GVC analysis on 5 key sectors conducted

Global value chain (GVC) studies on the aerospace, automotive and auto parts, chemicals, electronics and electrical machinery, and paper industries will be presented to various stakeholders through a public forum on  June 2, 2016 at the Makati Diamond Residences.

Conducted by the Duke University Center on Globalization, Governance, & Competitiveness (Duke CGGC), the five studies were commissioned under the Science, Technology, Research, and Innovation for Development (STRIDE) Program and the Advancing Philippine Competitiveness (COMPETE) Project of the United States Agency for International Development (USAID) for the Philippine Board of Invetments (BOI), the industry development and investments promotion arm of the Department of Trade & Industry (DTI). The GVC studies are intended to assist the BOI in its efforts to further develop its framework and strategies in promoting industries built on best practices.

“The findings of the studies carried out by the Duke CGGC are important in formulating policies and programs on how firms, SMEs in particular, can participate in GVCs and, for those that are already participating, how to upgrade and move up the value chain. The research studies provide evidence  which serve as basis to improve our industry development strategies towards a more globally competitive Philippine manufacturing industry,” said DTI Assistant Secretary for Industry Development Rafaelita Aldaba.

The Philippine new industrial policy as contained in the Comprehensive National Industrial Strategy (CNIS), the country’s blueprint for linking the manufacturing, agriculture, and services sectors, aims to improve the country’s competitiveness by upgrading the productivity of its industries and removing the binding constraints to their development.

Under this policy, the government acts as enabler of the private sector, which is the proximate engine of growth, and serves as facilitator of initiatives that will create the proper environment for private sector development. The new industrial policy is cluster-based and GVC-focused and intends to build strong regional economies in the country and focus government efforts in integrating local industries into regional production networks and enabling SMEs to move up their GVCs.

The GVC studies particularly focus on how the mentioned industries can reinforce forward and backward linkages. The analyses cover the structure of each industry’s value chain—from inputs, technologies, processes through distribution and marketing—at the global level, and indicates where the Philippines currently fits within these GVCs. It explores the global competitive environment for these value chains, and how the Philippines compares relative to its competitors.

The GVC studies also analyze the most binding contraints preventing Philippine firms from moving up the industry GVCs, and recommend strategies for value chain upgrading and improving competitiveness, as well as the needed investments, human resource requirements, and the roles of government and industry stakeholders in implementing these.

PHL hosts 24th APEC AD

The Philippines, through the Board of Investments (BOI), is hosting the 24th Asia-Pacific Economic Cooperation Automotive Dialogue (APEC AD) starting today, May 25 until May 27, 2016 at the Makati Diamond Residences where discussions are expected to center on the current status of the Automotive Industry in the Asia Pacific Region and the ongoing initiatives of the working group.

The APEC AD serves as a forum for APEC member economy officials and senior industry representatives to work together to map-out strategies for increasing the integration and development of the automotive sector within the region. It is one of the Industry Dialogues under the APEC Committee on Trade and Investments along with the Chemicals Dialogue and Life Sciences Innovation Forum.

At the 22nd and 23rd APEC AD also chaired by the Philippines through BOI, the vital role of SMEs in the automotive manufacturing industry and their integration into the regional and global markets where two workshops on the experiences and best practices of some SMEs in their participation in the GVCs were highlighted. The meeting also hosted various initiatives focusing on SMEs and their needs to better participate in GVCs including the study on the GVC-SME Automotive Sector (GSAS) conducted by Malaysia and Philippines with the aim of gathering information on automotive industry SMEs in the Asia-Pacific region, particularly the barriers they encounter in their endeavor to penetrate the international trading system.

“As a follow through, the APEC AD hopes to identify and develop a capacity building action plan for SMEs based on the findings of the study,” said BOI Executive Director for Industry Development Services Ma. Corazon Dichosa, also the APEC AD chair. “A compendia on motor-vehicle related taxes as well as automotive business regimes were also initiated to provide member economies with up-to-date vital information on the automotive sectors in the region. These aims to provide the auto industry, particularly SMEs with information to aid them in penetrating the GVC, e.g. market size of the economies, business regulations,” she said.

At the 24th APEC AD, the working group will discuss updates on APEC Developments, as well as the AD’s workplan until 2017.

PHL pushing for WTO TFA ratification

Philippine products and services are bound to reach an even wider international market once the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) is ratified.

The WTO TFA, a key component of the Doha Development Agenda, aims to speed up the movement, release, and clearance of goods across borders. The agreement includes provisions for advance rulings and pre-arrival processing, the use of electronic payment and promotion of the use a single window, provisions for customs cooperation and coordination, and reduced documents and formalities with common customs standards.

Negotiations on the agreement started in 2004 and will enter into force once two-thirds of the WTO members have completed their domestic ratification process.To ratify the WTO TFA, the Philippines will submit its Instrument of Acceptance signed by President Benigno Aquino III to the WTO through its Philippine Mission in Geneva.

The TFA is also consistent with customs reform initiatives in other international fora such as the World Customs Organization (WCO), Asia Pacific Economic Cooperation’s (APEC) Trade Facilitation Action Plans and activities of its Sub-Committee on Customs Procedures, and ASEAN trade facilitation initiatives.Philippine reforms are currently underway through the Customs Modernization and Tariff Act (CMTA) now pending ratification in Congress.

The CMTA adopts trade facilitation measures that will expedite import and export clearance. This legislation will improve customs services through a simplified, secured, and harmonized cargo clearance process. The CMTA addresses, as well, the country’s international trade commitments and deals with transparency and accountability issues in the Bureau of Customs (BoC).

DTI Undersecretary for Industry Development Dr. Ceferino S. Rodolfo said that the TFA will significantly benefit MSMEs since the implementation of rational, efficient, and simple rules would encouragethem toparticipate more actively in international trade.

“Our MSMEs can now easily export goods and finished products as well as import intermediate goods which will serve as industry inputs for processing and re-export, fully integrating our industries into the Global Value Chain (GVC). This will result into a spill over effect to other industries, thus generating jobs, disseminating upgraded technology, and advancing the skills and capability of our local entrepreneurs,” Rodolfo said.

The Philippines serves a crucial processing link along the GVC chain, both as a source and destination for intermediate goods, with a 56% overall participation rate measured by share of foreign value added in total exports. The country was ranked 8th in the list of the top 25 developing economy exporters in the 2013 World Investment Report of the United Nations Conference on Trade and Development.

BOI conducts supply chain training

BOI jointly with the US-ASEAN Business Council (US-ABC) conducted a workshop on “Supply Chain Readiness Training” for the Automotive Sector.

The workshop aims to transfer information, knowledge and skills from multinational companies to broader Philippine SMEs on various good business, legal practices and solutions in enhancing their competitiveness.

The workshop is part of the government and the private sector’s collaborative efforts to further integrate the country’s small and medium enterprise (SME) automotive players as competitive participants in global value chains.