The Philippine automotive parts manufacturers are urging the government to adopt a local content requirement (LCR) policy to revive the country’s struggling automotive industry.
Ferdinand Raquelsantos, president of the Philippine Parts Makers Association (PPMA), explained that is proposed LCR policy, inspired by Indonesia’s successful model, 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,” said Raquelsantos.
The PPMA proposes a phased implementation of the LCR, starting with a modest percentage and gradually increasing it over time. This approach would give manufacturers the flexibility to adapt while encouraging investments in local supply chains. Raquelsantos stressed 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,” he added.
Raquelsantos 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.
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 noted.
The PPMA believes that a local content 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 concluded.
The PPMA is committed to working with the government, automakers, and other stakeholders to ensure the successful implementation of this policy. With the right support, the Philippines can unlock the full potential of its automotive industry and secure its place in the regional market.
