The missing ingredient in DTI’s innovation push

THE Department of Trade and Industry (DTI) Secretary Alfredo Pascual recently unveiled an ambitious plan to boost innovation in the Philippines. It has long been our position that a greater focus on creating an environment for innovation is a necessity for economic growth, particularly among the nation’s micro, small and medium enterprises that make up the largest part of the economy, thus we are fully supportive of the ideas and intentions laid out by Secretary Pascual. 

What causes concern, however, is that while the ambitions of the DTI are certainly forward-looking, the one piece of infrastructure that is needed most to be able to put them into practice is still not up to the task. Without a robust digital infrastructure, much of the DTI’s vision will remain unrealized.

Innovation is critical to competitiveness and the capacity to expand, and it is apparently an area in which the Philippines is losing ground. Secretary Pascual’s announcement of the DTI’s new innovation initiatives was coincidentally preceded by the release of the 2022 Global Innovation Index, which showed the Philippines had fallen eight notches to 59th out of 135 economies.

In order to “uplift the lives of the Filipino people, improve the productivity of enterprises and enhance the competitiveness of the Philippine economy,” as Secretary Pascual said, the DTI is preparing a National Artificial Intelligence (AI) Roadmap, a broad strategy to harness new technologies and apply them to commerce and industrial development. The proposed roadmap has several key components, beginning with the establishment of a Center for AI Research, a public-private partnership hub where companies, universities and researchers can carry out projects.

The DTI is also planning to create an Industry 4.0 Pilot Factory, or I4PF, which will serve as a sort of laboratory for cutting-edge manufacturing technologies like advanced robotics, drones, the Internet of Things and augmented reality for factory simulations. “It will serve as a demonstration and training hub to accelerate the adoption of Industry 4.0 technologies in the production operations of Philippine industries, especially small and medium enterprises,” Pascual said.

Another initiative is the adoption of the Smart Industry Readiness Index, a digital transformation assessment framework developed by the Singapore Economic Development Board. This index will help to track innovation progress, and identify problem areas.

To spread innovation efforts out across the country, the DTI is also establishing regional inclusive innovation centers in partnership with other government agencies, industry, and educational institutions.

To support the creation and growth of startups, the Incubation, Development and Entrepreneurial Assistance Program will connect early stage tech startups with mentors, investors and the government. For startups that have reached a growth stage, the Accelerating Development, Valuation and Corporate Entrepreneurship Program will assist them in scaling up their enterprises.

Finally, recognizing the potential of creative industries as an economic driver, the DTI has created the Malikhaing Pinoy Program, which will, among other things, include the establishment of a creative venture fund, creative learning academy, creative innovation centers and creative market acceleration initiatives.

Virtually all of these initiatives will rely heavily on digital infrastructure, and that may be the effort’s Achilles’ heel. It is difficult to imagine, for instance, entrepreneurs willing to risk a wholesale shift to things such as cloud-based financial and data management, or web-controlled manufacturing processes, without an ironclad assurance of fast, reliable and affordable internet services — descriptions that sadly do not apply to what is available most of the time and in most places in the Philippines. Thus the biggest innovation that is needed, one that must be prioritized in order for any of DTI’s vision to become a reality, is in the government’s arcane policies and somnolent approach to attracting greater investment and encouraging expansion of digital infrastructure.