Presently advancing in the Senate is a measure titled “An Act Mandating the Formulation, Funding, Implementation, Monitoring, and Evaluation of a Comprehensive and Multi-Year ‘Tatak Pinoy” (Proudly Filipino) Strategy, Establishing a Tatak Pinoy Council, Appropriating Funds Therefor, and For Other Purposes.” The measure, championed principally by Senator Juan Edgardo “Sonny” Angara, with Senators Tolentino, Legarda, Binay, Estrada, and Mark Villar as co-authors, was reported out by the Senate Committee on Finance on Aug. 24 as Senate Bill 24261. It is presently under plenary consideration on second reading. Counterpart measures in the House of Representatives, authored by Representatives Stella Quimbo, Keith Micah Tan, Gus Tambunting, Luis Raymund, Miguel Luis Villafuerte, Tsuyoshi Anthony Horibata, and Brian Raymund Yamsuan, are undergoing committee deliberations.
The proposed Tatak Pinoy Act seeks to promote the production of Philippine products and services of increasing diversity, sophistication, and quality. Its operationalization will be overseen by a Tatak Pinoy Council (TP Council) composed of the heads of relevant government agencies and representatives from the private sector. The TP Council shall be chaired by the Secretary of the Department of Trade and Industry (DTI), while the Secretaries of the National Economic and Development Authority and of Finance shall serve as Vice-Chairpersons.
The TP Council shall be responsible for formulating a multi-year Tatak Pinoy Strategy (TPS) that will embody the plan to expand the productive capabilities of domestic enterprises. The TPS shall include plans and programs to be organized according to the five specified pillars of human resources, infrastructure, technology and innovation, investments, and sound financial management. The measure provides for preference for domestically produced and manufactured products that meet the specified or desired quality. It also mandates government financial institutions to ensure availability of credit to domestic enterprises producing or providing services covered by the TPS. Finally, the TP Council is tasked with market access facilitation in both domestic and international markets.
Since nearly four decades ago, the Philippines has progressively pursued market-oriented reforms, dismantling intensive government intervention in the economy through liberalization, deregulation, and privatization policies. What remains may be regarded as vestiges of old programs that have endured either because of sectoral resistance or deemed to be more market friendly, such as fiscal incentives for investment promotion, as well as those covered by constitutional restrictions. These policies, along with an economic perspective that disdains government intervention to favor specific industries, have limited the space for industrial policy as a component of development planning.
Tatak Pinoy represents a recovery of major tools for industrial policy.
First, the TPS shall not only identify national priorities and strategic goals, but also a list of target sectors and economic and investment activities. This is at the heart of industrial policy, which essentially refers to a set of government policies designed to promote the development of specific industries or types of industries, also intended ultimately to steer economic transformation towards strategic goals. In the case of Tatak Pinoy, the stated strategic goal is to systematically expand and diversify the productive capabilities of domestic enterprises to enable them to produce increasingly diverse and sophisticated products and services, and to compete in the global market.
Second, Tatak Pinoy identifies and provides a legal basis for the use of policy instruments to support the target sectors and economic and investment activities. These include the orientation of education and training towards ensuring adequate and skilled human resources for the target sectors and economic activities, the provision of required infrastructure, and the mobilization of scientific and technological research. Tatak Pinoy investment activities and projects are directed to be included in the Strategic Investments Priority Plan, making them eligible for fiscal and non-fiscal incentives. Government financial institutions are mandated to ensure credit availability through innovative financing mechanisms, including low interest or flexible term loan programs, credit guarantee programs, and leasing and venture capital. Finally, a bold provision is the grant of domestic preference in government procurement activities for products and services covered by the TPS.
Third, a key tool for industrial policy is an institutionalized and empowered coordination and governance mechanism. Tatak Pinoy addresses this through the TP Council. In addition to membership by key government agencies and representation from the private sector, the TP Council is authorized, among others, to ensure the harmonization of development plans, policies and programs towards TPS priorities, and to avoid overlaps. The TP Council thus has the potential of being able to bring together fragmented industrial promotion initiatives, some of which are mainly coordination efforts with limited support instruments, such as the DTI’s Industry Roadmaps process.
Tatak Pinoy deserves broad support. When passed, it will add industrial policy as a recovered dimension in Philippine development planning. However, recovering tools for industrial policy does not equate with industrial policy. The crucial next step is the “what” and the “how.” While this next step will be complex and perilous, it is a next step that we should actively engage, and not be afraid to take.
Nepomuceno Malaluan is a senior fellow and trustee at Action for Economic Reforms.