Makati City – Despite the impact of the COVID-19 pandemic, the Philippines remains among the world’s most innovative economies. The Global Innovation Index (GII) 2021 ranks the country at 51st out of 132 countries, as it sustains its status as an “innovation achiever” for the third consecutive year.

Department of Trade and Industry (DTI) Secretary Ramon M. Lopez emphasized that through the country’s Inclusive Innovation Industrial Strategy (i3S), “We have focused our efforts in strengthening national and regional innovation and entrepreneurship ecosystems by forging government-industry-academe collaboration, enabling a strong business and policy environment, and upskilling our creative talent pool. Our experience validates the strong potential of innovation to catalyze job creation, upgrade industrial competitiveness, and attract high-value investments.”

The GII 2021 noted that the Philippines continues to perform better in innovation outputs than innovation inputs. Among its innovation output strengths are in high-tech exports (ranked first in the world), utility models by origin (eighth), creative goods exports (as % of total trade, 10th globally), and ICT services exports (as % of total trade, 13th globally). For innovation inputs, the country’s strengths are in high-tech imports (first), firms offering formal training (eighth), and trade, diversification, and market scale (21st).

“This means that we were able to produce more and higher-quality innovation outputs despite our limited innovation resources and pandemic-induced setbacks. This is reflected in the GII observation that the Philippines continues to be among the countries that perform above expectations given our current level of development,” remarked Secretary Lopez.

The GII 2021 further noted that the Philippines ranks fourth among the 34 lower middle-income group economies. It is 11th among the 17 economies in Southeast Asia, East Asia, and Oceania, with a performance that is above the regional average in two pillars, namely: business sophistication, and knowledge and technology outputs. More importantly, the country is among the TVIP economies (Turkey, Vietnam, India, and the Philippines), which are systematically catching up and have the potential to change the global innovation landscape for good.”

Pointing out the importance of the collaboration among government agencies and linking the country’s researchers/universities and industry with one another to build and cultivate the nation’s innovation and entrepreneurship ecosystem, Undersecretary Rafaelita M. Aldaba said, “By making our ecosystem inclusive, nurturing a friendly business environment, and with government and the private sector providing the needed funds for research and development, we will be able to attract more investments, generate more and better-quality jobs, and produce higher-value products that would lead to better prices in the market for the benefit of our consumers.”

Secretary Lopez stressed, “We have seen that with the right collaborators, our country’s entrepreneurial and innovative people can boost and optimize their discovery potential and serve as a primary engine of economic development, especially amidst the Fourth Industrial Revolution. As envisioned by President Rodrigo Roa Duterte, this is the best way by which we can spur new enterprises, create more and better jobs, and build our industrial competitiveness towards a more comfortable life for all Filipinos.” 

The #GII2021 is available in this link and the Philippine country profile is available in this link. ♦

Date of Original Release: 21 September 2021

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Manila—Trade Ministers from the Association of Southeast Asian Nations (ASEAN) met with the United States Representative (USTR), Ambassador Katherine Tai, via video conference on 14 September 2021 for the AEM-USTR Consultations.

At the said engagement, ASEAN and US economic officials discussed current efforts undertaken to address the disruptions of the COVID-19 pandemic and expressed commitment to further accelerate recovery by ensuring that markets remain open for trade and investment, among others.

“On trade and investment policies, the Philippines believes that they must be people centered and should always promote inclusive growth. We have always adhered to this policy, and we will remain a strong mover of an open, free, fair, transparent, inclusive, rules based and non-discriminatory trading system,” said Secretary Ramon M. Lopez.

The meeting endorsed the 2021-2022 ASEAN-U.S. Trade and Investment Framework Arrangement (TIFA) Work Plan that will include implementation of initiatives on digital trade and sustainable development, as well as further dialogue on safeguarding worker’s rights and the inclusion of environmental provisions in trade agreements.

According to Secretary Lopez, the U.S. is an important and strategic trading partner to ASEAN, and the [ASEAN-U.S.] TIFA has served as a key mechanism to reinforce economic relations and expand trade and investment opportunities in the post-pandemic recovery efforts.

“The Philippines views the rise of e-commerce and digital economy as catalysts for post pandemic recovery. Thus, it is important that rules and disciplines be entrenched in this area to ensure a predictable way of doing business online while protecting the rights of consumers.” Lopez added.

