PH firms slow in shifting digitally

Published October 22, 2020, 6:00 AM

by Bernie Cahiles-Magkilat

The Department of Trade and Industry (DTI) is incentivizing local enterprises for them to adopt to digital technologies because while majority of enterprises are aware of the need to transform digitally many of them are facing various constraints, particularly the lack of capital.

DTI Undersecretary Rafaelita M. Aldaba (Photo credit:

DTI Undersecretary Rafaelita  M.  Aldaba stressed at the Asia Pacific Economic Cooperation Business Advisory Council (ABAC) Philippines Forum on Digital Innovation of the need of the government to step in to address the need of enterprises to adopt the Industry 4.0 Transformation.  

“We really need government and government has to step in and be able to share because there are uncertainties and risks that will be involved in terms of investing in these new technologies,” said Aldaba.

Aldaba stressed the need for government intervention as she cited poor adoption of digital technologies and barriers to Industry 4.0 Transformation among local enterprises as shown in their latest survey on SMART Manufacturing Maturity Index conducted in the third quarter of 2019.

Aldaba noted that firms’ primary considerations for shifting to Industry 4.0 include improvement in productivity and competitiveness, innovation and technology advancement, cost of investment and funding, market conditions.

Lack of financial capability topped as the number one barrier to Industry 4.0 Transformation followed by unfamiliar/not considering, market condition, lack of skills, knowledge and expertise, and poor digital infrastructure.

According to Aldaba, the government needs to provide interventions and provide necessary support to make MSMEs and even large companies.

She cited interventions like the Industry 4.0 pilot factory that would provide share service facilities for the production of prototypes. He said the government is collaborating with other countries like Singapore and Korea to help in the training program for employees.

“We envisioned is to have these shared service facilities, not only for trainings but also for helping companies that are innovating,” said Aldaba.

Only 40 percent of firm respondents are in level 1 meaning companies with spreadsheet management.

The survey also showed that only 38 percent are until level 2 or companies with standalone DB Management System with Legacy Application.

The data further showed that 17 percent of micro enterprises and 13 percent of small establishments are at level zero.

The medium enterprises though have higher 67 percent at level 1 and 30 percent at level 2 and 4 percent at level 3 or firms with manufacturing execution system. Twenty percent of large firms are at level 1 and 48 percent at level 2 and 24 percent at level 3 and only 8 percent are at level 4 or companies with Industry 4.0 and are employing internet of things, big data, machine learning and robotics in their operations.

Such low level of transformation is happening despite the fact that majority of enterprises are aware of the opportunities and challenges in transforming to Industry 4.0 Technologies. The DTI survey showed that 77 percent of micro enterprises are familiar with 4.0 while there are 67 percent of small and medium that are familiar with Industry 4.0. Majority or 83 percent of large enterprises are familiar with Industry 4.0.

Filipino firms though have high technology utilization in the areas of cybersecurity, quality and manufacturing activity management.