The Philippines should leverage on its three strong industries – electronics, information technology-business process outsourcing and medical professional skills – and cluster them with other sectors.
Workers who have been severely impacted by the pandemic such as those in tourism should be deployed to other industries through skills retraining.
Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand, told the ThrivePh forum yesterday the traditional-non tradable sectors — from shopping malls, restaurants to transport services — are poised to grow because of the Philippines’ demographic groups, urbanization, remittances etc.
“I’m not really very worried about this part. It’s much harder to develop the tradable or export oriented sectors because domestic demand is not sufficient to boost these sectors, because these goods can be imported,” Diop said.
Diop added the Philippines has the basis to develop its manufacturing competitiveness but it has to start somewhere.
In this case, he suggested to harness electronics which represent more than 50 percent of the country’s exports.
“The country is also world renowned and competitive for BPOs. The country is the world’s largest exporter of skills, like nurses. It is a good strategy to leverage these sectors, and to develop clusters around them,” Diop said.
For example, he said, the Philippines has a potential to grow semiconductors and develop around it automotive and aerospace industries which are increasingly becoming dependent on semiconductors.
“A very strong semiconductor industry provides the Philippines with the basis to develop a cluster…. Around the BPO, you can develop a cluster that includes media and telecommunications. Around the skills you can develop the whole cluster of health in life science and wellness,” Diop said.
But he said this strategy requires plugging in the skills element.
“What has been a handicap for the Philippines is really the skills element, either because not enough skills that the industries need are available, or if they’re available, the arbitrage between being employed in the Philippines, and being employed abroad, would be in favor of emigration,” he said
With demand for some sectors depressed by the new coronavirus disease 2019, Diop said workers in these industries can be deployed to other service sectors
“The good news is that COVID has also created new opportunities. E-commerce is booming, and with digitalization there are new opportunities that are emerging. One challenge for policymakers, is how do you help with this sort of allocation of resources from the sectors that we know will be growing less fast, or will be in overcapacity in the next few years,” he added.