Ministers also engaged with the US-ASEAN Business Advisory Council (US-ABC) where both sides underscored the importance of the private sector in coming up with concrete initiatives to facilitate economic recovery.

The US-ABC discussed their recommendation paper titled, “Re-building ASEAN’s Economy in Post-Pandemic Era” which identifies timely initiatives where the private and public sector can work together to support ASEAN in implementing relevant initiatives, such as the ASEAN Comprehensive Recovery Framework (ACRF), Ha Noi Plan of Action on Strengthening ASEAN Economic Cooperation and Supply Chain Connectivity in Response to the COVID-19 Pandemic, and the ASEAN Agreement on Electronic Commerce.

The US-ABC also lauded the support and assistance provided by the DTI led by Secretary Lopez on the launching of the ASEAN SME Academy, a US-funded online training tool and information portal to develop globally competitive MSMEs.

“We appreciate the proposed initiatives of the US-ABC, particularly in advancing the region’s digital transformation agenda. Digital trade is indeed a key area that ASEAN should look into to ensure synergies between the private and the public sector, and to fast-track recovery of affected businesses and micro, small and medium enterprises (MSMEs). We will ensure the proposals are considered by the relevant sectoral bodies,” Secretary Lopez noted.

The AEM-USTR Consultations was convened at the sidelines of the 53rd AEM Meeting, which was held in view of the 38th ASEAN Leaders’ Summit and related summits to be held on 26-28 October 2021. ♦

Date of Original Release: 23 September 2021

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The 4th ASEAN Inclusive Business Summit’s theme ‘Building Inclusive Businesses to Build Back Better’ is in line with this year’s ASEAN Chairmanship theme ‘We Care, We Prepare, We Prosper’ and reflects the potential of the public and private sector’s innovative models to address challenges posed by the ongoing COVID-19 pandemic.

Permanent Secretary (Industry) at the Ministry of Finance and Economy (MoFE) Pengiran Hajah Zety Sufina binti Pengiran Dato Paduka Haji Sani said this in her opening remarks at the virtual summit last Wednesday.

“As a result of efforts to promote inclusive business at a national level, ASEAN member states are actively engaging in inclusive business policy development and capacity building to better understand the inclusive business concept and approaches among its policy makers and businesses,” she said.

Pengiran Hajah Zety also shared the progress of inclusive business in Brunei Darussalam.

Though poverty in the Sultanate is marginal, there has been a growing trend of social entrepreneurship and corporate social responsibility initiatives that incorporate elements of inclusive business in addressing social challenges such as unemployment and assisting vulnerable groups including low-income families and single mothers.

The one-day summit showcased emerging policy frameworks, strategies, and success stories of inclusive businesses across the region.

BANDAR SERI BEGAWAN – Brunei Fertilizer Industries (BFI) on Monday signed an agreement with Muara Port Company (MPC) that will allow the fertilizer manufacturer to export granular urea through the country’s biggest marine port.

With BFI eyeing exports of granular urea to far-off markets such as India, Australia, Latin America and the United States, MPC, the operator of Muara port, is best positioned to handle the fertilizer cargoes, BFI said in a press release.

MPC recently began preliminary expansion works for Muara port that will double the size and capacity of Brunei’s main container terminal by 2023.

Under the agreement, MPC will provide BFI with the logistics of transporting urea from Sungai Liang Industrial Park to Muara Port, which can accommodate vessels of up to 40,000 deadweight tonnage to enable BFI to reach remote customers.

MPC will also take over operations of BFI’s terminal in Sungai Liang Industrial Park, which can accommodate smaller vessels up to 9,000 deadweight tonnage.

Date of Release: 7 September 2021

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BANDAR SERI BEGAWAN — China maintained its position as ASEAN’s top trading partner despite the ongoing pandemic that has disrupted economic activities all over the world, His Majesty Sultan Haji Hassanal Bolkiah said on Friday.

In his titah at the virtual opening ceremony of the 18th China-ASEAN Expo (CAEXPO) in Nanning, China, His Majesty said ASEAN and China registered an increase in total merchandise trade in 2020.

