Panel 6: Building Industries of the Future | Manila Strategy Forum 2026

My name is uh Edgar Kagan and I work at CSIS. I'm the Freeman chair of China studies uh and I have the great privilege of moderating this panel on industries of the future and all of us were sort of speculating amongst oursel trying to what exactly does that mean? And so each of us has come up with a variety of ways of looking at industries in the future. uh we have very very impressive uh panel uh and I think the right mix of people to bring perspectives uh onto this and I think what we've seen in the discussions that we've we've heard already is almost every single discussion every single yeah has come back to a couple of key points one of them is tremendous change in the global order And every panel in one way or the other has ended up talking about that. The other is the the linkage which I think all of us you know between the ability to expand the rejected power advanced national interests and the economy and then ultimately for countries around the world and particularly in Southeast Asia success is economic development and prosperity. I think for Americans, we'll all remember uh President Clint when he was running for office in 1992 is the economy sphere. And I think that across Southeast Asia, one of the great successes of the region has been ensuring a focus on economy and bringing prosperity to its citizens. So the question is in a world that is changing dramatic where we see extraordinary technological change, political change where the the sort of international rules based order that we were talking about a few years ago suddenly looks like it's much less international and there's a lot fewer rules and a lot less order. The question is going to be how does Southeast Asia, how do the Philippines continue to expand prosperity, bring development to the symptoms? And that the way that that's going to happen is not going to be by playing to what was done in the past. I inevitably Darius the rapid pace of trading is going to require looking at new industries looking at new technologies and trying to figure out how do we use AI how do we use the skills to generate more prosperity for our peoples everywhere I think that's particularly true at Southeast Asia Noling so we have a very impressive family um and I would ask you to I I'll give a brief introduction for everyone but then you are so very impressive people. So my immediate left is Hank Hendrickson who is the executive director of the US Philippine society. I was a US diplomat for 35 years. Uh 35 years undetected crime. Um and Hank is from my tribe. So uh it's a great pleasure to have him here. And he's served um in a number of places in St. Asia, Philippines, several twice, Thailand, Singapore and Korea. We also serve in Middle in the Middle East and Europe. And so he brings a truly global perspective and then a deep understanding of the US Philippine relationship really the Philippines in his role as executive director of the Philippine Society. Um to his left is uh Francis Emma Intorio who is a polymath who's done a variety of different things. does a variety of different things, but he's essentially he's here in the capacity of his expertise on investment and trade. And in particular, he chairs um the trade investments committee and the infrastructure and logistics committee of the American Chamber of Commerce of the Philippines and North UA. And so given all we've heard about the Muff economic corridor and his coral, I think he's a great addition um to his lot is uh Aaron uh you may know um and uh Karen is a lawyer. She's a media figure. She served in government in a variety of capacities. Um and she's also now working as a chief counsel for private equity funds. So she understands the perspective that major investors are bringing as they look at bringing their capital to develop industries in the Philippines. To her left, we're very lucky to have um Joseph Romero um who's here in a variety of capacity. I guess she's the ASEAN business advisory council senior adviser and also the Pecort. and she spent her career really working on the investment issues. How to make the Philippines more competitive, how to attract investment and she continues to do that in an advisory capacity um and she has tremendous experience as a former assistant secretary, chief of staff um to the secretary of the department of trade and interest. She's seated both from the inside outside government. And then to uh to her left is um Shawn Burn uh a former US Naval officer uh the surface warfare officer aka ship driver who after distinguished career went to Amazon and then from Amazon has come to lock and so he could give us a perspective in a very specific industry which refer Joe it's industry of the past the present and the future uh and you know what the opportunities are in the Philippines. So with that, let me start off by turning to >> Hey, who um has done his homework and actually has done some serious research about where opportunities may lie in the coming years. Hey, >> thank you for and good afternoon uh friends here. uh and thanks again to CFI for putting this together. And uh I'll start uh with the door that a review of the research of Philippine government preferences, private sector sentiment, investor expectation shows broad agreement on strategies for building a diverse group of future industries. Each of the industries or sectors draws advantage from the Philippines existing socioeconomic strengths, including speaking professional talent, the large young workforce, and a solid technology base. Among the areas prioritized by the government's 2026 strategic investment priority plan are critical mineral processing, AI, nuclear energy, and climate technologies. More broadly, the most promising industry is advanced semiconductors of electronics, which comes as no surprise. Electronics accounting for nearly 60% of merchandise exports now. But there is room for uh uh sorry uh there is room for improvements uh in terms of uh for example in semiconductors where activity remains largely concentrated in assembly packaging and testing. Other promising industries include number one AI, software, cyber security and digital services. Of course, while AI could disrupt call centers and beat down the BPO sector, it has immense potential to drive other higher value sectors. Number two, critical nodes. The Philippines rich mineral resources including nickel and copper price another advantage and with policies promoting domestic processing, they can move from the old lower value model or exporting ore for processing abroad. advanced aggra business at fruit technology. It works the area because it contributes industrial development beyond Metro Manila. Number four, aerospace maritime defense industries and natural in light of the Philippines geography and ongoing defense needs. And five, climate adaptation industries related to the resilient construction to resilient construction in one of the world's most vulnerable countries. Or for these industries to realize their full potential, a number of things have to happen. First, reliable competitively priced energy should be a priority. Second, in education, strengthen and broad teaching in math, science, engineering, and technical studies while building apprenticeship programs with employers. Third, continue to improve infrastructure including ports, rail connections, airports, highways, bridges, and electricity transmission. Fourth, R&D, improve lakes between the university and manufacturers in key sectors. and fill in terms of doing business reduce regulatory uncertainty at permitting degrees. Now like to look more closely at three sectors as examples in no particular order with a potential for growth into the future. In Washington, Greg made a mild suggestion about ship building his suggestion why the prospects for the Philippine maritime industry are strong and he's right. The opportunity is not only to restore large-scale commercial ship building, but to