All Hands on Deck for a Balanced, Innovation-led, and Equitable Economy

The UP CIDS Political Economy Program, together with the UP Diliman Office of the Vice
Chancellor for Research and Development, UP Diliman Colleges of Science and
Engineering, and the Asia Pacific Pathways to Progress Foundation, Inc., held a roundtable
discussion on the shipbuilding industry, entitled “All Hands on Deck for a Balanced,
Innovation-led, and Equitable Economy,” on 7 May 2019. The RTD had officers and
members of the Philippine Navy, the Shipyards Association of the Philippines (ShAP), and
the Maritime Industry Authority (MARINA) meeting with UP officials, specialists, and
researchers toward identifying possible UP-government-industry collaborations to address
the industry’s research and development needs.

In his opening remarks, UPD Vice Chancellor for Research and Development Fidel
Nemenzo emphasized the responsibility of UP community to harness its expertise for nation-
building. As part of its public role, the university needs to anchor its research to the needs of
communities and industry and advance innovative solutions to social and industry problems.
He cited previous university-government collaborations, such as the PHL Microsat Program
that built and launched two microsatellites (Diwata 1 and 2) to gather data that could be used
for disaster risk management and resource use planning. The program was a collaboration
of UP Diliman, the Philippines' Department of Science and Technology, and two Japanese
universities. Dr. Nemenzo ended his talk with the hope that the afternoon RTD will lead to
similar success in the shipbuilding industry.

In her message, Department of Trade and Industry Undersecretary Rafaelita. Aldaba noted
the need to equip the domestic shipbuilding industry to move up the global value chain.
Currently, the Philippines is involved in the back-end, low-value stages of manufacturing
(i.e., assembly, processing, and testing). This makes the sector vulnerable to shocks and
raises production costs. For the shipbuilding industry, in particular, Usec. Aldaba posited that
the Philippines needs to build the capacity to manufacture parts and components
domestically, attract more investments, and build not only commercial but naval vessels as
well.

The RTD consisted of two parts. In the first half, the Philippine Navy’s Vice Commander
Rommel Jude G. Ong, ShAP President Meneleo Carlos III, and Engr. Ramon Hernandez of
MARINA presented the status, plans, and needs of their respective organizations and
networks. The second half of the RTD had UP Visayas Chancellor Ricardo Babaran, and UP
Diliman’s College of Science Dean Laura David, and College of Engineering Associate Dean
Menardo Berana providing an overview of possible tie-ups with government and industry.

Vice Commander Rommel Jude Ong started the discussion by stating how the shipbuilding
industry ties in with the needs and roles of the Philippine Navy, especially under the Armed
Forces of the Philippines’ modernization program. He stressed the importance of research in
developing the Navy’s defense, security, and humanitarian work capabilities and cited
collaborative initiatives by the Naval Research and Technology Development Center with
other government agencies, and various universities, in weapons development, data
exchange among command centers, and a satellite project. Describing the potential outcome
of a collaboration strategy between the academe, industry and the Philippine Navy, Vice
Commander Ong said that government and academe can partner in developing
technological models that industry can in turn assemble, with initial funding from the
government. To facilitate technology transfer, government could give the academe and
industry the license to mass produce the technology for domestic requirements and even for
global production later. However, Vice Commander Ong also acknowledged that the cost of
innovation is currently shouldered by the innovator, which suggests the relatively low priority
given to R&D by the government.

MARINA’s Engr. Ramon Hernandez also gave a situationer on the Philippine maritime
industry and the agency’s programs for shipbuilding and ship repair under its Maritime
Industry Development Plan. At present, there are 119 local shipyards, 95 percent of which
are small in size. Fifty percent of these small shipyards are engaged in shipbuilding for the
local market and five percent are involved in the export market. While the domestic
maritime industry benefits from the country’s strategic location for international commerce
and trade, competitive labor supply, and abundant deep-water spaces, most shipyards are
limited in terms of capability (e.g., outmoded facilities and equipment, and inadequate
materials). There are also limited ship financing options and brain drain of skilled manpower.
Based on MARINA’s assessment, although the Philippine shipbuilding capability is at a
maximum of 2500 gross tonnage, local shipyards’ capacity to meet the domestic market is
not maximized as second-hand vessels continue to be imported from China, Japan and
Korea.

MARINA’s development plan is thus centered on accelerating the development of a
nationally integrated and globally competitive industry through education, innovation,
technology, and sustainability. The plan’s priorities for the industry include: promotion of the
Philippine Flag Registry; development of the Philippines as a transhipment and bunkering
hub in the region; upgrading and expansion of local shipyards; and, establishment of an eco-
industrial maritime park and a maritime training and research center.

On the part of the shipbuilders, ShAP President Meneleo Carlos III discussed the many
challenges faced by industry and the steps that could be taken to address these. One major
challenge according to Mr. Carlos is competition from global players, especially China, that
can build more ships at a faster rate and a much lower cost. To meet this challenge, the
Association hopes to build links with other sectors, emphasizing the need for education and
technology that will help the industry grow. Other measures that need to be undertaken
include: investing in modern technology to increase productivity, introducing trade skills
(e.g., carpentry, electrical instrumentation) as early as Senior High School, improving
financing practices, and policy reforms. Mr. Carlos further reiterated that local shipbuilders
are capable of building high quality vessels, as evidenced by a number of local shipyards
that have earned ISO certifications. Underlining the potential role of the former Hanjin
shipyard, Mr. Carlos said that under a national shipbuilding program, local shipyards can
make use of the facility and allow them to replace the existing ROROs within a two year
period.

In response to the government and industry presentations, UP officials provided an overview
of the programs and studies that could be tapped to benefit the maritime sector. The second
half of the RTD started with College of Engineering Associate Dean Menandro Berana briefly
discussing the Engineering Research and Development for Technology, a DOST
collaboration with UP and other universities that focuses on developing human resource
capabilities through graduate scholarships, research grants, and exchanges. Further, he
identified the College’s five research areas that can contribute to developing the maritime
industry and its attached industries: energy, information and communication technology,
semi-conductor materials and electronics, environment and infrastructure, and
manufacturing and machinery.

UPD College of Science Dean Laura David stated that UP has the technological knowledge
and capability for remote monitoring and analysis of ships, port design, wave and current
modelling, and environmental assessment that can provide inputs to the shipbuilding
industry. The College also has three major research vessels. Finally, Dean David raised the
importance of multi-sectoral collaboration in protecting and conserving marine resources.
UP Visayas, which specializes in fisheries and ocean sciences, was represented by
Chancellor Babaran and former Chancellor Rommel Espinosa. Dr. Babaran welcomed the

initiative to explore UP-government-industry collaboration in the shipbuilding industry and
said that UP Visayas is ready to share its studies, such as in computational fluid dynamics,
and facilities (e.g., model tank facility) with the Philippine Navy, MARINA and the
shipbuilding industry.

The discussants agreed on the need for regular exchanges among the government,
academe, and industry to ensure that the various resources and opportunities to develop the
shipbuilding industry can be maximized, and that efforts across these sectors are cohesive,
complementary, and responsive to current needs.

A second RTD on the shipbuilding industry is being planned for August. For inquiries on this,
you may contact the Political Economy Program at [email protected]