This underscored the strong economic ties and business linkages that characterised the long-standing relationship between ASEAN and China, he added.

Trade between China and ASEAN reached US$684.6 billion last year.

China has been the regional bloc’s largest trading partner for 12 consecutive years. As of June this year, mutual investment between China and ASEAN exceeded US$310 billion.

Date of Release: 11 September 2021

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International Monetary Fund (IMF) Executive Directors encouraged Brunei Darussalam authorities to continue to build on efforts to diversify the economy, further attract foreign direct investment (FDI) and enhance human capital and improve private employment.

They welcomed the policy priorities of the recently released Economic Blueprint, and highlighted the importance of accelerating digital and green growth to foster job creation and enhance resilience.

This was highlighted in a report when IMF Executive Board concluded 2021 Article IV Consultation with Brunei Darussalam recently.

Executive Directors also commended the authorities for the strong, timely and multi-pronged policy response to the COVID-19 pandemic and associated decline in oil and gas prices. Noting the uncertain outlook, with risks skewed to the downside, the executive directors stressed the need to maintain supportive policies until recovery is on a firm path. They also underscored the importance of continued reforms to support economic transformation, strengthen resilience, and foster green, digital, and inclusive growth.

The logistics sector plays a pivotal role for ASEAN integration into regional and global value chains which accounts for about five per cent of gross domestic product (GDP) in the region, said Minister at the Prime Minister’s Office and Minister of Finance and Economy II Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah at the ASEAN Economic Ministers (AEM) meeting yesterday.

In view of the sector’s significant role in fostering economic development, the minister added that it is important to ensure a well-developed and efficient logistics network, due to its impact on the economic activities, trade cost competitiveness and supply chain connectivity.

“We were pleased to work with the Organisation for Economic Cooperation and Development (OECD) and ASEAN Secretariat in embarking this project three years ago, as part of the ASEAN Competition Action Plan (ACAP) 2016-2025, towards a more pro-competitive regulations and elimination of competition distortions, to enhance market efficiencies,” he said.

Dato Seri Setia Dr Awang Haji Mohd Amin Liew also pointed out that five sectors – transport by road, inland waterway and maritime, freight forwarding, warehousing, small package delivery services and value-added services are the key for the development of the enterprise sector, particularly the micro, small and medium enterprises (MSMEs) and new start-ups, which can generate economic growth and employment.

An assessment of the impact of state-owned enterprises on competition entitled OECD Competitive Neutrality Reviews: Small-Package Delivery Services in ASEAN was also carried out by the OECD, which has become more relevant, due to the rapid growth of e-commerce amid the COVID-19 crisis.

Date of Release: 10 September 2021

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The Bandar Seri Begawan Joint Declaration of the 39th ASEAN Ministers on Energy Meeting (AMEM) on Energy Security and Energy Transition, which we will seek to adopt, will go a long way in pursuing our goal of energy security, while transitioning our diverse energy systems towards lower-emissions to achieve access to affordable, reliable, sustainable and modern energy for all, said Minister of Energy Dato Seri Setia Dr Awang Haji Mat Suny bin Haji Mohd Hussein.

He said this while officiating and chairing the 39th AMEM yesterday.

The virtual meeting was vice-chaired by Cambodian Minister of Mines and Energy Suy Sem and attended by the Deputy Minister of Energy as head of delegation for Brunei Darussalam, Dato Seri Paduka Awang Haji Matsatejo bin Sokiaw.

