Keynote speech 

Secretary Karl Kendrick T. Chua 

 

Department of Trade and Industry Inclusive Innovation Conference 2021  

“Inclusive innovation: The Philippines’ engine for growth”  

December 15, 2021 l 1:30 PM

 

Good afternoon, distinguished guests and participants.

 

Despite the setbacks caused by the COVID-19 pandemic, the Philippines is now on track to achieving our 2022 goal of becoming an upper-middle income country. In the second quarter of this year, we recovered strongly with a Gross Domestic Product growth rate of 11.8 percent. Through our calibrated strategies to safely reopen the economy, and manage risk such as the shift to the Alert Level system and granular lockdowns, we sustained our recovery and grew by 7.1 percent in the third quarter. The most recent economic indicators show further gains, and we expect growth to accelerate in the fourth quarter.

 

The country’s economic performance has exceeded expectations in 2021. We expect to recover to the pre-pandemic level in early 2022.

 

However, as this pandemic has shown, we cannot simply return to “business as usual.” To attain our 2040 vision of eradicating extreme poverty and becoming a high-income country, we need to continuously innovate to ensure that our development gains are inclusive and sustainable.

 

Innovation to sustain the Philippines’ structural transformation 

 

The Philippines has grown rapidly in the past several decades, and more innovation is needed to complete our structural transformation. As we have seen in the experience of other East Asian countries and economies, a strong, productive agriculture sector provides the foundation for a competitive manufacturing sector, and eventually, of a high-skilled services sector.

 

However, in the Philippines, policy distortions have slowed the growth of both agriculture and manufacturing in the last six decades. Instead of agricultural productivity paving the way for a labor-intensive manufacturing sector, and then a capital-intensive manufacturing sector, and finally a vibrant high-skill services sector, the reverse took place. Agricultural productivity has remained depressed in most crops, and manufacturing has failed to grow sustainably. As a result, a low-skill services sector emerged as the dominant sector in the economy. Employment shifted from agriculture to the informal services sector, instead of manufacturing as seen in other countries.

 

Except for some city-states, no country has achieved high-income status without first addressing agricultural productivity. Hence, innovation is crucial in these sectors for the country to grow sustainably.

 

One of our reforms is to reform the rice sector. For instance, when we enacted the Rice Tariffication Law, we succeeded in bringing down rice prices for all Filipino consumers while increasing the productivity and income of rice farmers through our Rice Competitiveness Enhancement Fund.

 

Through more innovations and reforms aimed at addressing the country’s policy distortions beginning with the most basic sector – agriculture, we can transform our agriculture, manufacturing, and our services sectors and provide better economic opportunities and outcomes for all.

 

Reforms to spur innovation 

 

Filipinos are known for our innate talent and creativity. Globally, the Filipino brand is recognized among our Overseas Filipino Workers. Further economic liberalization and investments in our human capital can unlock our country’s potential to become an innovation hub in the region.

 

Public Service Act 

 

The National Economic and Development Authority fully supports the urgent passage of amendments to the Public Service Act. This is currently now in the Senate and on its way to the bicameral. Relaxing restrictions on foreign ownerships especially telecom and transport will help us attract more investments and create more and better jobs that are crucial to accelerating our economic recovery.

 

This, in turn, will expose us to new ideas, best practices, and high skills in an increasingly globalized world. For instance, we are told that the merger of Indonesian tech giants GoJek, a ride-hailing app, and Tokopedia, an e-commerce platform, created Indonesia’s most valuable start-up company which is majority owned by foreigners. Japan’s SoftBank and China’s Alibaba are their largest shareholders, and the latest estimated value of their firm is around 40 billion US dollars. To put this into Philippine perspective, a Philippine firm with this valuation would make it the most valuable company in the Philippine Stock Exchange.

 

Similarly, welcoming foreign investments in key industries while ensuring safeguards through the Public Service Act will allow Filipino firms to work with experts and continuously grow and improve our services to compete globally. The Public Service Act will complement four other key measures to support innovation that are already enacted into law, or are soon to become law. These are the Foreign Investment Act, the Retail Trade Liberalization Act, the Innovation Law, and the Innovative Start-up Act.

 

Philippine identification system 

 

The Duterte administration has also accelerated the implementation of the Philippine identification system or the PhilSys or the National ID to provide every Filipino with a unique and digitalized proof of identity. This will give every Filipino, especially the poor, access to much-needed social, financial, and digital services.

 

As of December 10 of this year, we have registered over 50 million Filipinos to the demographic and biometric data capture. In partnership with the Land Bank of the Philippines, we have also facilitated the opening of more than 6.7 million bank accounts for low-income families. This will help us achieve our goal of having 100 percent financial inclusion at the family-level towards the end of the year. Apart from promoting financial inclusion, this will lead to a more efficient targeting and quicker delivery of government social protection programs.

 

Gearing up for the full implementation of the Philippine Innovation act  

 

Over the past five years, the government has implemented many reforms to address long-standing issues and lay the foundation for continuous growth beyond the Duterte administration.

 

With the full implementation of the Philippine Innovation Act, we will further solidify our growth prospects and improve our global innovation index by encouraging more research and development, and adaptation of new technologies.

 

As vice-chair of the National Innovation Council, NEDA is spearheading the crafting of the National Innovation Agenda and Strategy Document (NIASD). This document is a 10-year foresight plan to weave and harmonize existing policies and strategies based on the evolving innovative, or innovation ecosystems.

 

Moreover, next year, the National Innovation Council is tasked to manage one-billion-peso of innovation fund to strengthen enterprises, our support to enterprises engaged in developing innovative solutions to address the concerns of the people, most especially those who are vulnerable and most in need.

 

Innovation is not simply about cutting-edge technology. Rather, at its core, innovation is about working together to find the best solutions to our most pressing problems – even basic ones in agriculture and financial inclusion, where many of us benefit, but the far majority have yet to benefit. Everyone has a role to play in strengthening our innovation culture. We look forward to working with our partners in the public and private sector towards our shared vision of a country free from extreme poverty.

 

Thank you very much and take care.

 

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