PIDS bares strategy to transform manufacturing industries into regional hub

The Philippine Institute for Development Studies (PIDS) has unveiled a government strategy to transform domestic manufacturing industries into a regional production hub and enhance global competitiveness.
PIDS senior research fellow  Rafaelita Aldaba disclosed that the first phase of the roadmap covering 2014 to 2017 calls for rebuilding the capacity of existing industries, strengthening emerging industries, and maintaining the competitiveness of advantage industries.

The second phase, from 2018 to 2021, will see a shift to high-value-added activities, investments in upstream industries as well as the linking and integrating of small and medium enterprises (SMEs) and large enterprises for broad-based industrial development.

The third phase, encompassing the years 2022-2025, envisions the Philippines’ deepening participation in regional integration by serving as hubs in production networks for industries like auto, electronics, machinery, garments, and food, Aldaba said.

The roadmap can be accomplished with an action plan for the successful transition of the country into a dominant production player in Asia.

The plan includes closing the supply or value-chain gaps for key industries, such as establishing supply hubs for raw and natural materials for the furniture sector, and increasing the tool and die sector’s access to raw materials, equipment, and software.

For the paper industry, focus can be on expanding the fiber raw material base and developing massive tree plantations and commercial agro-forestry areas integrated with virgin wood pulp production.

The second step is cultivating the domestic market base of the transport sector. This would entail providing fiscal and non-fiscal incentives to rebuild the domestic automotive market, implementing Republic Act 9295 mandating the retirement of old shipping vessels, and developing the local parts support industries for motorcycle assembly to reduce the high cost of importing these parts.

The third part of the action plan focuses on skills training. Aldaba said more training on design, tool making, prototyping, molding, and die-casting is needed in the auto parts and tools and die sectors, while the furniture sector has to upgrade the supervisory and managerial skills of its staff for improved productivity.

She suggested that the Technical Education and Skills Development Authority could look into increasing vocational training activities for iron and steel workers, she added.
The action plan likewise highlighted the importance of the fourth step-SME development and technological innovation.

Aldaba urged greater support for SMEs’ development by providing them better access to finance, setting up incubation facilities, and clustering these sectors: auto parts, motorcycle parts, furniture, rubber, metal casting, tools and die, chemicals, iron, and steel.

Establishing quality-testing facilities will likewise bolster the small auto and auto parts, motorcycle assembly, motorcycle parts, furniture, and rubber enterprises.

Supporting R&D facilities and industry-academe linkages for new product development can boost the metal casting, tools and die, engineered bamboo, rubber, iron and steel, chemicals, furniture, paper, and plastics industries.

This four-pronged action plan should be complemented by aggressive marketing to attract investments particularly in new technologies, measures to address the high cost of power and domestic shipping, regulations to streamline and automate government procedures, and steps to ensure a competitive exchange rate, Aldaba continued.

At the same time, there should be a mechanism where government, industry, and private groups can collaborate on cluster-based interventions to increase supply of skilled workers, encourage technology adoption, and improve regulations and infrastructure.

Aldaba drew up the roadmap following several consultations with private and government stakeholders from January to July 2013.