1 month ago
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Catherine Talavera - The Philippine Star
February 2, 2025 | 12:00am
MANILA, Philippines — Local automotive parts manufacturers are urging the government to adopt a local content requirement (LCR) policy, inspired by Indonesia’s successful model, as well as other forms of support to revive the country’s struggling automotive industry.
In a statement, Philippine Parts Makers Association (PPMA) president Ferdi Raquelsantos said a LCR policy could strengthen domestic manufacturing, create jobs and position the Philippines as a competitive player in the ASEAN automotive market.
“Indonesia’s local content policy has been a game-changer for its automotive sector. By requiring automakers to source a significant percentage of components locally, they’ve built a robust supply chain and attracted major global players. The Philippines can achieve similar success if we take decisive action now,” Raquelsantos said.
The PPMA is proposing a phased implementation of the LCR, starting with a modest percentage and gradually increasing it over time. It explained that this approach would give manufacturers the flexibility to adapt while encouraging investments in local supply chains.
Raquelsantos said that incentives are crucial to ensure compliance.
“To make this policy work, we need strong government support. Tax breaks, duty exemptions on raw materials and grants for research and development can make it financially viable for automakers to source components locally. At the same time, we must provide technical and financial assistance to our SMEs to help them meet global standards,” Raquelsantos said.
He also highlighted the importance of workforce development in ensuring the policy’s success.
“Our workers are the backbone of this industry. We need training programs in advanced manufacturing and robotics to equip them with the skills needed for modern automotive production. Collaboration with universities and technical schools will be key to building a skilled talent pipeline,” he said.
As infrastructure improvements are another critical factor, Raquelsantos called for the development of modern industrial parks with reliable utilities and enhanced logistics networks to reduce production costs and attract investors.
“Streamlining customs procedures and reducing bureaucratic red tape will also make the Philippines a more attractive destination for automotive investment,” he said.
The PPMA believes that the adoption of a LCR policy, combined with targeted incentives and infrastructure development, can transform the automotive industry into a major driver of economic growth.
“This is not just about reviving an industry; it’s about creating thousands of jobs, boosting exports, and securing a brighter future for Filipino manufacturers. We have the potential to become a competitive player in the region, but we need to act now,” Raquelsantos said.
The PPMA, the sole organization representing the country’s automotive parts manufacturing industry, recently raised the alarm on the sector’s continued decline, noting that it has barely 40 active members, a significant decline from when the industry was at its peak in 1997 with 140 company members when 80 percent of automotive parts were locally manufactured.
According to PPMA, the figure has plummeted to just 20 percent today, as the sector contends with shrinking demand, global competition and lack of comprehensive government support.
“The decline of our industry has serious implications, not just for the economy but also for our workforce and the future of local manufacturing. We used to be a cornerstone of the Philippine automotive industry, but now we’re fighting for survival,” Raquelsantos said.
He stressed the need for immediate intervention, calling on the government to provide targeted support to revive the sector.
“Without a clear roadmap, financial incentives, and policies that prioritize local content, we risk losing this critical industry altogether. The Philippines has the talent, the resources, and the potential. What we need is decisive action,” Raquelsantos said.
Aside from the adoption of an LCR policy, the PPMA is urging policymakers to explore measures such as initiating another scheme similar to the Comprehensive Automotive Resurgence Strategy program, providing competitive incentives for Automotive Assemblers, far better than what Thailand, Indonesia or Vietnam is providing, imposing stricter local content requirements for vehicle assembly and supporting technology and skill upgrades to enhance global competitiveness.
The association believes that revitalizing the automotive parts manufacturing industry is vital to boosting local manufacturing, creating jobs, and contributing to the country’s economic growth.
“We need to act now,” Raquelsantos stressed. “Let us work together to save the Philippine parts-making industry and rebuild it to once again be a pillar of nation-building and pride.”
The PPMA said it remains committed to working closely with the government, stakeholders and industry partners to create a sustainable future for the local automotive parts manufacturing sector.
