SME Clustering To Boost Economy

MANILA, Philippines - The Department of Trade and Industry (DTI) is implementing a national industry clustering approach to increase the contribution of the small and medium enterprises to the national economy.

This initiative is implemented through the three-year National Industry Cluster Capacity Enhancement Project (NICCEP), which seeks to enhance SMEs' capability for job creation, investment generation, export growth, SME development, and poverty alleviation.

During the series of industry cluster development planning workshops, strategic development plans for target industry clusters were drafted using the value chain framework.

The following industries were chosen after a series of consultations with key industry players and experts: milkfish, dairy products, coffee, bamboo, tourism, information and communication technology (ICT), health and wellness, wearable and homestyle in Luzon; gifts, decors and housewares, tourism, ICT, health and wellness in Visayas; and banana, mango, coconut, seaweeds, wood, mining, tourism, ICT, rubber, poultry, tuna and palm oil in Mindanao.

"Through the NICCEP, these industry clusters' capacities to plan, implement, and evaluate projects will be enhanced. This project also intends to improve the competitiveness and business environment of these industry clusters," said Secretary Gregory L. Domingo.

The NICCEP is funded by Japan International Cooperation Agency (JICA) in coordination with the DTI to develop and mobilize pilot industry clusters nationwide. Twenty-four pilot projects were already identified in Luzon, Visayas and Mindanao.

In 2010, the Davao Industry Cluster Capacity Enhancement Project (DICCEP) successfully ended and recognized as the first recipient of the Overseas Development Assistance (ODA) Good Practice Award for Strategies for Achieving Outcomes by the National Economic Development Authority (NEDA).

Out of 10 shortlisted foreign assisted projects, the DICCEP was considered ahead in achieving results, innovativeness, replicability, sustainability and social acceptability.

It succeeded to develop eight priority industry clusters in the Davao during its three-year run. This resulted in its replication through the NICCEP, which is seen as a major development strategy of the Philippine Development Plan 2011-2016.

"As it became popular among developed countries, industry clustering approach provided a framework for collaboration between the public and private sectors. It also strengthened the emphasis of the Philippine Development Plan in the promotion of industry clusters as a major strategy for inclusive growth," Domingo said.

To strengthen capacities of industry cluster development managers and implementers, the DTI tapped experts from the Deutsche Gesellschaft für Internationale Zusammenarbeit (German Agency for International Cooperation) or GIZ to introduce ValueLinks or value chain methodology as a tool in industry development.

The participants were from national government agencies, enterprises, business associations, development agencies and the academe.

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