Philippine Innovation Act Summary

Policy and intent

The State declares it is the policy of Republic Act No. 11293 to foster innovation as a vital component of national development and sustainable economic growth (Section 2).
The State places innovation at the center of development policies guided by clear and long-term goals that harness innovation to help the poor and marginalized and enable MSMEs to participate in the domestic and global supply chain (Section 2(a)).
The State promotes a culture of strategic planning and innovation and ensures knowledge is created, acquired, disseminated, and used more effectively to promote sustainable economic and social development (Section 2(b)).
Investments in education, science, technology, and innovation are guided toward strengthening the country’s knowledge-based economic development that benefits all, with educational institutions, private organizations, government agencies, and LGUs as key drivers for innovation literacy and skills development for Filipinos, including women and youth (Section 2(c)).
The State recognizes an effective and efficient innovation ecosystem and adopts a “whole of government” approach to ensure policy coherence, alignment of priorities, and coordination in program delivery (Section 2(d)).
The State emphasizes governance that enables and maximizes innovation benefits by putting efficient institutions in place with authority to remove regulatory, informal, and other obstacles (Section 2(e)).
The State recognizes the role of the business sector, academe, scientific community, and research institutions and provides for government cooperation and collaboration with these sectors, including public sector innovation as a driver of private sector growth (Section 2(f)).
The State promotes sources of innovation unique to the country—traditional knowledge, traditional cultural expressions, and genetic resources—while protecting them from misappropriation (Section 2(g)).

Key definitions

“Blue economy” means the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, while preserving the ocean ecosystem (Section 3(a)).
“Business incubators” are facilities where startups are hosted and business development services are provided (Section 3(b)).
“Cluster policies” support geographic concentrations of interconnected firms and related actors such as specialized service providers, academic or educational institutions, MSMEs, and businesses (Section 3(c)).
“Genetic resources” are genetic material of plant, animal, microbial, or other origin containing functional units of heredity, of actual or potential value (Section 3(d)).
“Inclusive innovation” is the creation of new ideas that lead to new products, processes, and services that help improve welfare of lower-income and marginalized groups (Section 3(e)).
“Innovation” is the creation of new ideas resulting in new or improved policies, products, processes, or services that spread or transfer across the market (Section 3(f)).
“Innovation alliance” is a coalition of R&D-based technology companies, academic/educational institutions, and/or research institutions, MSMEs, and other relevant organizations supporting innovative efforts and enterprises (Section 3(g)).
“Innovation centers” are centers of competence and innovation activities in academic/educational or non-academic facilities that support collaborative RD&E and innovation-related activities between institutions and business (Section 3(h)).
“Innovation governance” is the institutional setup of the national innovation ecosystem, including institutional structures and processes governing policymaking and implementation, plus coordination and collaboration across public institutions and stakeholders (Section 3(i)).
“Innovation networks” are interconnected companies and organizations in the knowledge infrastructure mainly focused on innovation (Section 3(j)).
“Innovative goods and services” are new or significantly improved products, services, processes, technical specifications or components, methods, and tools enhancing the government’s ability to deliver services (Section 3(k)).
“Marketing innovation” is significant change in product design or packaging, placement, promotion, or pricing (Section 3(l)).
“Multi-stage process” covers feasibility study, designing, prototyping, testing, and commercialization stages for a product or solution (Section 3(m)).
“Organizational innovation” is development and/or introduction of new or significantly improved methods in business practices, workplace organization, or external relations (Section 3(n)).
“Policy innovation” is introduction of new or significantly different solutions to policy problems (Section 3(o)).
“Pre-commercial procurement” is procurement of RD&E services for services, solutions, or products that do not yet exist, involving contracting by development phase from feasibility study, designing, prototyping, testing, and commercialization (Section 3(p)).
“Process innovation” is development and/or introduction of a new or significantly improved production or delivery method (Section 3(q)).
“Product innovation” is introduction of a good or service new or significantly improved in features, applications, characteristics, or intended uses (Section 3(r)).
“Project-based competition” is a process where contractors bid for contracts for a specific project with flexibility to submit particulars detailing unique scope and features, and the contracting agency awards to the proponent deemed to have submitted the best innovation solution or product (Section 3(s)).
“Social innovation” is identifying and delivering new services that improve quality of life, including through employment, consumption and/or participation (Section 3(t)).
“Technology diffusion procurement” is public procurement undertaken on behalf of end-users to accelerate diffusion of innovative solutions or technologies offering greatest advantage to users (Section 3(u)).
“Technology platforms” are self-organized programs allowing stakeholders to collaborate in identifying common needs and assemble a portfolio of funding sourced from government and industrial sources or a mix (Section 3(v)).
“Technology programs” link industrial, academic, or educational RD&E efforts toward building national capacities in developing industrially important technologies (Section 3(w)).
“Traditional cultural expressions” are forms of traditional culture expressed and passed generation to generation that become part of the identity and heritage of a traditional or indigenous community (Section 3(x)).
“Traditional knowledge” is a body of knowledge, innovations, systems, and practices of indigenous peoples and local communities developed, sustained, and passed generation to generation within a community, often forming part of cultural heritage or spiritual identity (Section 3(y)).

