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Republic of the Philippines the Study on Potential Industry and Further Economic Development for Central Luzon and CALABARZON Area

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Republic of the Philippines the Study on Potential Industry and Further Economic Development for Central Luzon and CALABARZON Area Republic of the Philippines Department of Trade and Industry Republic of the Philippines The Study on Potential Industry and Further Economic Development for Central Luzon and CALABARZON Area Final Report July 2017 Japan International Cooperation Agency Nomura Research Institute, Ltd. Nomura Research Institute Singapore Pte. Ltd. 1R International Development Center of Japan Inc. JR Oriental Consultants Global Co. Ltd. 17-046 Map of Region III and Region IV-A Region III Central Luzon Region IVa Calabarzon Province Population (2015) Area (km2) Province Population (2015) Area (km2) Aurora 214,336 3,147 Batangas 2,694,335 3,120 Bataan 760,650 1,373 Cavite 3,678,301 1,574 Bulacan 3,292,071 2,796 Laguna 3,035,081 1,918 Nueva Ecija 2,151,461 5,751 Quezon 2,122,830 9,150 Pampanga 2,609,744 2,062 Rizal 2,884,227 1,192 Tarlac 1,366,027 3,054 Total 14,414,774 16,954 Zambales 823,888 3,831 Metro Manila (National Capital Region) Total 11,218,177 22,014 City/ Municipality Population(2015) Area (km2) 16 Cities and 1 12,877,253 614 Municipality Source: Philippine Statistics Authority. Contents List of Tables ................................................................................................................................ iv List of Figures ............................................................................................................................. vii Abbreviation ................................................................................................................................. xi Chapter 1 Overview of the Study .................................................................................................. 1 1.1 Background of study ................................................................................................ 1 1.2 Objectives of the study ............................................................................................ 2 1.3 Target areas .............................................................................................................. 2 1.4 Stakeholders of the study ......................................................................................... 2 Chapter 2 Policy and Regulations on Development Planning and Industrial Development ......... 5 2.1 Development Planning Administration ................................................................... 5 2.1.1 Development Plans .......................................................................................... 5 2.1.2 Significant Development Programs under Previous Administration ............. 14 2.1.3 Development Orientation under Duterte Administration .............................. 15 2.1.4 Organization Reform for Logistics Development ......................................... 19 2.1.5 Local Plans .................................................................................................... 20 2.2 Land Use Plans ...................................................................................................... 24 2.2.1 Institution for Industrial Estate Development ............................................... 24 2.2.2 Industrial Location ......................................................................................... 26 2.3 Industry policy and plans ....................................................................................... 27 2.3.1 System of Industry policy, plan and roadmaps .............................................. 27 2.3.2 Comprehensive National Industrial Strategy (CNIS) .................................... 29 2.3.3 Manufacturing Industry Roadmap (MIR) ..................................................... 30 2.3.4 Manufacturing Resurgence Program (MRP) ................................................. 32 2.3.5 Comprehensive Automotive Resurgence Programs (CARS) ........................ 33 2.3.6 Industry Roadmaps for Sub-sectors ............................................................... 33 2.3.7 Roadmaps Localization ................................................................................. 34 2.3.8 Industrial Promotion Programs by DTI ......................................................... 35 2.4 Tax System............................................................................................................. 38 2.4.1 Taxation ......................................................................................................... 38 2.4.2 Tax Incentives for Investment ....................................................................... 40 2.5 Regulations on Foreign Ownership in the Target Industry .................................... 42 2.6 Industrial Human Resource Development ............................................................. 44 2.6.1 Education System Framework in terms of Industrial Human Resource Development ........................................................................................................... 44 2.6.2 Higher Education ........................................................................................... 46 2.6.3 Technical Vocational Education ..................................................................... 47 2.6.4 Industry-Academia Collaboration ................................................................. 49 Chapter 3 Current status of the target regions ............................................................................. 53 3.1 Macro economy ..................................................................................................... 53 3.1.1 Region III (Central Luzon) ............................................................................ 53 3.1.2 Region IV-A (CALABARZON) .................................................................... 66 3.2 Regional Development .......................................................................................... 76 i 3.2.1 Land Use ........................................................................................................ 76 3.2.2 Natural Disaster Risks for Industrial Locations ............................................ 78 3.2.3 Location of Industrial Estates ........................................................................ 80 3.2.4 Location of Business Process Outsourcing (BPO) ........................................ 82 3.3 Industry Promotion ................................................................................................ 83 3.3.1 Central Luzon ................................................................................................ 84 3.3.2 CALABARZON ............................................................................................ 85 3.4 Industrial Human Resource Development ............................................................. 87 3.4.1 Current Status of Industrial Human Resource Development in Central Luzon ................................................................................................................................ 87 3.4.2 Current Status of Human Resource Development in CALABARZON ........ 88 3.5 Infrastructure ......................................................................................................... 90 3.5.1 Definition of Logistics in the Philippines ...................................................... 90 3.5.2 Overview of the Transportation Development .............................................. 91 3.5.3 Current condition of other types of Infrastructure ........................................ 110 Chapter 4 Direction of the Development in the Target Regions ............................................... 123 4.1 Positioning in Development Plans ....................................................................... 123 4.1.1 Positioning in PDP and RDP ....................................................................... 123 4.1.2 Relationship with Metro Manila .................................................................. 124 4.1.3 Focused industrial sectors in various development plans ............................ 124 4.2 Resources for further economic growth .............................................................. 125 4.2.1 Advantageous resources of Central Luzon .................................................. 125 4.2.2 Advantages and challenges of CALABARZON ......................................... 126 Chapter 5 Industry Analysis ...................................................................................................... 129 5.1 Analysis Framework ............................................................................................ 129 5.2 The Trend of International Division of Labor in ASEAN ................................... 130 5.2.1 Trend of economic partnership over ASEAN ............................................. 130 5.2.2 International division of labor within ASEAN ........................................... 132 5.3 Economic Situation of the Philippines Compared with ASEAN Countries ..... 140 5.3.1 Macro Economic Situation of the Philippines ............................................. 140 5.3.2 Population and Labor Force of the Philippines ........................................... 147 5.4 Global Value Chain Analysis of the Potential Industries ..................................... 152 5.4.1 Aerospace Industry ...................................................................................... 152 5.4.2 Electrical and Electronics Industry .............................................................. 166 5.4.3 Shipbuilding Industry .................................................................................. 175 5.4.4 Automotive/ Auto
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