move on to higher value vessels as well as naval and coast guard construction. The Philippines has much to build on in the maritime space, including its strategic location near shipping routes, a large maritime workforce, established shipyards that have already built large OSHA joy vessels, competitive skilled labor, extension of domestic requirements for inter island shipping and connections with leading ship builders in Northeast Asia. The Philippines has more than 130 registered shipyards with a skilled workforce. over 11,000 demonstrating that it can operate internationally competitive shipyards. For Americans, perhaps the most important recent event is the return of ship building to Subi Bay. The former Hanjin facility now operated by Hyundai Heavy Industries and enabled by the American private equity firm service rebranded as Agil Sudic was formally inaugurated one year ago. project could double Philippine ship building capacity and create more than 4,000 Filipino jobs. In line with long-term modernization plans, the Philippine Navy and Coastark are acquiring more ships in response to tech to tensions uh in West Philipp uh sea and as we heard from the defense secretary uh in the eastern side and uh in the north of course or Taiwan the south as well. Uh and the the secretary also mentioned that the Philippine naval vessels that have previously up to this point been largely built overseas and proper are now being directly more work is being done here in the Philippines including uh in sub ship repair services complement ship building industries with its geographic location aside the Philippines can offer a full range of services to commercial shippers. ers as well as military contractors. As an archipelago, the Philippines requires enormous numbers of vessels ranging from passenger fairies to cargo and logistic ships with much of the domestic fleet in need of modernization. While opportunities abound, obstacles are also substantial. Clearly competition from China, South Korea, and Japan, which enjoy supply chain and government support advance. Ship building is expensive, required burly capital and export financing and challenges remain in training and recruiting ski Filipinos who are also highly employable overseas. But in overall terms, the Philippines has a realistic opportunity to become one of the world's important maritime manufacturing powers, albeit hello, China, and South Korea, but perhaps positioned alongside Japan and emerging ship building countries. A second mightily important sector that we've chosen to look at for the nation are in is uh the overseas workforce. Now it's not technically an industry but I think it's worth a look. uh the OFWs as we refer to uh is uh is one of the most valuable resources right now for the Philippines and as likely to remain one of the Philippines major economic strengths well into the future. That future is not simply to send more workers overseas. Rather, the opportunity is for a transition toward global supplier of highly trained professional and technical talent. The OFW sector's financial contributions to the Philippine economy is substantial with some $ 38 billion in personal remittances reported last year. This strong base could be used to support changing global needs, including in health care and elder care in the grain societies of Europe and Japan. Labor shortages in Japan will open opportunities for skilled workers in Japanese industries as well as in the rural agricultural sector. Maritime employment remains a major strategic asset. The Filipinos representing about 30% of the global seaf fairy workforce. The Philippines is the world's leading single supplier of maritime crew members and companies like Philippine Transmarine Carriers who represented here today are training seafares to move up the value chain from ordinary seafares to skilled technicians and deck officers. Skills training provided for overseas workers also benefits the Philippine economy directly as workers return home for employment or choose to stay in the domestic labor force rather than deploying to overseas markets. A third promising area for future growth and dispersed benefits is the halal food and beverage industry. The worldwide halal market is valued at $975 billion and is projected to expand significantly over the next decade. The Indo-Pacific region leads the market. The Philippines geographic location provides ready access to consumers in neighboring Indonesia, Malaysia, Singapore, Unai as well as points west. In addition, the Philippines has its own sizable domestic halo market. The upcoming election coming in a few days early next week is as part of the transition bat more of a honest region of Muslim and now offers a strategic opportunities to develop and grow a more robust alawal industry in the southern Philippines. the top of the corridors here on economic carter. But if the inanal allow economic card that links production and processing zones in the barn and they connect with uh ports in minal, the region ports there that could connect the Philippine producers with regional global markets reaping economic benefits for the least developed part of this country. Of course, the Philippines is unlikely to displace Malaysia or Indonesia Southeast Asia's government halal economy, but can reasonably aspire to become one of Asia's important non-Muslim majority producers and exporters of halal products. So, to recap, the Philippines is well positioned for future expansion across a broad range of industries and avoid risking dependency on a narrow booth sector of the economy. As a represent of the US Philippine Society, I would close with this observation. In many if not most of the growth industries up in discussion here, there's broad scope for US Philippines cooperation including as strategic supply chain and industrial partners. Thank you. >> Thank you very very much for that layown. um gives a sense of the range of opportunities that may be out there. I think it's also useful to hear uh from Josephine Romero from her perspective on the Peor experience in government how she how others in the the government sector look at these opportunities. you super >> thanks very much and thank you for laying out the the story of the Philippines and so I am not for from government I am in private sector although for 10 years I worked for Philippine department of uh trading industry as a salesman the salesperson of the Philippines based in North America in South America so we know what investors are looking for I know what the investors are looking for and at the time it It was like cake pong. The foreign trade service officers would talk to the CEOs to the the procurement people abroad and then throw the information to the companies and say do we have this ready or can we make this ready? So now that I be back in private sector um that goal of bridging between the investment opportunities uh for the Philippines and what the Philippines can offer to the world continues to be the aim of the private sector advisory council where I have been uh working for the last four years. So unlike other presidents uh before him uh president Marcos Jr. did in 2022 was to bring together uh the different um conglomerates and businesses in the country and ask them to form different groups, economic groups uh and advise him directly on how to do better. So I am part of the education and jobs group. There are also groups of agriculture, digital infrastructure, physical infrastructure, tourism and healthcare. So those are six. Now we started off as to set jobs. But every quarter that you meet with the president, we would talk about education because our number one answer in the Philippines is talent, the human capital. But we know that in recent years before the before what's in the news today of of positive news about visa results a few years ago the Philippines was backup. It were we were almost antibotting of the visa results. So we said for us to be able to compete in the world we have to face our education