50% Locally sourced inputs to be required of manufacturers

By Elijah Felice Rosales, Business mirror, 26 Feb 2020

THE country’s trade chief is eyeing to craft a policy that requires all manufacturers to localize at least 50 percent of their products to support the purchase from domestic suppliers.

In mandating the whole manufacturing sector to make their products at least 50 percent local, Trade Secretary Ramon M. Lopez aims to have manufacturers support the domestic supply chain and, in turn, generate opportunities for many Filipinos.

Lopez explained the policy could also cover infrastructure projects, which means constructors will be tasked to source half of their material requirements from local producers.

“If you are a locally funded ‘Build, Build, Build’ project or you are enjoying incentives from the BOI [Board of Investments], Peza [Philippine Economic Zone Authority] or others, you should be required to increase the local content of your materials,” Lopez told reporters recently. “You buy locally made materials.”

He added: “If the cement, steel, pipes, metal sheets are locally made and up to standard, prefer the local. That’s the campaign we will be pushing on a broader scale: buy Philippine made [products]. We will revive awareness to buy locally made.”

Purchasing locally, he pointed out, has a multiplier effect on various industries, as it augments not only production but job demand, as well. Further, he said increasing the local content of goods manufactured here improves the country’st industrialization efforts.

“[That will be the] general policy in manufacturing, not only on automotive vehicles, [to require] preference to locally manufactured supplies or locally assembled products,” he disclosed.

Under the Comprehensive Automotive Resurgence Strategy (CARS) program, selected vehicle assemblers are mandated to increase the localized content of their enrolled automobile to 60 percent, from 40 percent. This is part of the state’s plan to encourage building units here than importing them.

The CARS program provides incentives to car makers to locally make models with a production volume of at least 200,000 units for up to six years.

In return, each firm is granted up to P9 billion of fiscal support from the government, on top of nonfiscal measures. Toyota Motor Philippines Corp. enrolled its Vios in the CARS program, while Mitsubishi Motors Philippines Corp. registered its Mirage.

The long-term plan for these locally made models is for them to be exported, but even Lopez himself admits that goal has to be set aside for now given the high production cost here when compared to Southeast Asian manufacturing powerhouses Vietnam, Thailand and Indonesia.