4th Annual Public Policy Conference
Philippine Institute for Development Studies (PIDS)
6:00 p.m. | September 19, 2018 | EDSA Shangri-la, Ortigas
Good evening, everyone.
First of all, I would like to congratulate the Philippine Institute for Development Studies for a successful forum. This is a very important topic, one that presents itself with much urgency despite its recent nomenclature.
The Fourth Industrial Revolution (FIRE) is not anymore an idea; rather, it is a reality that promises a lot of possibilities in addressing the social problems that we face today.
We live in an age when artificial intelligence plays a big role in our day-to-day activities. The gadgets that utilize this intelligence have become indispensable—from smartphones to Smart TVs, and even robots that can mimic human behavior.
During my younger years, I thought the fax machine was the best thing that could ever happen. I’m not kidding. Let me explain. I was writing op-ed commentaries for several broadsheets then, and I would have to drive to the publisher myself to submit my articles. When the fax machine came, it was a huge relief. It became easier to send documents to anyone.
In comparison to our generation, those who are entering the workforce today will be stumped if we take away their smartphones and computers. Gadgets have become extensions of ourselves. In 2014, Brookings Institution argued that we might all be cyborgs–as the devices we carry in our pockets, or wear on our wrists, are no less part of our being than they would be if implanted in our bodies.
Earlier this year, I caught a glimpse of the Fourth Industrial Revolution in practice when our economic team visited Alibaba Univesity in Hangzhou, China. As you may know, Alibaba is a multi-national conglomerate that specializes in e-commerce, retail, A.I. and technology.
During the visit hosted by Alibaba group, we witnessed a “smart” supermarket that showed the future of retail. Transactions were cashless; payments were made through a digital platform called Alipay. Goods could be delivered in your doorstep in less than an hour. By collecting and leveraging Big Data from customers, the Alibaba was able to grasp consumer habits, as well as producer practices to ensure an efficient supply chain and logistics network.
But despite this great promise of the FIRE, there are certain caveats. One of these is the issue on privacy and security, as Big Data capitalizes on information, some of which may be personal. Still, perhaps the most pressing challenge is the anticipated labor displacement in certain sectors of the economy.
As mentioned, the FIRE is primarily about artificial intelligence, which may replace human work in sectors like hotel and restaurant services.
In the United States, for example, a group of graduates from the Massachusetts Institute of Technology came up with a restaurant that replaced human chefs with seven automated cooking pots that simultaneously whip up meals in less than three minutes. In Japan, there is a hotel where guests check in with robots which also deliver their luggage to their rooms.
This phenomena is a concern for the Philippines, since we rely heavily on our services sector. If you take a look at this graph, you will find many jobs in the services sector at risk for automation.
The future of work has taken over many discussions among policy-makers and industry and business leaders. Make no mistake, we are very concerned. But, perhaps, some of our anxiety from this, as the Asian Development Bank would have us believe, may be overblown.
Technological change will bring jobs also. But the kinds of jobs the new industrial revolution will require us to prepare our work force for are for an increasingly knowledge-driven and technology-intensive economy.
Of course, we have to acknowledge that we have our weak knowledge infrastructure. We have limited human capital in science and technology, low levels of research and development investment, and weak networks where these are concerned.
Hence, there is little optimism as to our capacity to innovate and create the products that will advance the FIRE. But with the right mix of policies and investment priorities, we can hopefully catch up and benefit from this new industrial revolution sooner rather than later.
Allow me to discuss opportunities available as regards this new industrial revolution insofar as our policy environment and government investment are concerned.
Human capital development
Consistent with the government’s aim of developing the country’s most important resource—its people—we continue to give education the highest allocation of the budget. We also provide huge allocations to K-12 and the Universal Access to Tertiary Education programs.
From P470.5 billion in 2018, the budget for the K-12 program is increased to P528.78 billion in the proposed 2019 budget. Meanwhile, the budget for the Universal Access to Tertiary Education was increased from P44 billion in 2018 to P51 billion in 2019.
Science and technology investment
Acknowledging the rapid changes brought about by technology, part of our administration’s 0+10 Socio-economic Agenda is the promotion of science, technology, and the creative arts to enhance innovation and creative capacity towards self-sustaining, inclusive development.
To ensure the achievement of this goal, the budget for Science and Technology has been increased from P19.5 billion this year to P19.8 billion next year.
About one-fourth of this budget will go to expenditures for scholars of Philippine Science High School and Science Education Institutes.
Closer to home: BTMS, Virtual Store, DIME
Finally, and this is me bringing it a bit closer to home, I would like to talk about a number of key reforms in my department, the Department of Budget and Management, that are important steps for modernizing government.
It’s difficult to imagine that until recently, our Public Financial Management (PFM) System remained highly decentralized, and therefore, technology used for different PFM activities, including accounting and fiscal reporting, vary across spending units.
There were attempts in the past to create a fully-automated centralized system for all PFM transactions. However, they all failed. As a result of more careful planning, we have successfully rolled out our Budget and Treasury Management System or BTMS in the DBM and Bureau of Treasury. By subjecting expenditure items in the budget to the BTMS, a rigorous, automated control regime, the executed budget will better reflect the budget law that was approved by the legislative.
This October, we are launching a Virtual Store for procurement. This online store will serve as a platform for online purchases of common-use supplies and equipment. With the application, payment can be done using the user agency’s e-Wallet for ease in transaction. Delivery will be made within three days for agencies within Metro Manila, but goods can also be picked up from the nearest depot. This is a key feature of the modernized Philippine Government Electronic Procurement System (mPhilGEPS), the single, centralized electronic portal that serves as the primary and definitive source of information on government procurement.
Finally, and perhaps inching closer to our FIRE aspirations, we also have the Project Digital Imaging for Monitoring and Evaluation or Project DIME. A partnership between the DBM and the DOST, Project DIME makes use of satellites, drones, and computers, to monitor projects real-time. Project DIME is expected to curb corruption in the form of ghost projects, especially the hard-to-monitor infrastructure projects.
With the exception of DIME, most of what I have discussed will perhaps sound like business as usual. Admittedly, government policy and legislation is barely catching up with the rapid pace of technological growth, and will unlikely catch up in the near future.
Of course, we are no less bullish in laying the foundations to prepare for a new industrial revolution as we are in solving our present-day problems. Fortunately, we have institutions like the Philippine Institute for Development Studies that remain relevant and forward-thinking.
At the onset, this radical shift in our industrial technology is sure to create winners and losers. Again, the government cannot address the challenges FIRE will bring about by itself. We must all work together to ensure we usher in a new era of productivity that is inclusive and broad-based.
The private sector is instrumental in this pursuit. After all, this is the playing field of innovation—the industries and individuals that pave the way for industrial revolutions. We in the government, however, are not complacent of the role we can play to stimulate innovations. It is our job, of course, to incentivize and support them to invest in such undertakings, or simply get out of the way of innovation.
Trust that we in the government will work with you should you have policy proposals that will aid in the transition to this new industrial revolution. I, for one, am keen to gather your insights from this forum.
Again, thank you PIDS for organizing this timely and relevant event, and thank you everyone for participating.