Thursday, January 30, 2014

A Feasibility Study on Setting Up a Chemical Engineering Research and Development Outsourcing Firm in the Philippines


It has been empirically proven that the implementation of Research and Development (R&D) contributes to a country’s economic development. R&D increases productivity which in turn results in economic growth. Unfortunately, R&D in the Philippines is not robust; as evidenced by the 2010 Gross Expenditure on R&D (GERD) of 0.12% of Gross Domestic Product (GDP). This is by far below the UNESCO benchmark of 1% of GDP for developing countries. In terms of this indicator, the Philippines lags behind its neighbors: with Malaysia investing 0.64% and Thailand investing 0.25%.  
One of the ways to address this issue is to spur the growth of R&D in the private sector. This growth can be catalyzed by the establishment an R&D outsourcing firm.
This paper studies the feasibility of setting up a Chemical Engineering R&D outsourcing firm in the Philippines, which aims to serve the Chemical Engineering R&D requirements of large and multinational corporations. By establishing synergy with academia, the firm shall have access to subject matter experts as well as laboratory facilities. This minimizes the capital investment requirement for the firm, maximizes the utilization of the university equipment and facilities, and creates a stronger partnership between the academe and the private sector.          
This study mapped out the corporate and operations strategy of a potential R&D outsourcing firm based on analysis of the industries that rely on Chemical Engineering R&D.

To evaluate the financial viability of this firm, Internal Rate of Return (IRR) and Net Present Value (NPV) for the worst-, base-, and best-case scenarios were computed. Figures showed that a Chemical Engineering R&D outsourcing firm is a feasible business venture in the Philippines.


1) Cororaton, Caesar. “R&D Gaps in the Philippines,” PIDS Discussion Paper No. 99-16, 1999. <>, viewed July 2011.

I was presenting my MBA thesis to ADB experts during the ADB Research Forum held at ADB Headquarters in Mandaluyong City. The forum is an annual gathering of ADB scholars from around the world.  

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