Government picks industry clustering as strategy for economic development

Cabinet clusters that troubleshoot problems in different sectors have been disbanded for being cumbersome. Industry clustering as a national strategy for economic development is, however, in.

This development emerged following a briefing made by Export Development Council (EDC) consultant Ceferino Follosco Jr. and Trade and Industry Secretary Manuel Roxas II on the latest developments in the effort to get the export sector back on its feet following the battering it got in the first half of the year as the economies of its major markets like the United States and Japan sputtered.

Follosco reports that President Arroyo has expressed her administration’s full support in the grouping together of enterprises in each strategic industry and related support-businesses in the regions and provinces as a central strategy for economic survival and growth in the first decade of this century.

A presidential endorsement of the strategy that was piloted in a few selected export industries for the past two years will mean that:

• Government’s scarce resources will be focused on tying-together related enterprises in the field, and assisting them to get better access to credit, acquire cheaper raw materials, other inputs and equipment;

• Board of Investments’ new package of incentives directed to key players in industry clusters will have to be drawn;

• Pooling of public and private resources in the establishment of common service facilities for small and medium enterprises like marketing assistance, transfer to the provinces of modern technology, best productivity practices and global quality standards;

Clustering of industries as a government strategy was first piloted here by the late President Diosdado Macapagal when he initiated the integration of the domestic steel industry to spur Philippine industrialization. This was, however, cut short when his successor nationalized the Integrated Iligan Steel Mill and froze the industry’s full integration from iron mining, refining, manufacturing of intermediate products like billets, rolled steel and slabs and downstream industries like foundries, tool-dyeing and construction steel manufacturing.

The idea was revived in pilot industries by the export community in 1999 when they found the "export winner" strategy of government in promoting export growth began floundering in the face of intensifying competition.

Follosco has reported that among the pilot industries, the most successful that adopted the idea so far have been the coffee industry with Nestle Philippines as the core enterprise, the furniture industry in Cebu and to a lesser extent, the fine jewelry industry in Bulacan.

As the EDC and the DTI moved across the country promoting the "industry clustering" strategy for adoption by the rest of the exporting enterprises in the regions since last year, they found adherents not only among export-oriented businesses, but purely domestic enterprises.

This has prompted the DTI to adopt the idea as a strategy both for export and domestic enterprise development. – Abe Belena, Philexport News & Features