Objective and innovation scope

The objective is to generate and scale up action in education, training, research and development across all levels and areas to promote innovation and internationalization activities of MSMEs as drivers of sustainable and inclusive growth (Section 4).
The Act’s objectives include promoting a culture of strategic planning and innovation to expand and maintain economic competitiveness (Section 4(a)).
The Act improves innovation governance by compelling adoption of a long-term vision and focused priorities (Section 4(b)).
The Act ensures effective coordination and eliminates fragmentation of innovation policies and programs at all levels (Section 4(c)).
The Act strengthens the position of MSMEs in the innovation system (Section 4(d)).
The Act removes obstacles to innovation by suppressing bureaucratic hurdles and adapting the regulatory framework to support creation and diffusion of new knowledge, products, and processes (Section 4(e)).
The Act encourages entrepreneurial attitude, especially among MSMEs (Section 4(f)).
The Act explores, promotes, and protects potentials for innovation of traditional knowledge, traditional cultural expressions, and genetic resources (Section 4(g)).
The Act strengthens and deepens interactions and partnerships among public and private actors, academe, MSMEs, RD&E institutions, and communities to promote inclusive growth and improve quality of life through innovation (Section 4(h)).
The government adopts a broader innovation view covering product, process, organizational, social, marketing, academic or educational, and policy innovation, and also seeks to harness global knowledge and technology for productivity and public welfare (Section 5).

National Innovation Council and Secretariat

The National Innovation Council (NIC) is established to develop national innovation goals, priorities, and long-term strategy (Section 6).
The NIC chair is the President of the Philippines, and the Vice Chair is the Director General of NEDA (Section 6(a)-(b)).
The NIC includes cabinet-level members: DOST, DTI, DA, DENR, DOH, DoTr, DOE, DND, DICT, CHED (Chairperson), DBM, DepEd, DILG, DFA, DOLE, and the Director General of the Intellectual Property Office of the Philippines (IPOPHL) (Section 6(c)-(r)).
The NIC has Seven (7) Executive Members appointed by the President from business, entrepreneurs, academe, and scientific community, with at least one (1) woman (Section 6(s)).
At least one (1) Executive Member must be from the MSME sector, and at least one (1) must be from the business sector, with recommendations from a legally established and reputable business organization (Section 6(s)).
Executive Members from academe and the scientific community must have at least seven (7) years of experience in science and technology, R&D, or innovation (Section 6(s)).
The President may designate the Executive Secretary to attend and preside over NIC meetings (Section 6).
Department Secretaries and other members may not designate alternate representatives other than their undersecretaries (Section 6).
A majority of the NIC members constitutes a quorum (Section 6).
The NIC has functions including developing strategic vision, setting innovation goals and strategies, serving as strategic intelligence, coordinating sectors, monitoring and reviewing strategic programs, identifying implementing agencies under the NIASD, communicating policies, administering the Innovation Fund, approving fund-qualifying programs, developing and monitoring metrics, submitting annual reports to Congress, and performing other necessary functions (Section 7).
A Secretariat within NEDA is established to support the NIC, headed by an Executive Director III (Salary Grade 28) appointed by the President (Section 8).
The Executive Director III must have at least seven (7) years of experience and practice in science and technology, R&D, innovation, finance, or business management; the Executive Director III is nominated by the NIC (Section 8).
NEDA submits the initial staffing structure to the DBM for funding, and NEDA constitutes an interim Secretariat within one (1) month from effectivity through temporary detail of personnel from member agencies pending plantilla creation (Section 8).
The Secretariat functions include NIC support, expert consultation, coordination with government/private/academe/stakeholders, designing and implementing an innovative startup development program, gathering strategic intelligence, building strategic intelligence on human capital development, assessing effectiveness of science and technology/innovation grant programs and scholarships, drafting relevance criteria for RD&E funding, developing monitoring and evaluation metrics, making recommendations, and performing other NIC-directed functions (Section 8).

