JURIST Guest Columnist Edsel F. Tupaz discusses what's to come from the enactment of the Philippine Innovation Act...
Republic Act No. 11293, or the Philippine Innovation Act, was signed into law by the Philippine President on April 17, 2019. However, the Act was released to the public only on July 16, 2019.
The Philippine Innovation Act aims to promote a culture of strategic planning and innovation in the country through improving innovation governance and adopting long-term goals. The Act recognizes the richness of the country’s resources and culture and the ways these can be harnessed to further innovation and entrepreneurship. Among others, it seeks to explore, promote, and protect the potentials for innovation of traditional knowledge, traditional cultural expressions, and genetic resources.
Emphasis is placed on inclusive innovation. The Act seeks to promote the creation of new ideas that will be developed into new and quality products, processes, and services aimed at improving the welfare of low-income and marginalized groups. Women’s participation and skills development are also areas which the law aims to improve. The Act also provides for the advancement of micro, small and medium enterprises (MSMEs) through the development of a comprehensive support program which shall set forth strategies towards promoting MSME internationalization and participation in local and global value chains.
In order to effectively drive innovation across all areas of government policy and to achieve the innovation goals of the country, the Act has adopted a “whole of government approach” in order to facilitate coordination between and among different government agencies and between government and the private business sector.
National Innovation Council (NIC)
The Act established the National Innovation Council (NIC) which is tasked to develop innovation strategies as well as coordinate with various sectors and agencies pursuant to a whole-of-government approach. The NIC is also in charge of monitoring and assessing the country’s strategic innovation programs and of identifying agencies and local government units (LGUs) that will be tasked to implement specific strategies under a National Innovation Agenda and Strategy Document (NIASD). Most importantly, the NIC is responsible for the establishment and administration of so-called Innovation Funds that shall fund programs to be approved by the NIC.
The NIC shall have the President as Chairperson and the Director General of the National Economic and Development Authority (NEDA) as Vice Chairperson. Secretaries of various government agencies will serve as members of the NIC. Aside from these officials, the President shall choose seven (7) executive members from the following sectors:
- MSME sector – at least one (1); recommended by a legally established and reputable business organization
- Business sector – at least one (1); recommended by a legally established and reputable business organization
- Academe and scientific community – at least seven (7) years of experience in the field of science and technology, research and development or innovation.
The Act requires that at least one (1) of the Executive Members shall be a woman. The NIC will be assisted by a Secretariat to be established within the NEDA.
National Innovation Agenda and Strategy Document (NIASD)
The National Innovation Agenda and Strategy Document (NIASD) shall serve as the framework for the implementation of the Act. It is meant to establish the country’s vision and long-term goals for innovation, provide a road map, and set forth the strategies for improving innovation governance. The Act mandates that the NIC identify strategies to stimulate regional capacity for development and take into consideration the competitive advantages and strengths of each province, region, and community. It is also required that the NIASD include innovation priority areas, and the strategies to be used to realize these priorities which shall have a ten (10)-year horizon at a minimum, subject to periodic review by the NIC. In identifying priority areas for innovation, issues and challenges in the following areas shall be considered:
- Food security and sustainable agriculture;
- Blue economy
- Education and the academe
- Secure, clean and reliable energy;
- Climate change and disaster resilience;
- Resource efficiencies;
- National and community-based comparative advantages in the context of global value chains;
- Comparative strengths and advantages of sectors and communities;
- Potentials for innovation of traditional knowledge, traditional cultural expressions, and genetic resources;
- Infrastructure needs;
- Development of human capital;
- Digital economy and
- Transportation services
Strategic Research, Development and Extension (RD & E) Programs
In order to attain a higher level of mission orientation in publicly funded research, the NIC is mandated to develop RD & E themes as well as a “relevance criteria” which shall guide agencies in selecting programs and projects to be funded under the Innovation Fund. The Act aims to establish centers of research excellence and centers of collaborative research activity in order to further innovation in the country.
During the Act’s initial year of implementation, the NIC is provided with a revolving fund. This fund will be used in giving grants to qualified proposals for projects, as screened and approved by the NIC.
Innovation Development Credit and Financing
The Innovation Development Credit and Financing Program will serve as the loaning facility of the NIC for purposes of developing new technologies, product innovation, process innovation, organizational innovation, and marketing innovation. A credit quota has been established whereby all banking institutions are required to set aside at least four percent (4%) of their total loanable funds for innovation development credit.
Removal of Barriers to Innovation
The NIC and its member agencies are mandated to remove regulatory barriers to innovation and cut red tape, such as procurement rules and regulations, in order to boost innovation efforts. LGUs are encouraged to undertake reforms in their systems and processes such as reducing the number of days to process applications for and renewal of business licenses to three (3) working days. The processing of other government permits and clearances, and applications for patents, shall also be streamlined towards ensuring a business environment that fosters innovation.
Implementing Rules and Regulation
The NEDA, DTI and DOST are tasked to formulate and promulgate the Implementing Rules and Regulations and other issuances necessary to implement the statute within sixty (60) days from its effectivity.
Edsel F. Tupaz is a lawyer, writer, and law professor at Far Eastern University Institute of Law. Currently senior partner at Gorriceta Africa Cauton & Saavedra (https://www.gorricetalaw.com/), Mr Tupaz’s practice focuses on the nexus of law, policy, and technology. He studies the global regulatory environment for digital assets and advises upon legal frameworks for blockchain-based technology initiatives, digital asset offerings, smart contracts, and virtual currency business initiatives. Aside from law and technology, Mr Tupaz holds experience and expertise in infrastructure and special projects. Before joining Gorriceta, Mr Tupaz was a senior public official at the Department of Public Works and Highways. A dual-qualified lawyer accredited under the Philippine and New York Bar, Mr Tupaz is legal adviser to Fortune 500 and Nasdaq 100 companies along with many of the largest and most impactful technology companies in Southeast Asia. Edsel holds a Master of Laws from Harvard Law School, Cambridge, Massachusetts, and a Juris Doctor and a Bachelor of Arts in Economics from the Ateneo de Manila University. He studied FinTech and blockchain technologies at the Massachusetts Institute of Technology.
The author would like to thank Genica Gale Lahoz for her valuable contribution to this article.
Suggested citation: Edsel F. Tupaz, The Philippine Innovation Act, JURIST – Academic Commentary, August 27, 2019, https://www.jurist.org/commentary/2019/08/the-philippine-innovation-act
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