system training program for AS9100 certification. This effort aligns with the aerospace industry roadmap which envisions the Philippines as a hub for aerospace parts manufacturing and allied services in Asia,” Pascual said.

On policies to make the Philippines an attractive destination for foreign direct investment, “we are implementing recently passed laws that either ease foreign ownership restrictions or incentivize investments,” he said.

Sharing more of the agency’s strategies and initiatives to strengthen GVC participation, Pascual said the DTI recently launched the Center for Artificial Intelligence Research or CAIR, which “will be instrumental in boosting AI’s contribution to our economy.”

The CAIR will be a hub where data scientists and researchers can perform collaborative AI research and development. it will provide AI training programs and support the digital transformation of industries, particularly the smaller enterprises, he said.

The center will be complemented with the establishment of an Industry 4.0 pilot factory that will host pilot demonstrations and learning laboratories for relevant technologies such as robotics, intelligent manufacturing, automation, and cyber-physical systems.

Pascual said that DTI’s other actions to drive industry digitalization and stronger GVC participation include advocating legislation that will further accelerate trade and industry development.

Moreover, export measures are being adopted to promote domestic processing for greater value addition from the country’s reserves of green metals such as nickel, cobalt and copper. “These measures should complement our efforts to enable 100% foreign equity ownership in solar, wind, tidal and other renewable energy projects by amending the implementing rules and regulations of our Renewable Energy Act,” he added.

Another initiative is to develop the domestic skills needed to further advance GVC participation, as the World Bank report noted that some challenges in this area are insufficient skills upgrading and a lack of workers with the skills required by innovative firms.

In this regard, Pascual said the Board of Investment is working with education agencies on a national skills mapping and survey to promote academe-industry matching and identify appropriate interventions to minimize the skills mismatch.

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