THE World Bank said that in post-pandemic, the Philippines has more opportunities to deepen its participation in global value chains (GVCs), especially in the Department of Trade and Industry’s featured business clusters.

During the launch of its report titled “A New Dawn for Global Value Chain Participation in the Philippines,” the bank said that addressing the constraints to participation for these GVCs will boost the recovery, resilience and competitiveness of the Philippine economy.

“Greater participation in global value chains can be a powerful driver for productivity and growth, enabling countries to leapfrog their development process as seen in many countries,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand.

“Countries that embrace GVCs will be able to leverage their strengths in specific tasks and roles in manufacturing and services, and export at scale, enabling them to sustain growth, create more jobs and reduce poverty faster,” said Diop.

According to the report, there are several global trends favoring the Philippines’ chances to succeed in GVCs. Among them are the increasing use of automation and artificial intelligence, the rise of services in manufacturing demanding higher labor skill and the efforts by companies during the Covid-19 pandemic to diversify suppliers, which also align with the Department of Trade and Industry’s business clusters.

It also added that the Philippines can still capture bigger shares in the electronics, electrical parts and components GVCs by attracting foreign investments in design capacity so that more valueadded is captured and manufacturing is retained and expanded in the country. There are also bigger opportunities for business process outsourcing (BPO) companies to move up the ladder by providing value-added services like analytics.

However, the World Bank said that this can be achieved through the cooperation from several stakeholders such as mobilizing key stakeholders to build opportunities from accelerated digitalization, capitalizing complementarities across clusters and diversifying electronic and electrical intermediate goods, adding analytics to the voice service sector and expanding it to other sectors, and upgrading the BPO to KPO (knowledge process outsourcing), which will become a key stepping stone to an integrated telecommunication cluster.

Moreover, the report said the Philippines also needs to overcome some “structural constraints” to take advantage of ongoing trends in GVCs. These constraints include restrictions on foreign direct investments in various sectors of the economy and scarcity of advanced science, technology, engineering, mathematical skills, among others.

This is the reason why the country passed several amendments to the Foreign Investments Act, the Retail Trade Liberalization Act and the Public Service Act, which are aimed to help foreign investors with the ease of doing business in the country.

“Timely implementation of these legislations will be essential for the Philippines to attract investors looking for alternative production sites as transnational companies continue to adjust to the challenges posed by [the] pandemic,” concluded Souleymane Coulibaly, World Bank lead economist and program leader for Equitable Growth, Finance and Institutions Practice Group for Brunei, Malaysia and the Philippines.