Lack of infrastructure and weak investor confidence arising from governance issues, and the weakness in the regulatory environment and investment climate are some of the most binding constraints that affect the industrial sector’s growth and the entry of new firms.These, according to the Philippine Institute for Development Studies, are the challenges that must be addressed in order to improve the performance of the industry sector in the Philippines. Rafaelita Aldaba, PIDS senior research fellow and acting vice-president, said in a policy note that there is a need for a new industrial policy to help the government determine measures to strengthen industries and the business environment in which they operate. “Industrial policies are needed to enhance firm productivity, deepen linkages of domestic firms and SMEs with large domestic and multinational companies, and aggressively court more investment. Policies will also be necessary to boost the survival of new entrants and provide assistance for the growth and development of SMEs,” the note said. “To enable firms to move up the technology scale, programs should be formulated to improve technological and human resource capabilities as well as to strengthen supply chains,” it added. Aldaba said that the role of the government is crucial, as it needs to coordinate policy support measures which will address the obstacles to the entry, exit, and growth of domestic firms, especially SMEs.
