THE Board of Investments (BOI) wants to boost the local sourcing of automotive parts and components, as automakers noted a lack of competitiveness from manufacturers of these supplies.
At the Auto Reverse Trade Fair held Tuesday, BOI Executive Director Evariste Cagatan said incentives are available to support the local auto parts manufacturing sector. However, auto companies mentioned the challenges that small and medium enterprises face.
For instance, local auto parts makers fall short in design capability, testing facilities, and research and development, Toyota Motor Philippines First Vice President Richard Valdez said in his presentation.
There is also a shortage of availability of local raw materials. “Supply chain management is about utilizing the competitive advantage of multi-sourcing,” Valdez added.
For her part, Cagatan said promoting the local sourcing of auto parts and components will create a sustainable and resilient industry that will benefit manufacturers, the economy, as well as industries related to motor vehicles.
The Philippines, she added, can play a more significant role in motor vehicle production across Southeast Asia, given its high consumer demand, skilled workforce and growing industrial base.
“However, to do so, we must focus on developing and capacitating our local parts manufacturers to meet the growing demand for high-quality parts and components. This is key to strengthening our position in the regional value chain,” Cagatan pointed out.
Developing the sector means producing automotive components and parts locally rather than importing them. This will support other local industries, as well as reduce costs.
Toyota locally produces four main plastic parts of a vehicle, the bumper grill, 50 component parts, two parts for air-conditioning system and crossmember. In 2023, Toyota had 13 direct-export suppliers with sales reaching around $200 million.
Mitsubishi Motors Philippines Corp. stressed the need to balance the cost of supply with those of parts from other countries. The company said high importation costs of auto parts persist due to the lack of local raw material manufacturers.
At the event, the BOI reaffirmed its commitment to support the local automotive industry and its suppliers, saying the Create More Act and the Strategic Investment Priorities Plan will help the sector.
Cagatan also mentioned the Electric Vehicle Industry Development Act which promotes local electrical vehicle manufacturing, with a target of having 10 percent of all vehicles to be electric by 2040.
“By focusing on local manufacturing, we ensure that the entire ecosystem benefits. The positive impacts on the downstream supply chain are immeasurable — more local suppliers, more jobs, and a stronger industrial base,” she said.
The Philippine automotive sector achieved 17-percent growth in 2021; 24 percent in 2022; and 18 percent in 2023. Also last year, the Philippines exported over $4 billion worth of auto parts and components.
“Additionally, electric vehicle sales are seeing extraordinary growth, with hybrid electric vehicles leading the way,” Cagatan added.
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