The COVID-19 crisis has severely disrupted the Philippine economy and labor market, and highlighted the urgent need for policies that will increase the capacity of pandemichit sectors and firms to create jobs for sustainable and inclusive growth, according to a new United Nations (UN) Philippines study. The pandemic has also revealed the vulnerabilities of sectors and firms that are dependent on foreign trade and intermediates, said the study, as it called for political will and collective action to implement necessary reforms. The paper is a joint research project of the UN Philippines with the International Labour Organization, United Nations Development Programme, and United Nations Industrial Development Organization that was released earlier this month. The report further said that policy decisions in the Philippines have not responded to evolving challenges but rather have continued to produce weak industrial competitiveness and lack of productive employment, which keeps investments and demand for skills low. “These feed the vicious cycle that makes industrial diversification, upgrading and deep structural transformation increasingly difficult over time,” said the report. It said intensifying the capacity of the Philippine economy to create productive employment is now a matter of urgency, with a working-age population of around 75 million and around 600,000 net additional workers entering the labor force each year. However, it also found that “developing countries such as the Philippines are particularly handicapped by their weak institutions and their dependence on the continued openness of the world economy for their own economic growth.” The report went on to identify main trends that characterize the current state of the Philippine industry and labor market. One is the weakening competitiveness of Philippine manufacturing and the shrinking number of exporting firms over the last two decades. “The Philippines has also become more of a market of consumer goods rather than a hub of manufacturing exports due to the combination of a liberal trading regime and a large domestic market with increasing purchasing power boosted by the robust flow of remittances. For Filipino firms, this entails behaving like exporters who must compete with foreign businesses to survive in the domestic market,” the report said. Another trend is the weakening integration of the Philippine industrial base through the years, which constrains firms from domestically sourcing their inputs in the most costefficient manner. “While agriculture has become a more important source of input for industry and services, the role of these sectors for agriculture production has diminished. Based on the extent of transactions within sectors, manufacturing seems to have also become less integrated as indicated by the reduced intensity of sourcing within sub-sectors,” the paper said. The third trend is that while the Philippines has increased the sophistication of its exports through its participation in global value chains (GVCs), it has languished in low value-added segments of production. The country in general demonstrates a comparative advantage in labor-intensive, and thus lower-value export goods, and a comparative disadvantage in higher-value, capital-intensive imports. Another finding is that industrial catch-up and diversification towards more complex products is becoming increasingly difficult, slowing down the pace of economic diversification. The Philippines did diversify from 2003 to 2018 but this added just 3% to export revenues, contributing $33 to the country’s income per capita in 2018. In comparison, Vietnam added 48 new products and $1,015 to its per capita income, and 35% to total exports during the same 15-year period. “This suggests that while the Philippines has diversified, the volume of its new products has not been big enough to substantially contribute to overall growth,” said the research. The last notable trend is that the Philippine labor market is characterized by stagnant growth in real wages, persistent gender disparities, low employment growth and poor quality of work. The report said: “The COVID-19 crisis has exposed the weaknesses of economic, health, social and political systems. In so doing, however, it has also presented extraordinary opportunities to muster the political will and collective action towards necessary fundamental reforms.” It recommends putting at the top of the policy agenda measures that will increase agricultural productivity and resilience, as well as address the vulnerability of millions of the working poor, daily wage workers, youth and other vulnerable groups. It further said that the COVID-19 economic stimulus package for local firms is a potential catalyst for inclusive growth if proper focus is given to the recovery of small and medium enterprises. The stimulus package, it added, could have an even lasting impact on inclusive growth if it is used to institutionalize reforms particularly in credit access, formalization, digitization and innovation. It could also be used to incentivize industrial linkages and the transition towards green technologies and products. At the same time, the report described how other countries successfully implemented industrial policies for catch-up industrial growth, largely by capacitating the domestic industry. “Invariably anchored on bold and long-terms targets to build domestic industrial base, successful countries extended strict rules to induce GVCs or large companies to integrate local firms in their input-sourcing strategies with complementary investment in upskilling the workforce and supporting research institutes. Tax breaks and subsidies are combined with pragmatic strategies to deliver necessary skills, finance and infrastructure to producers and to build socio-political consensus. A COVID-19 economic package for local firms can take place under a fully coordinated industrial package that contributes to long-lasting development impact.”

The Covid-19 pandemic has accelerated borderless entrepreneurship in Southeast Asia, a trend seen to continue to grow and impact the region, and to offer enterprises opportunities to extend their business beyond borders, according to regional experts.

“There is a bright future in borderless entrepreneurship. Digital is now the way to do business and there is no turning back,” said Laurent Tam Nguyen, co-founder and general manager of Digital Mekong in Vietnam, a virtual market agency addressing the need for an entrepreneurship freelancer market in the Association of Southeast Asian Nations (ASEAN).

Nguyen was one of the speakers at a recent webinar on borderless entrepreneurship organized by the Economic Research Institute for ASEAN and East Asia (ERIA).
Citing a survey from global management consulting firm McKinsey & Company, Nguyen said COVID-19 has accelerated the digitalization of companies in the Asia-Pacific region by about four years.

