WE PRESENT this urgent appeal on behalf of the Philippine Parts Makers Association (PPMA), an organization that has long championed the resilience and growth of the auto parts manufacturing industry in the Philippines. Once a thriving sector, our industry experienced its heyday in the late 1990s with a robust membership of 140 companies. Today, however, we find ourselves in a precarious position, with only 40 members remaining as we grapple with serious challenges that threaten our survival.
The decline of our industry cannot be attributed to a lack of talent or dedication among local manufacturers. Rather, it stems from a series of policy decisions that have inadvertently stifled growth and competitiveness. We urge the government to learn from the past to ensure a sustainable future for our auto parts manufacturing sector.
In the early 2000s, the importation of second-hand vehicles was allowed, a decision that had dire consequences for local manufacturers. This policy not only undermined local production but also led to a significant decrease in demand for our products as consumers shifted their focus toward more affordable used vehicles. The imposition of excise tax on Asian Utility Vehicles (AUVs) with high local content exacerbated the sales decline, making local vehicles less appealing in the market.
Furthermore, our strict adherence to World Trade Organization (WTO) rules, particularly in comparison to our ASEAN neighbors who adopted more flexible approaches, has placed us at a distinct disadvantage. The discontinuation of safeguard measures by the Department of Trade and Industry (DTI) was another misstep, as these measures were critical for protecting our local industry against unfair foreign competition.
To reverse this troubling trend, we propose a multi-faceted approach aimed at revitalizing the auto parts manufacturing industry, inspired by successful practices in neighboring countries. Specifically, we advocate for the implementation of a 50% local content rule, similar to what Indonesia and Vietnam have adopted. This will encourage the use of locally produced parts while enhancing the overall competitiveness of our automotive sector.
In addition, we call for the introduction of subsidies for our exports, akin to the incentives provided by Thailand. Such assistance would provide much-needed support to local manufacturers, enabling us to compete more effectively in the global market.
In conclusion, we implore the Philippine government to recognize the vital role of the auto parts manufacturing industry in driving economic growth and job creation. By supporting our sector through sound policies and strategic partnerships, we can revitalize this once-thriving industry, create sustainable jobs, and boost the nation’s automotive manufacturing capabilities.
Together, let us build a brighter future for the Philippine auto parts manufacturing industry.
Ferdinand “Ferdi” Raquelsantos is president of the Philippine Parts Makers Association (PPMA).