National Innovation Agenda and Strategy Document (NIASD)

The NIC must develop a National Innovation Agenda and Strategy Document (NIASD) establishing the national vision, long-term goals for innovation, a road map, and strategies for improving innovation governance through delineation and complementation of innovation efforts across agencies (Section 9).
The NIASD must integrate and foster public-private partnerships, including with large businesses, MSMEs, academe, and RD&E institutions (Section 9).
The NIC must identify strategies to stimulate regional capacity for development to enable differentiated innovation strategies across regions, provinces, and communities, considering competitive advantages and strengths (Section 9).
The NIASD must include innovation priority areas, strategies to realize priorities, and the resources and budget to support them (Section 9).
Agenda and strategies under the NIASD must have a minimum ten (10)-year horizon, subject to periodic NIC review (Section 9).
All agencies must strictly comply with the NIASD and pursue it as a collective national effort, and agencies must incorporate relevant programs in their work programs and action plans guided by the NIASD (Section 9).
The NIASD must be developed through consultation with government agencies, Regional Development Councils (RDCs), LGUs, and other stakeholders, and must be completed within six (6) months from effectivity of the Act (Section 9).

Priority areas and inclusive innovation measures

When identifying priority areas for innovation, the NIC must consider issues and challenges in food security and sustainable agriculture, the blue economy, education and the academe, health, secure clean and reliable energy, climate change and disaster resilience, resource efficiencies, comparative advantages in global value chains, sector and community strengths, potentials of traditional knowledge/traditional cultural expressions/genetic resources, infrastructure needs, governance, development of human capital, digital economy, transportation services, and other areas (Section 10).
The NIC must develop strategies to create ideas that develop into new and quality products, processes, and services aimed at improving welfare of low-income and marginalized groups and creating livelihood opportunities (Section 11).
The NIC must integrate policies promoting women’s participation and skills development in science, technology, engineering, arts and mathematics, including information and communications technologies (Section 11).
The NIC must develop strategies for promoting social innovation as a tool for delivering new services improving quality of life and enabling community participation, and must incorporate these strategies in the NIASD (Section 11).

MSME innovation, innovation centers, and regional clustering

The NIC must develop strategies promoting MSME internationalization and participation in local and global value chains (Section 12).
The NIC must develop and agencies concerned must implement a comprehensive MSME support program from incorporation to internationalization including coaching and mentoring on design, technology extension services, standard business practices in contracting, accounting and project management, quality control, standard-setting, commercialization and management, patents, and similar supports (Section 12).
Through a startup MSME innovation development program, the government must mobilize agencies with private organizations to provide technical and/or financial support programs for development training of entrepreneurs (Section 12).
The Department of Trade and Industry (DTI) must identify high productivity innovative businesses to help them identify and exploit overseas market opportunities (Section 12).
The NIC must develop metrics to assess progress in these areas (Section 12).
The government through the NIC must encourage and support innovation centers and business incubators in partnership with private sector, academe, and RD&E institutions for skills and technology transfer, collaboration between small and big businesses, supplier development, access to finance, and marketing opportunities (Section 13).
The DTI and DOST must collaborate to ensure complementarity and coherence in programs providing innovation-related services to MSMEs and innovators (Section 13).
Programs must build links between tertiary institutions, research institutions, and industry to create avenues for knowledge diffusion and capacity building, and government-academic-business research collaborations must be pursued to foster future innovations (Section 13).
The NIC must integrate in the NIASD strategies promoting regional innovation harnessing each region’s and province’s competitive advantages and strengths (Section 14).
For regional implementation, RDOs help coordinate and monitor NIASD implementation in their respective regions (Section 14).
The NIC must adopt cluster policies as significant components of national innovation policy and, for feasibility and effectiveness, must consider other policy streams such as regional economic development policy, industrial/enterprise policy, and higher education policy (Section 14).
Cluster policies must focus on regional hubs or provinces or sectors such as MSMEs, large firms, spinoffs and startups, academic/educational institutions, research centers, or combinations of these (Section 14).
The NIC must establish a Cluster Development Program, and funding for this must be incorporated in the annual General Appropriations Act (Section 14).
Cluster strategies and programs are implemented through agencies concerned through a well-coordinated system facilitated by the NIC (Section 14).