and for us to be able to generate new jobs in the traditional industries not even looking at future industries we have to face education so that's what we did but what we did was to focus on industries where the Philippines had the biggest chance of being number one or had the biggest chance getting export revenues whether this will be in products or in services. So Hank mentioned many of them maritime tourism healthcare semiconductor industries the IPDP or digital and then agriculture or food sustainability and then we also even had study slay in critical minerals because that's again an asset. So now there are opportunities very specific opportunities that are available to us. In fact what's being discussed at the other side of ano manila is very relevant to what we're discussing here today. I think many of us in Anna will be talking about that later. So we now are focusing on just three major but this major industries but this affect a lot of the other industries that I mentioned earlier. So what are these? One is semiconductor industries as mentioned by uh by hand. Now there are three pillars in the semiconductor industries where we are we have uh um expertise already but we need to move forward. So in the semmit testing packaging we have been doing this since 1974 more than 50 years ago. So now we are building skills towards advanced ATP. We're also in assembly electronic management services. So there are a lot of secret companies that are here doing this the Filipino companies and together with government through the advice of the private sector and in influencing the policies that we have now the laws that we have now um a lot of resources are being poured into upskilling in advanced lecture uh electronics managed uh manufacturing services and finally in IC design. It is unfortunate that the Filipinos are known for software and IC design. Why is it unfortunate? Because all of our neighbors are grabbing the people. So we need to educate and train people enough for our industries to grow and of course allow these people to also for careers outside of the country. It is a fact of life. So that's for semiconductors industry. By the way, it healthcare is a safe link. The Filipino should be known as the health care hub of the world because we don't only do healthcare for our country but every other head of state that meets with President Marcos. Thanks. So the second uh period where we know that we have a big chance of um doing great is maybe another thing that uh another industry that's been here for the last 20 years because we started in 202 year 2000 is the IPv industry. Now this is very much affected by the growth of AI just like semiconductors although semiconductors is affected in the way that there is greater velocity in semiconductors because of the needs and requirements of AI. Now in IPF ecosystem service, a fear is that as AI develops some more then the ITPM industry in the Philippines will lose out. But that is not the view of the Philippines. In our conversations with the industry and government, what we're talking about is augmentation. rather than losing opportunities, we use AI as an opportunity to grow. And then um the third one of course I mentioned earlier is critical minerals and critical minerals we have been exporting soil for the longest time. But in the last five years and most especially in the last two years where the government has been listening to private sector there has been I mean I think it was during the time of president um Aino uh Pinoy when uh we started saying that mining is a big advantage for the Philippines but the laws uh were administratively. So for the longest time until uh the fiscal regime for mine uh the law for the fiscal regime for money got passed few months ago uh just to get that exploration permit you would need 1400 signatures. Now I think that's streamlined a lot. So those three areas semiconductor industries um critical minerals and IPM. So now how do we bend the big arc is talent and that is how we sack education and jobs have been talking extensively with the government. So some the wins uh the president has um listened listened to us when he when we asked him to put together semiconductor electronic industry advis council that is last year. this year. Uh another another um win with in our talks with the president, we asked him to look at education as one whole program because Philippines has three different agencies maybe four including department of science and technology. Different agencies handle in different parts of education. The basic education, the textbook and the higher education. Now there is only one group called the education workforce development group where the Japan and supply for education and labor are all together thinking together doing policies togethering together. And then um finally this year just a couple of weeks ago four weeks ago we were able to ask the go the the president and his cabinet to agree to have a public private part task force to implement AI for the country. So I'll stop there. There's a lot I can share some more but I think with the conversation on stage today we'll be able to find a point. >> Thank you. >> Thank you so much. We really can share that perspective. So I want to turn now to Francis uh because we've heard sort of the the far opportunities how um the advisory groups are looking at things. So how does that translate to your work on the infor the side? >> So thank you ambassador vegan and thank you to CSIS for an opportunity to join this discussion. Kudos to ICPSI, Loheed Martin and Argie Panawa for support this event. food of my year here and also it >> records. You see >> when we talk about building the industries of the future, we naturally begin with the indust what our co-panelists did. semiconductors, advanced manufacturing, defense industries, digital industries, clean energy. But from an investment promotion perspective, I think there is an equally important question. What does it actually take to make those industries happen and grow in a particular place? The Philippines already has many of the pieces. We have a strong semiconductor and electronic space. We have economic souls and established manufacturing centers. We are making major investments on infrastructure and Lina have the important opportunities through the laz economic corridor and our partnerships with the United States, Japan and other countries. The challenge is making these pieces work together. That is something I learned very practically through investment promotion. >> When you are trying to bring an investment from initial interest to actual operation, the investor is rarely dealing with just one issue. There is land, power, infrastructure, logistics, permits, workers, incentives, local government, and the national agency itself. And over time, that led to a fairly simple observation. Government tends to operate vertically, but investors experience government horizontally. to the investor. All of these things form one investment environment. So institutional coordination is not simply a governance issue. It is a competitiveness issue. I saw another dimension of this when I was when I had the opportunity to chair the technical working group for the Philippine Investment Promotion Plan which brought 19 investment promotion agencies across the country. Our investment promotion agencies naturally took and competition is healthy. But we also found that cooperation in areas of common interest could make the overall Philippine proposition stronger. There is an important principle there. Competition among locations but coordination across the system or differently coopetition and I think this becomes even more important when we look at it and economic corridors. The corridor ID itself is already brewing in the north and central lazot since 2010. I entered a conversation from the investment promotion side in PTA where one of the practical questions was out growing connectivity among sub Clark and Matai could translate into actual