A LOCAL-CONTENT requirement of 30% for vehicles assembled in the Philippines and tax incentives will potentially attract $500 million in investments in the auto industry, the Philippine Parts Maker Association (PPMA) said.
In a statement on Tuesday, PPMA said one of its proposals to the Department of Trade and Industry “is to mandate a 30% local content requirement for vehicles assembled in the Philippines, coupled with tax incentives for automakers that comply.”
“This move could attract an estimated $500 million in investment and create over 50,000 new jobs in the auto parts sector. Additionally, it would reduce the country’s annual auto parts import bill, which currently stands at $2.5 billion,” it added.
According to the PPMA, the Philippines could emulate Vietnam’s local-content rules that prioritize domestically produced auto parts.
“By requiring automakers to source a significant percentage of components locally, Vietnam has not only boosted its auto parts manufacturing sector but also created thousands of jobs and attracted billions in investment,” it said.
Citing 2022 data, the PPMA said Vietnam’s auto parts industry has contributed over $5 billion to its economy.
In the Philippines, the auto parts industry only contributes $1.2 billion annually.
“Vietnam’s local-content policy is a game-changer. It has transformed their auto industry into a regional powerhouse, and we can achieve the same here in the Philippines,” PPMA President Ferdinand I. Raquelsantos said.
“By implementing a robust local-content rule, we can create a sustainable ecosystem for our parts manufacturers, generate employment, and reduce our reliance on imports,” he added.
He said the Philippines could double the output of its auto parts industry within five years.
“We have the talent, the technology, and the capability. What we need is a clear policy framework that incentivizes automakers to source locally and supports our manufacturers in meeting global standards,” he added. — Justine Irish D. Tabile