RD&E programs and innovation instruments

The NIC must develop RD&E themes guided by the innovation agenda and development goals (Section 15).
RD&E themes must be adopted in concerned agencies’ RD&E programs to ensure mission orientation in publicly funded research (Section 15).
The NIC must develop and administer relevance criteria that agencies concerned administer in selecting RD&E programs or projects for funding (Section 15).
The NIC must prepare an inventory of academic/educational and RD&E institutions with resources and capacities to undertake RD&E programs/projects to provide strategic intelligence for public funding and grants (Section 15).
The NIC must monitor project implementation and ensure compliance with relevance criteria and attainment of objectives for which projects were funded (Section 15).
A peer review system may be established for monitoring and evaluation (Section 15).
The NIC must establish centers of research excellence to bring together multi-sector/stakeholder teams for multidisciplinary research agendas (Section 15(a)).
The NIC must establish centers of collaborative research activity between academic and business (Section 15(b)).
The NIC must mandate pertinent agencies to work with academic/educational and research institutions to provide research infrastructure to support key research areas (Section 15(c)).
The NIC must recommend to Congress an annual proposed level of Gross Expenditure on Research and Development (GERD) based on the NIASD, submitted at the beginning of each annual budget cycle (Section 15).
The government must employ innovation instruments including technology programs, innovation centers, innovation networks, technology platforms, cluster policies, and human capacity building programs (Section 16).
The NIC must develop strategies so government agencies harness these instruments more efficiently and promote collaboration among stakeholders, and agencies listed in Section 17 must submit their action plans guided by NIC strategies (Section 16).
Establishing innovation centers must be done in coordination with private sector, academic/educational institutions, and other sectors to maximize collaboration and joint initiatives (Section 16).

Whole-of-government implementation and public portal

A “whole of government approach” must be adopted to drive innovation across government policy areas including education, training, health, energy, communication, industry, science and technology, defense, and others (Section 17).
Government agencies concerned must implement the innovation strategies and observe the whole-of-government approach to engage business, RD&E sector, MSMEs, and the community for full implementation of the innovation agenda (Section 17).
The agencies required to implement include NEDA; DOST; DTI; DA; DENR; DOH; DOE; DoTr; DND; DICT; DBM; DILG; DFA; DepEd; CHED; DOLE; and IPOPHL (Section 17).
The agencies must make available for public access a joint web portal bearing information on innovation policies, strategies, programs, services, grants, and financial assistance for trainings (Section 17).
The portal must include a database of all ongoing and completed innovation projects implemented under the NIASD (Section 17).
The portal must include interactive features allowing the public to access services or file applications for scholarships and other services/programs online (Section 17).
Inquiries received through the online facility must be addressed within three (3) days from receipt (Section 17).
Processing of scholarship and other service applications must be streamlined under guidelines established by the NIC, and reforms must be reported to the NIC within six (6) months from effectivity (Section 17).
The online facility must provide an acknowledgement receipt and reference number for each transaction for monitoring (Section 17).
Agencies must submit periodic progress reports to the NIC on the status of innovation strategies and projects, with reporting requirements harmonized to achieve efficiencies with other innovation-related laws; NIC must prepare reporting guidelines (Section 17).
The agency list is without prejudice to other agencies the NIC may mandate (Section 17).

Diaspora program, IP management, and advocacy

A Diaspora for Innovation and Development Program is established to mobilize and tap high-level expertise of the Filipino diaspora for innovation and development (Section 18).
The NIC coordinates with DOLE, Bureau of Immigration, Bureau of Customs, DFA, and other agencies to facilitate qualified diaspora participation (Section 18).
The NIC must develop an inventory of skills and talent requirements, and identify institutions/programs needing them, as basis for inviting diaspora Filipinos (Section 18).
The NIC must develop guidelines for inviting participation in coordination with DOST and other agencies with existing programs and funding to mobilize overseas Filipino talents for innovation and science and technology efforts (Section 18).
The Intellectual Property Code of the Philippines (Republic Act No. 8293), as amended, and related IP laws must be enforced to protect exclusive rights of scientists, inventors, and innovators to their IP and creations (Section 19).
The IP-related laws expressly referenced include the Philippine Plant Variety Protection Act, the E-Commerce Act, and the Technology Transfer Act (Section 19).
Government agencies must promote diffusion of knowledge and information for national development (Section 19).
IPOPHL must promote registration of patents, trademarks, copyrights, industrial designs, and geographical indications to protect innovation against misappropriation (Section 19).
IPOPHL must streamline and rationalize administrative and registration procedures and undertake programs to assist MSMEs in registration of those IP rights and geographical indications (Section 19).
IPOPHL reforms must be reported to the NIC within six (6) months from effectivity and every year thereafter (Section 19).
The NIC, cooperating with concerned agencies, must undertake an information and community education program to rally public support and inform the public on available innovation programs, services, grants, and financial assistance for trainings (Section 20).
The government must carry out advocacy and community education in partnership with the business sector and business associations, MSMEs, incubation centers and networks, Negosyo Centers, and academic/educational institutions (Section 20).
LGUs must create innovation programs through collaboration with other government agencies, non-government organizations, academic institutions, and private companies (Section 20).
LGUs may provide incentives for implementing innovation instruments, including those under Section 16 (Section 20).
The NIC must develop a communication plan for advocacy and community education (Section 20).