investments. Today the Lazaki corridor gives us an opportunity to take the thinking much further and the question in my view is not simply what infrastructure are we going to build. It is what will the infrastructure unlock? Because a corridor should not simply connect places. It should connect economic capabilities. Clark, Subi, Manila, Patangas and the industrial areas around them with different assets. Ports, airports, economic zones, manufacturing clusters, logistics, skills and investment opportunities. The opportunity is not to make these places identical. Okay. >> It is to make their capabilities complimentary. If we can do that deliberately, the Lison economic corridor becomes more than just a transport corridor. It becomes an industrial development and investment platform. Now, this is where we encounter what I see as the missing middle. Infrastructure crosses jurisdiction. Supply chains cross jurisdictions. Investors cross jurisdictions. Institutions unfortunately often do not. That is why I have been exploring a corridor architecture a framework for cross boundary economic development all alignment. The idea is not to create another bureaucracy. It is to find practical ways for national agencies, local governments, investment promotion agencies, infrastructure institutions and the private sector to align around shared corridor out. What infrastructure investments unlock particular industries? What are the bottlenecks between institutional mandates? How do we connect infrastructure pipelines with investment priorities? In other words, how do we begin looking at the corridor not as a collection of separate projects as a part as an integrated economic system? Our semiconductor amissions illustrate why this matters. If the Philippines are further into advanced packaging, design, engineering, innovation and other high value activities, attracting another individual investment will not be enough. Those activities require an ecosystem around them, reliable energy and infrastructure, sophisticated logistics, engineers and skilled workers, suppliers, research institutions, technology, finance and predictable institutions. So industrial upgrading requires ecosystem upgrading and this is where I think the different conversations around the industries of the future begin to converge. Industrial strategy tells us what capabilities we want to build. Infrastructure provides the physical foundation. Economic corridors provide the geography that connects those capabilities. Investment promotion helps convert those advantages into actual investments and corridor governance provides the ordination that allows the system to work across boundaries. So when I think about building the industries of the future, I go back to five actions. Connect, coordinate, convert, cluster, upgrade, connect our infrastructure and economic assets, coordinate the institutions around them, convert the assets into actual investments, cluster those investments into ecosystems, and use those ecosystems to upgrade Philippine industrial capability so So that is the proposition I would like to put on the people as we get this discussion. Infrastructure connects places. Investments break capital. Coordination turns both into ecosystems. The Philippines already has many of pieces. The opportunity now is to make those pieces work as a system. Thank you very much. That was great. So we've heard now an overview. We've heard the the sort of setting of the stage. What are some priorities cur investment portion standpoint but really you know now we're going to hear from people with the real power the investors. So Carrie want tell us from your perspective given what also what you've heard if you might want to react a little bit. What when you and your colleagues look at where to put money for an industry for the future, what do you need to know? >> Okay. Thank you, Ambassador Caden. So, I'd like to say hi to everyone. I know this is a difficult part of the forum where we're at the tail end and it's everyone's steaming tired. So I'm going to make this very concise but I currently chief legal counsel and director and a member of the investment committee of soft cap partners private equity. Our managing director and founder is an apparent that put up this fund to invest in the Philippines. If you go to our website, one of our immediate quotes there is we are passionate about the Philippines. But if I were to ask all of you please with a show of hands, who among you are passionate about the Philippines? All right. Okay. So, a lot. Thank you. I guess that's why you're here. Who among you would put your money in the Philippines? Well, still bless. And I see Ambassador Vicki here. Ambassador Victoria. Um she served under the office of the president under president Aino Bita Aino III and we were at the time I was serving under the office of the president uh we went to parliament in Europe uh as an advanced party to explore the free trade agreement with the EU. But my point is years ago when I was asked by soft cap to join I as a Filipino was not that passionate about the Philippines. So to be honest and I suppose it's hard for me because I serve in the government. I serve under the office of the president under Benito the third during the Yolanda rehabilitation with Senator Pin Lung. So I saw the devastation that came with Tyson Hayang, Tyu Yolanda where it destroyed 171 cities and municipalities and later I also served under President Duterte with a department of public works and highways as under secretary for legal affairs at priority projects and of course I got to see the bureaucracy that goes with government. Um I left to study again as a fullright scholar at UC Berkeley and also worked after that with the World Bank from Washington DC. So when I decided to come back here when I was asked to join soft cap it was strange for Americans to show to me why it was a compelling thesis to put up a fund that solely will invest in the Philippines. But when they showed me the opportunities, the numbers, that's when I realized the Philippines is a good place to invest. And I know that's hard to believe with what we're witnessing right now. And honestly for me, it's hard not to let the optimism chip away because every day I host a morning current affairs program for billionaire news channel where I always have to interview politicians, members of the government and of course independent third parties about what's going on in the Philippines. And uh for those of you have been following the news, we have impeachment. Um, we've had recent arrests related to the flood control controversy. So, every time I sit back in the office and we're discussing an investment, particularly when we're discussing with our co-investors from abroad, they're always asking me, Karen, what's going on there? And of course, they read bits of the news that doesn't really show the full context. And you always have to manage your expectations because I also don't want to be overly optimistic, you know, given what the circumstances are. But our managing director will always say, well, if you look at the bright side, we're getting kids at a discount because the pleso is weakening. But I guess to our point, there are of course challenges. I'm not going to sugar quote. There are a lot of challenges in this country. the times we've made investments sometimes when we uh try to apply for all the permits the timeline is always a challenge um and our councils from abroad when we hire um foreign councils from the US and UK they would compare the processing guide even to corporate with what they have abroad and they could say like for us this would take like a day or two and for us it takes two months or more. So those are the challenges we face as investors. But honestly hearing from Josephine uh even from Hans uh and Francis what they're saying is true. There are a lot of investment areas. That's why for our fund we're sector agnostic because we see opportunities in so many areas. And one thing that we've