INNOVATION AND R&D WILL COOL DOWN 'HOT MONEY' - ANGARA

Senator Edgardo J. Angara said that the Philippines must focus on innovation and R&D to turn short-term portfolio inflows into long-term investments that stimulate job generation and sustainable growth.

Angara, Chair of the Senate Committee on Science and Technology, made the statement in response to the International Monetary Fund's call to Asian countries to do something about hot money.

"Hot money" or foreign portfolio investments are short-term placements mostly in stocks and bond markets that may lead to more volatile exchange rates and increase inflationary pressures," explained Angara, also Vice Chair of the Senate Committee on Finance.

"Uncertainty from continuing debt problems in Europe is pushing investors to direct their sights towards our side of the globe. But to ensure that any incoming investment is anchored firmly in the country, we need to boost our capacity to innovate and conduct meaningful R&D--which really are our abilities in providing long-term value," said Angara.

The Bangko Sentral ng Pilipinas (BSP) reported that between January and August of this year net inflows of foreign portfolio investments reached US$3.1 billion, compared with US$926 million in the same period last year.

On the other hand, total approved foreign direct investments (FDI) for the first half of the year amounted to around US$1.46 billion or 3.5 percent up from last year's figures, according to the National Statistical Coordination Board (NSCB).

Angara, also Chair of the Congressional Commission on Science, Technology and Engineering (COMSTE), noted the OECD Science, Technology and Industry Outlook 2010 which reported that some developing, non-OECD countries like Brazil, China, India and Indonesia have become important players in S&T and innovation.

"The report challenges widely held notions that developing countries should first catch-up economically with their developed counterparts before they begin investing heavily in R&D," noted Angara. "Clearly, the case is being made that policies for stimulating innovation can become the foundations of a national development program."

He noted that COMSTE has been advocating for the formation of innovation clusters--three-way partnerships among government agencies, the academe and industries for the adaptation and development of usable technologies to solve the country's foremost challenges.

The Department of Science and Technology (DOST) and the Commission on Higher Education (CHED) have already agreed to devote funds for the roll-out of five initial innovation clusters in Algae Research and Commercialization; Disaster Science and Management; ICT for Cloud Computing and Software as a Service; Responsible Mining Technologies; and Precision Farming and Smart Agriculture.

"We will see to it that more than P300 million from the 2012 budget is earmarked for these clusters to become venues for collaborations in innovation that could definitely include foreign partners," he vowed. "In this way, we send out a clear message to the world that we are serious about creating R&D tie-ups with foreign partners and about becoming a prime destination for long-term investments."