October 1, 2023

Only a third or 33.6 percent of Philippine firms are active in innovation.

This was disclosed by authors of the 2021 Philippine Institute of Development Studies (PIDS) Survey of Innovation Activities, namely PIDS Senior Research Fellows Jose Ramon Albert, Francis Mark Quimba, and Ramonette Serafica; Supervising Research Specialists Jana Flor Vizmanos and Neil Irwin Moreno; and research analysts Abigail Andrada, Mika Muñoz, and Angelo Hernandez.

The study investigated the innovation practices of 11,500 firms across major sectors. Compared to previous surveys, the 2021 round had 10 times more respondents and gathered information on the use of digital platforms by firms.

Based on the study, about a fifth or 21.8 percent are product innovators and a quarter or 27.4 percent are process innovators.

Among the sectors, information and communications technology ranked the highest while agriculture consistently ranked the lowest in innovation.

Albert, who presented the results at a PIDS public webinar, said the study assessed firms’ innovation based on their engagement and types of innovation pursued (product or process innovation).

Considered innovation are new and significant improvements in the firms’ goods, services, production processes, marketing, or organizational methods that add value.

The survey found that only one in every four firms was aware of government innovation policies, of which only 13.6 percent availed of government assistance for their innovation activity.

Only a quarter of the innovation-active firms filed for intellectual property rights.

Both innovators and non-innovators rated cost factors as the innovation barrier with the highest importance, followed by knowledge and market factors.

The survey also revealed the firms’ preferred incentives. Micro, small, and medium enterprises (MSMEs), large firms, and industry and service sectors rated tax deductions or tax credits as a “highly important incentive”.

In contrast, the services sector prefers “more training” while agriculture firms “highly prefer direct subsidies, training, and technical support”.

To address the barriers to innovation and foster a healthy innovation ecosystem in the country, the authors recommend promoting digitalization in the government and private sector and developing a “robust monitoring and evaluation system to determine the effectiveness of the Philippine Innovation Act”. – Press release