learned in terms of making the most out of our investments is to find those weak spots where we as investors can offer our own strengths. So just to give an example because there's so many areas to talk about uh that I don't want to burther you with so we can finish this faster. Just as an example, one of our assets here in the cut chain is um it's a commercial complex and a lot of our locators are multinational companies based abroad including American companies and one thing that they are concerned about is the Philippines being number one most disaster risk from a country in the world in the 2025 world just index. of you guys see that we're number one. So of course if they have a locator and they find out that the BO is located in the Philippines, one of the things your client ask them is are you sure we should have seats in the Philippines? That's that's number one disaster risk prone. But one of the things that I as a law professor I've been teaching uh also a course on resiliency just a quick formula that you can take away from today disasterbased is not it's not just hazards so we are prone to typhoons earthquakes we have volcanic eruptions but the formula is it's hazards times vulnerability vulnerability is something that we can control hazard hazards, we can't if it's going to rain hard, it's going to rain hard. We can't do anything about that. But the vulnerability side is something we can control. So for us as investors, one thing we've done is also find solutions for our investments to make them more resilient, more sustainable. And just for that specific example, what we did was have a new development across our commercial complex where we have we're building housing for specifically for the employees or our locators so that they can house their employees just across from our property. And that ensures that there's continuity even if there's massive flooding, even if the government calls off their offices. And we even provide free shovels to the employees of our educators. So that's just one example, but I can see that our belief up to now is that there's a lot of opportunity in the Philippines and that talent is really one of our big advantages and that's something that you can't get from other countries overnight. They can put a lot of money, but you can grow the talent if you don't have the people. And we are one of those countries that still have a lot of talent and a lot of people, a lot of smart bodies that can make our investments happen and worthwhile. So, I'll stop at that and I look forward to the question and answer. >> Thank you very much, Karen. uh appreciation your cander and you're weighing out investors perspective and obviously you know there's always challenges but the way you seconded that that was very off let me turn to shop uh you know it's interesting my first reaction I'm very frank when I saw that he was there was I don't think of defense as industry in the future I think of it as an industry present uh but the reality is that since 2022 one of the things happened as a results of the invasion of Ukraine. There is a single country of the world comes to defense budget. >> Uh and countries are booking in a very tough way at secure respect. You know, I think we have to be honest. There's a lot of factors facial rule Trump administration the sense that as the rules-based porter sort of erodess that some of the constraints that used to be in place about use of force aren't there. One of the things that's also there is the question of south the question of capacity and the dates in which the countries were willing to trust all the productions being in a very distant place really shifting and so I really given your extensive background of the US Navy your also your perspective going from your time at Amazon it's all now your role in business development for Lucky Martin how do you look at defense streets and their ability to generate prosperity in the Philippines. Okay, great. Well, thank you for that introduction and yes, it seems like I'm the duck out, you know, some but Hamilton says it's okay. They uh because we are very interested in this topic and it's something we spend a lot of time talking about. First, I want to thank CSIS for hosting this. It's been a great and educational event. uh as you would expect I spent a lot of my time in very defenseoriented aerospace oriented events talking to people around tribe right and I really enjoy the opportunity to attend these types of events and I've appreciated the really holistic discussion about critical issuing arts that are impacting both and across the spectrum right because there is a spectre of things that are driving economic security concerns etc and we're just pulling out a little bit of that offense. So, I appreciate the opportunity to speak. You know, kind of as I start, I would just like to highlight you like why is Lockheed Martin in here? But, you know, most people don't realize we have over a six decade history in the Philippines. We deliver aircraft to the 1950s and we've been here ever since. And you know, just to kind of kick off the discussion a little bit, you know, we I wanted to congratulate the armed forces of the Philippines and the Philippine Air Force. They stood delivery at the 48th Blackhawk helicopter a week and a half ago in a very big event here. It's been a super excitable program for us to be just been sent guarantees that we are going to be parkers in the Philippines well beyond a hundred years because I was flying for a long time and we're really proud of that. I usually I could see them fly around the hotel all the time when I'm in the hotel but the weather frankly has sucked this week so I haven't seen anything out my window. Um but I think you bring up a good point talk about like so you know is defense from the past and I would argue that you know technology has changed dramatically. 20 years ago you know one can argue defense technology is kind of still what are very bespoke very kind of focused on singular mission activities and it's transformed. So technology today is overlapping in ways that we've never seen in the past both commercial and military applications. And so this I think is a very relevant topic and you know as we look forward as a company we're the largest defense OEM in the world and uh we work globally you know I think as we look at this issue and we talk about um the questions that countries are asking themselves as we engage with them and every country's different and everybody's everybody's desires are different. It's not it's becoming a much more mature discussion around not necessarily how do we access the technologies. It's like how do we access those technologies and build industries around them that help us economically and then set us up into the future especially as these technologies start to overlap and you can branch off for the new areas. So you we've hit on a lot of these topics already over the last day and a half which is you know AI obviously is huge right but then there's things like advanced manufacturing digital engineering cyber security autonomous systems are huge you talk about those a lot you see them in the news all the time and it's growing very very quickly but they're actually transforming economies and they're transforming the architecture and ecosystems around it and they're making it a very different competitive landscape and I think people would normally expect and I think that's applicable to a place like the Philippines as they think through what is their strategy for where they want to invest and build capability leveraging their strengths in a marketplace that doesn't have to be the largest market to be competitive uh in our view uh which maybe people don't understand I mean we really do care about the industrial development piece of what we do with our partnerships and our in many countries and I have several examples some really powerful ones. But in our view, the countries that benefit most uh from these emerging technologies are not