Even industries that are highly traditional and technology-averse are now joining the bandwagon and finding that the digital approach can also work for them, he added.

As the trend of borderless entrepreneurship is quickly escalating, he emphasized the soft skills that all entrepreneurs should have, including resilience, adaptiveness, empathy, and transparency in managing teams and building businesses.

Haewon Rah, engagement manager at Techstars, a global startup accelerator based in South Korea, pointed out that investors will be more likely to support and invest in the companies that are interested to scale up their business globally.

But she acknowledged that going global is neither easy nor simple as there are differences in regulations, culture and behavior that an entrepreneur needs to become aware of.

She shared two important factors critical to successful borderless entrepreneurship: the ability to utilize networks and the willingness to create small wins.

Haewon said enterprises must actively network to gain knowledge of how businesses in the region work, adding that even group chats are a form of networking that can yield results down the line.

Creating small wins is about becoming aware that immediate, big achievements (and profit) are likely not realizable early on, and it is wise to take small but steady steps toward reaching one’s goals. Haewon suggested working in the local area first while at the same time trying to build a network and find someone who can help the business expand into a new location.

Jirut Wattom, technology strategy manager at global accelator Sprint in Thailand, echoed Haewon, saying the pandemic provides an opportunity for entrepreneurs to scale up their business faster as they can mobilize and operate their teams to do business locally while also accessing global markets.

For Jirut, although physical interaction will remain important, digitalization has been helping many regional enterprises to compete with their counterparts around the world. He highlighted how the borderless entrepreneurship ecosystem has given entrepreneurs the advantage of high exposure to clients or talents from various cultures and backgrounds. 

During the Q&A session, the speakers discussed how entrepreneurs can address the challenge of differing national regulations by being creative and agile as well as learning in-depth about the entrepreneurship ecosystem in other countries and the region.

Moreover, as digitalization has now reduced the cost of testing products, they encouraged entrepreneurs to always conduct market testing before launching their expansion bid.

Lastly, joining startup support programs or accelerator programs is also another notable way to expand networks and discover opportunities for scaling up, they said.

Business travellers engaged in selling goods or services and investments between Asia-Pacific Economic Cooperation (APEC) economies will experience streamlined entry to participating economies.

 

This, as the APEC business travel card (ABTC) transitions from physical to virtual cards using the new mobile application that will provide real-time updates/approvals by economies using their application status.

 

“As the virtual card will replace the current physical cards, they are considered as good as the physical card when presented to the immigration authorities at points of entry in APEC member countries,” Department of Foreign Affairs (DFA) acting Asst. Secretary Senen Mangalile informed Philippine Exporters Confederation Inc. (PHILEXPORT) President Sergio Ortiz-Luis Jr. in a letter.

 

The ABTC provides business people streamlined entry to participating economies through a simple pre-clearance system that allows them to obtain a multiple short-term entry to participating APEC economies through a single application.

 

The virtual ABTC has been created for the convenience of approved cardholders and will bring the ABTC scheme into the modern and digitized era of global travel. It is free to download and accessible for those applicants who have been approved for an ABTC.

 

“It provides cardholders from fully participating member economies with a more secure, efficient, convenient and user-friendly service.

 

The virtual ABTC automatically updates as a cardholder opens or refreshes their smart device ‘app’, ensuring all relevant information is up-to-date and readily available for the cardholder’s travel,” according to the APEC Business Mobility Group.

 

Participating economies in the ABTC scheme currently includes Australia, Brunei Darussalam, Chile, Chinese Taipei, Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, People’s Republic of China, the Philippines, Peru, Russia, Singapore, Thailand and Vietnam.

 

Each economy determines its own timeline to transition to the virtual ABTC for its cardholders.

 

In line with this, Mangalile requested the exporters’ group to provide the department with a list of ABTC cardholders among its members with their respective personal email addresses.

 

“The information is needed so that they could be provided with access or log-in credentials to the mobile application,” he said.

 

Mangalile also asked the PHILEXPORT to inform its members who are ABTC holders about the new process, adding that the department will provide a user manual and frequently asked questions once APEC has finalized them.