The Philippine’s performance in the recently released 2020 Global Innovation Index (GII) is encouraging, as we ranked 50th out of 131 economies — our best showing ever, in this regard. This ranking also marks the second year that we have been identified as an innovation achiever, performing at a much higher level than what is expected given our level of economic development.
Despite this success, we remain unable to maximize the potential benefits that would accrue from innovation. Consider that according to the 2020 GII, we are first when it comes to high-tech imports as a percentage of our total trade, and third in terms of high-tech net exports. However, we are 81st place in terms of patents by origin per billion of GDP, and 91st place for PCT patents. It appears that even though some of the world’s top technologies passes through our factories, we are not developing new knowledge or technology ourselves. And if we are, we may not be earning from it.
Currently, the Senate is working to correct this situation. Last week, during the interpellations on the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the bill’s sponsor Ways and Means Committee Chair Senator Pia Cayetano and I discussed at length on how and why research and development (R&D) should be given incentives in our country.
While the Senate’s working draft of CREATE already gives incentives to R&D activities, I raised that some amendments could be made so that registered business enterprises have more room to branch out into other products and services. In short, a company’s R&D activities eligible for incentives should not be limited to the products or services that they are currently offering.
We also brought up the idea of incorporating aspects of an “intellectual property (IP) box” or “patent box” tax regime, common among many European Union countries, where companies that earn from IP that they’ve helped create or co-own are given preferential rates. Thankfully, Senator Cayetano has expressed openness to our suggestions.
Meanwhile, during the public hearing on the 2021 budget of the Department of Science and Technology (DOST), many of the senators present, including myself, acknowledged how the funding for government R&D has historically been lackluster. And so as Finance Committee chair, we asked DOST Sec. Fortunato de la Peña to submit to us a priority list so that we in the Senate can determine where scarce public funds would be allocated best.
We then asked the department to help us identify which among the so-called 21st century industries the Philippines could excel in so that as early as now, we could already make strategic investments and prepare ourselves for whatever opportunities that may emerge.
We also requested the Philippine Space Agency (PhilSA) to demonstrate to us how their proposed satellite development programs could spill over to other science and industrial spaces—as justification for a bigger budgetary allocation for them. PhilSA Director General Joel Marciano did say that the technological know-how that would be gained from building our own satellites could then be leveraged into developing high-value electronics, while the data science needed would strengthen our foundations to excel in an information-driven future.
Sec. De la Peña wrote a chapter in the GII, where he described “Filipinnovation,” a whole-of-government approach crafted by key government agencies such as the DOST, the Department of Trade and Industry (DTI), and the National Economic and Development Authority (NEDA). For Sec. De la Peña, the approach is basically the Bayanihan community spirit as applied to developing homegrown technologies through a countrywide network for innovation where government researchers, the academe, and industry are closely collaborating.
Such an approach resonates very closely with the core ideas of our Tatak Pinoy initiative. Specifically, Filipinnovation will be essential in our attempts to empower our industries to move further up the value chain and offer more sophisticated and complex products.
The book “The Atlas of Economic Complexity,” has this line: “Knowledge can only be accumulated, transferred, and preserved if it is embedded in networks of individuals and organizations that put this knowledge into productive use.” We have to support innovation — R&D certainly — if we want to make our country and economy significant, regionally and globally, in the coming brave new world. (30)
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Senator Sonny Angara has been in public service for 16 years — 9 years as representative of the Lone District of Aurora, and 7 as senator. He has authored and sponsored more than 200 laws. He is currently serving his second term in the Senate.