going to be the ones that just adopt them, not just be an AI user. You know, that's adopting that technology doesn't necessarily make you better. It's going to be the countries that figure out how to leverage the talent, right? What are your strengths? Leverage the talent. uh industrial capabilities, developing those things along treatment. And I it was great that Secretary Toddor brought this up because I couldn't agree more. There's a couple things you he brought up that I thought were really really important was research and develop often overlooked. The research and development is the engine that starts a lot of these industrial capabilities that will last for decades. And so the countries that do that the best are the ones that are going to benefit the most. Uh the other topic that the secretary brought up that I thought was really important was the sun defense defense posture here in the Philippines and it's something that you know we believe defense modernization because it is true and it's come up on multiple panels that fits budgets are not shrinking. You know Japan has essentially doubled their defense budget but a recognition of the security environment. Taiwan is pretty darn close to that as they rise to a very high level of defense spending. The Philippines has been working diligently to try to find a modernization program here that is successful uh here in the Philippines and the SRDP is a is an avenue to recognize that a in a partnership between government industry and local industry you can find avenues for investment that can really make a difference and that's an area where I think you know those technologies that the Philippines is an example because that's the point of this discussion here. What do you want to focus on? You can't have it all. And you need to have an end state in mind, not a project today. What is the outcome you're looking for? Where do you think you fit in that competitive marketplace? And you can make B where you need to make a difference and then invest in those things and build towards that. And I won't go into an example here, but if it comes up to dialog somewhere, I think this is a really good example to act locally. So we see a lot of opportunities here in the Philippines to to partner with local stakeholders and we want to do that as we kind of leverage uh programs procurement and modernization dollars that have been invested in including capability but also people would like to partner in improving the industrial capability here in the country. Uh anyway so I I'll try to kind of I'll trying to stop there because I know that you know I won't riff on forever. I'll talk for a long time but uh but I think ultimately at the end of the day the countries that really can take through make smart investments and the I think hold people like Lockhee accountable to supporting building programs that are going to be supportive of your industrial u endeavors are the ones that are going to be most successful or you see tons of opportunity in the Philippines to do exactly that. >> Thank you. Thank you very much. So let me ask the panelists and then we're going to get quickly to questions from the audience. Um let me ask the panelists from your perspective as you think about opportunities for the Philippines. >> Does the Philippines compete with countries in ASEAN? Is the Philippines competing globally? like hope where are your benchmarks and so if I could just do a very quick lightning round like here where where do you see how the Philippines since within uh the ASEAN region within bar Indopacific region and Koha >> hi >> so yeah well you know I've been involved in Assean for the since 2017 we just finished the uh asan semicon road And for us in the Philippines, we actually just came public the Philippine central road map last week after 3 years of flight to refresh it. So we finished the ASU road map before we finished the Kibino map. This is one year, right? It's very So do we even know where we are in the supply chain within Asia? But that kind of answers you. there's confusion as to where the Philippines sits in supply chain within Asia much less the globe. So at least now um I think so I mentioned that you know that I've been working uh uh I worked with EI in the early 2000s and my uh focus then was happy and I got back to it since I was the s uh I secretary council so it's like full circle now is the only time that all the stakeholders are actually working together We are agree that there is really a big place for the Philippines in the global supply chain. Well, we just have to fix ourselves. And the biggest thing that sometimes is overwhelming for the Philippines is how can we afford to upskill? We don't have any money. At least that's in the mind. Well, there are a lot of ethics in the world now to make us afford to do this upkeeping. Our omnibus me which used to give zero uh taxes for investors the the I into tax holidays for like 10 years and then perpetually you'll just have a 5% corporate tax. That's gonna the government under the administration under the DDR fix that. But there's like it's now we can take advantage of the global minimum tax where instead of giving zero tax we could charge taxes to our investors and use this money for training for infrastructure development and so on and so forth. So to us know what the answers are. I know that the department of finance and even the executive secretary the finance secretary are seriously thinking about scheme mechanisms so that we can take our place with the low supply chain. >> I noticed Karen immediately sort of bristled a little bit. You said tax the investors. So I'm curious Karen you have a response to that. >> Yeah my is very quick. So are we in competition with our Assean neighbors? Yes. But are we competitive? I would say not as much. Uh I would say Vietnam has been attracting more investments and I say this from an investor's cap because for us for our fund we have a fund that's dedicated to the Philippines but our partner funds are global funds that have to allocate in the different markets. So they do evaluate and decide how much are we going to allocate per country and the Philippines I would say sati is not very competitive so we're still working our way towards becoming more competitive actually let's say we're not at all competitive I just did not want to say that but you know I was in government when it left the Philippines and I know all the reasons why they left and Vietnam was the winner >> okay well I mean Let's turn let's see uh pink do you want to response on that is full pink's competing with there's an in globally we've heard a perspective that it is competing but it's not competitive enough what do you think >> well I think there is absolutely there's competition with it asen just as an example uh bal food and beverage market I didn't mention this my works but apparently I've learned from some folks here know more about this than I do that Vietnam is now a major competitor in the halal food market. Now, who would have thought about that? But as you know, Vietnam as most of us know encourages visitors. They have a a very strong tourism sector and the tourist I'd expect uh options of purchase industry and then they export. So there's competition within the the region for that. Uh what I would go back to the point that there's growth in this industry as there is in in ship building a lot of it depends on growth conditions but there'll be a demand I think the Philippines needs to understand that as there's growth and international shipping uh consumption of products example uh the need for overseas workers talked about Japan and elder care or these things yes there's going to be plenty of opportunities of Filipinos to work and compete well in a market that is repetitive. Good question. Thanks. Good Francis from a investment promotion standpoint and your heart must have sunk a little red from an investment promotion standpoint and shock one of the wonderful that I've worked with for so long good