Innovation Fund and financing program

An Innovation Fund is established to strengthen entrepreneurship and enterprises developing innovative solutions benefiting the poorest of the poor (Section 21).
The Innovation Fund provides grants and is administered by the NIC, which screens and approves qualified proposals (Section 21).
Subject to availability of funds, the Act allocates a revolving fund of One billion pesos (P1,000,000,000.00) for the initial year’s implementation (Section 21).
Funds necessary for continuous and effective implementation must be included in the annual General Appropriations Act (Section 21).
The NIC, in coordination with concerned agencies, must explore accessing a growing range of bilateral and multilateral funds to assist funding of RD&E and other innovation efforts (Section 21).
Public-private partnerships are encouraged for innovation initiatives in RD&E, education, product development and testing, among others (Section 21).
The Act requires development of an innovation development credit and financing program to generate and scale up innovation in accordance with the NIASD (Section 22).
Innovation development credit includes loans and other financing activities for development of new technologies and innovation types: product, process, organizational, and marketing innovation (Section 22).
The NIC, in coordination with the Bangko Sentral ng Pilipinas (BSP) and relevant agencies, must involve the private sector in developing the credit and financing program (Section 22).

Credit quota and penalties; implementing rules

All banking institutions, whether government or private, must set aside at least four percent (4%) of total loanable funds for innovation development credit (Section 23).
Loanable funds for credit quota purposes refer to funds generated from the date of effectivity of the Act (Section 23).
Innovation development loans benefiting agricultural sector workers and businesses are considered compliance with the credit quota requirement of Republic Act No. 10000, the Agri-Agra Reform Credit Act of 2009 (Section 23).
The four percent (4%) credit quota is subject to joint review by the NIC and the BSP after three (3) years of implementation to determine effectiveness in accomplishing the law’s goals, and the findings must be submitted to Congress of the Philippines (Section 23).
The NIC must conduct an annual assessment of bank compliance with applicable credit quota regulations for innovation development and submit recommendations to the BSP (Section 23).
The BSP must impose administrative sanctions and other penalties on lending institutions for noncompliance; penalties for noncompliance/under-compliance are computed at one-half of one percent (0.5%) of the amount of noncompliance/under-compliance and directed toward innovation development (Section 23).
Of penalties collected, 90% goes to the Innovation Fund and 10% goes to the BSP to cover administrative expenses (Section 23).
The BSP and NIC, in consultation with concerned agencies and sectors, must promulgate rules and regulations to implement Sections 22 and 23 within ninety (90) days from effectivity (Section 23).
The implementing rules must provide modes of alternative compliance to credit quota allocation and take into account varying scale and maturity of banks’ operations (Section 23).
The rules and regulations take effect fifteen (15) days after publication in a newspaper of general circulation in the Philippines (Section 23).

Barriers removal, procurement innovation, and alliances

The NIC and member government agencies must eliminate regulatory barriers to innovation and cut red tape to boost innovation efforts (Section 24).
The NIC must facilitate consultations with stakeholders to identify and cause removal of barriers, including procurement rules and regulations, and to align efforts and enhance collaboration (Section 24).
Government agencies and all LGUs must improve efficiencies in addressing public transactions impacting innovation, including reducing the number of days and costs of starting or expanding a business (Section 24).
Government agencies and LGUs must process applications for starting a business and renewal of business licenses within three (3) working days from receipt (Section 24).
Government agencies and LGUs must streamline other permits and clearances as well as applications for patents to ensure a business environment fostering innovation (Section 24).
The NIC must develop and prescribe guidelines toward streamlining and improving the country’s performance in key innovation indicators, identify these indicators, and monitor strict implementation (Section 24).
The NIC must establish the necessary conditions and framework to promote establishment of Innovation Alliances to encourage collaborative research consortia among private sector entities and with academic/educational institutions (Section 25).
The alliance framework must facilitate regional networking and alliances to promote knowledge and technology sharing and collaboration in innovation projects (Section 25).
Public procurement must be conducted under Republic Act No. 9184, the Government Procurement Reform Act, and its implementing rules and regulations (Section 26).
The NIC must coordinate with the Government Procurement Policy Board (GPPB) and its technical support office for issuance of procurement guidelines under Republic Act No. 9184 and its IRR, covering:
- Innovative Goods and Services: identification of innovative requirements with clear output specifications and functional/performance criteria, and guidelines allowing project-based competition (Section 26(a)).
- Pre-Commercial Procurement: government