afternoon. So I've been doing investment promotions for since 2010 and uh Right. >> You asked your competitive. I answer is it depends what it does. At the end of the day, the investor will always look at the dollars in cities. It will look at their spreadsheet. It was eer cheaper than the for example or more expensive. It will look at the political stability of certain country. uh as opposed to the what we will able to you know get from that country. So in a sense it's comparative and it's practical when an investor chooses we chooses because it's wait for them and so it is imperative and it is our responsibility I think there is a question was are competitive like the denazion globally or regionally right like along the spectrum and I would think obviously speaking I'm not I can't speak for commercial scientist much right we'll speak about from the defense perspective is that I think there's a ton of potential to be competitive here uh in the global supply chain for instance which would have some global impacts I think there's potential to be competitive here in some other spaces that are maybe closer, more advanced related uh leveraging strengths here. I think the area that you know from my this is just my personal opinion have to worked it out for for several years is there's still work to be done and I'll use the SRBP as an example whereas published I don't know a couple years ago we still won't have implemented rules. So there's not a consistent understanding with those in industry saying how do I make investments or work or develop a program that's going to be successful. We feel confident that we'll be successful uh without closing any rules. I think there's probably similarities and parallels that going across those that will be best financially say hey what's the bureaucracy look like for me to get this over and finish Lori and it is about the finances at the end of the day. I I agree with I agree with you 100% that there's more than just a spreadsheet. There's a value proposition that's associated with that spreadsheet that may make some of those variables change, but at the end of the day, it's got to be a positive network that says, hey, there's a return on that investment and how business works, right? So um I think there's there is potential for them to be competitive certainly in Azia and I think it's by taking one bite at the apple that you didn't know if it won't build a road map that's going to be successful. Great. Thank you. So make charts to the audience questions for this very impressive panel see um on service. So you're in first at table 23. >> Yep. Good afternoon. My name is Abdul Jennan. I am the regional director for forest management under the customer but I'm here as student master of public safety administration under the public Philippine public college. uh we're talking about competitiveness and I think one of the reasons why we are less competitive compared to our neighbor countries particularly in the as of uh the higher rates of electricity if you talk about semiconductor if you talk about IBP if you talk about last idea for the picture and if you talk about regionality we cannot meet for investment because of the of the higher rates of electricity. There was this few of years ago when the manufacturing company from the US and everywhere else they said and declare they are cooling out their manufacturing for China and putting up some areas of Southeast Asia but they ended up putting up in Indonesia uh island uh in Vietnam. So we were excited to have more piece of job creation in the Philippines when they supposedly decide to yeah put up their manufacturing company in the Philippines but they found out that the electricity rates here in the Philippines is >> quite shocking like they cannot afford it. So how can we map it at 40 for best and even ourselves maybe we can take if we can afford to you know put our nan the Philippines we have to take it twice because the rate is far higher than even in Singapore if you look at the the Philippines eye where they said that uh the we are we have much higherity rate that it is Singapore. So the question through the deputies stage is uh what is your recommendation in order for us to compete with our neighboring countries visibly to the real uh reform industry for electricity and for for how we compete with Hanad industry. Now that we have a react expanded autonomous depth maybe with yeah the the Brunai Indonesia Philippines in terms of you know uh working with the halal industry in fact we don't have the you know the great name in terms of the trust and confidence Paula Great. Thank you. I think there's a question already. We're take several and then we're going to ask panel to answer collectively. Um let me see. I see your hand up. I don't I can't see the table number. Yeah, you >> what's up? >> 28. >> Thank you. Good afternoon. My name is Michael from Grand Park Philippines. Um for the past two days we've been talking a lot about opportunities the Philip for the Philippines and of course challenges and there were a lot of mentions on the Lison economic corridor for Philip days as well and earlier Hank mentioned about one of the requirements that they need to harness the opportunities for picture industries is education and so I I want to ask this question to Miss Josephine I I believe you were in the international CEO conference Prince Excuse me. Yes. Abd uh since you sit if I remember correctly when you introduced yourself you have the intersection of educational jobs. It's so my question is should schools or educational institutions start offering courses that is the demand for these the industries that they've mentioned um ITV specific conductors etc. Should they start offering those courses in within the short term like next two to three years? Should they wait it out? Should they wait for demand to um increase? What what should be you to prepare? >> Okay. Thank you. See um uh >> oh 40. Yeah. Okay. 40. Uh, thank you for the speakers for the very insightful discussion. So, I am Siago Castillo. I am with KDI. It's a US-based logistics company. I'm also a fellow of the Supic Squad forum and also a part-time analyst for Fax Asia. So, I just have two questions. Let's keep it simple. So the first is how can smaller scale but very niche capability private sector companies be able to effectively assist let's say here in the Philippines Philippine government or other entities when it comes to capability development and they feel confident to operate those kinds of activities and partnerships specifically when it comes to dual use emerging technology. technology and I'm talking about uh advanced manufacturing. So the trend is 3D printing, additive, manufacturing, subtractive, and also the buzz word, drone development. And we're not talking just about making drones, but the skills to piloting, designing, the systems that go behind it. And related to that the second question is how can we address supply chain of raw res of raw resources and especially blue on blue because right now we're trying to find a logistic ecosystem that doesn't always depend on Chinese gold or raw resources and also since it was raised several times how can we also address energy capacity issues in the Philippines just to drag point is that uh we have engaged with the Philippine government recently in Kavit to establish a proposal for 3D printing facilities in Kavita. It was suggested Kavita but our first question is do you have the energy capacity because 3D or advanced manufacturing facilities require stable energy to sustain less carbon footprint but you need energy for it and the answer is there's only one power grid so like why are we going to put it we would rather do it sub because at least they're all written than C's >> oh that's just C so how can we Great. >> Thank you. So, we kind of have a couple questions. other sum up um on on the you know electricity and and the linkages energy electricity is a critical for health the challenges of the heating in the Southeast Asia um outside just an education of jobs and then questions for as looking for industries in the future how do you make sure that the opportunity unities here's um and looking development both the technology manufacturing but also the skills to use them effectively and then finally the supply chain uh issues for raw materials and making sure that developments in areas like materials bring prosperity for all and also just don't block Philipp extension on supply chain so let me see who wants to go First her drawers were gold. >> Yeah. Uh but it is it did capture my attention not because just you talk about small medium enterprises and there can be some challenges right when you're small medium enterprise. How do you engage with these big companies that are you know especially poor company that's in looking for potential partners to work with? And this is an area where I do think I I go back to this certainly the Philippines is not in this position today but I always use this example. If you look at Korea at the end of the war before the artist, I mean an economic wasteland in South Korea and 70 years later it is a powerhouse globally from the manufacturing perspective. And what drove that partnership between the government and industry with a vision where they were going and I think there's you know we talk about these small D medium we're interested in those ourselves because we find often they have the ability to be less expensive much more nimble than working with a big company. I mean I mean I'm happy to be self-critical, right? We talk about locker. We're the largest defense company in the world. There's thousands, right? Like we're we tend to be a bit more expensive. We're not always freaking nimble, but we deliver our beaver, right? Some of these smaller companies in some of these vents in growing markets, there's opportunity. You know, we sponsor industry days, especially I work on, as we said, a campaign. They launch eight times these campaigns. And I think there's probably a good partnership between the government and some of these industry opportunities and maybe even investors as they think through where's opportunity to bring these companies together and work through the process of actually being able to recogn I'll stop there. Thanks. Who wants to go next? France is super excited. Sir, electricity is not a new problem. It's not a new issue. >> It has been the uh the issue since like in the early 2000. So, >> if it's not an issue, >> what did we do then? uh what we did for 202 promotions is that we make sure that we also target industries that are not energy dependent not too much. Uh another another thing is that what we do is we make sure that we have the numbers in. So for example, if you're going to look at Texas future, which is energy uh dependent, you have to take into consideration what incentives you will be giving to Texas to sort of balance off the expense that you could infer when it comes to electricity cost because electricity cost is a constant cost especially for manufacturing. >> I understand your box. use the my moderator's limited privilege use but I think that the point is that's one way of responding to high electricity prices but all the time to support competitiveness in the Philippines the real solution is to bring that electricity and so I guess the question is does anyone want to address what's the tools what's the best way to do that just speak let's uh let's why don't you go because you were the most excited then we'll switch to car >> no only because uh we really did a study of several agencies or several industries about this. So according to the semicon industry if you revolve the middle bank our price is protective. So I think with withan so that's one um and price is not the only issue it's also the reliability of the electricity. So one uh one solution that we're trying to work out together with government and the private sector is cluster development is putting the state industries together instead of putting uh like manufacturing with a heavy metrics in one. So so so that kind of existent development should also help and then of course there's the energy investments not just by the government. Well, now you think Francis, you were the one who said that there's a 60 million >> that's $60 million grant from the United States for energy development here. >> So the partnership is the third point. Yes. Really? So reliability and price there are real solutions and actually because of good negotiations with some uh investors in the last 20 years some are actually enjoying those benefits already. But their secret negotiations, it would be good if they become ubiquitous. Just like K, do you want to add? >> Just add from the investors perspective. Um, I agree that electricity prices are very high in the Philippines. And so for us as investors, we're not a charitable organization. So we just really look for areas of investment that's not energy intensive. uh for the BPO industry for example uh they do complain the taxes that we end up getting from a supplier that has increased their rates uh we've had to uh we encountered that when the oil suddenly went up during the Ukraine Russia war a post FC fuel cost recovery and we had to do test up but of course our locators were complaining they said this decreases our cost per se and So for us as investors, we really have to find in the short medium term industries that are not heavy on electricity use until the Philippines becomes competitive regionally. But as investors, what we expect from the government is to find a solution for this. So what gives us hope would be the nuclear program of the country. uh the Philippines and the US have the 123 agreement where the the US is directly helping the Philippines in terms of training for nuclear power and I think that could provide cheaper electricity in the future. But yes, as an investor um we have to manage that as a cost but macro from macro perspective this is something that we need the government to live on. Well, let me just echo what Terry just said at nuclear and it was identified as a government priority uh especially small reactors uh that are suitable for an archipelago uh to via the regional grids uh also uh you'll have a carbon emission so it's clean it would fit in it's not the solution but it's part of the option or the menu of options the Philippines has for more power generation. And then the other point in terms of energy availability is transmission. And uh that's an area that's going to be consistent any of the power generation the transmission lines which are important uh to to maintain to build or so I recognize there's some questions out there but I also recognize we're constrained by time. Um I want to thank everyone for being a really great audience. I want to thank our outstanding panelists but I want to add something but I think it's worth keeping in line and I asked my question about competing within ASEAN outside ASEAN for visa and that is I have I believe very very strongly and I've said this both to President Trump several times President Bikin that in the next 30 years ASEAN Southeast Asia and Southeast Asia together will and really India since India's 80% of South Asia economy will be to the global economy what China was in the last eight years and that is the single largest source of growth. It will be different. You're talking about 11 12 countries rather than one. You're talking about more complex policy marks clearly huge technological change. And so I don't want to predict that it's going to be a straight line, but I think that it does give the Philippines a tremendous advantage because I would argue in the last 50 years, South Davis has done quite well. But I think in the next 30 years, it's likely to do even better. And being in a good neighborhood is always a good thing. So with that, let me just ask Paul here to join me in a round of applause for our Steve. You've been a great audience and I didn't have to fall to basketball. button. >> Okay.