Malaysia’s auto parts industry has become a major economic driver, contributing over $4 billion annually and accounting for 30% of the nation’s total automotive output. This success is credited to a strong policy framework and government incentives that have positioned Malaysia as a competitive force in the global automotive supply chain.
In comparison, the Philippines’ auto parts sector generates only $1.2 billion per year, highlighting a vast potential for growth. Recognizing Malaysia’s achievements as a model, the Philippine Parts Makers Association (PPMA), led by President Ferdi Raquelsantos, is pushing for similar policies to revitalize the local industry.
“Malaysia’s success was built on clear policies, strategic incentives, and a strong commitment to innovation. The Philippines can achieve the same results if we take decisive action now,” Raquelsantos asserted.
One of the key drivers of Malaysia’s success is its National Automotive Policy (NAP), which focuses on sustainability, technology adoption, and market expansion. By prioritizing energy-efficient vehicles (EEVs), Malaysia has secured $2.5 billion in investments and generated 50,000 jobs. Raquelsantos believes that the Philippines can replicate this by incentivizing local production of EEV components such as batteries, motors, and lightweight materials. “The global shift to green mobility presents a unique chance for the Philippines to become a leader in sustainable auto parts manufacturing,” he said.
Another critical factor is Malaysia’s emphasis on local content requirements. By mandating that a significant percentage of vehicle components be produced domestically, Malaysia has strengthened its supply chain and reduced reliance on imports. In contrast, the Philippines’ local content rate stands at only 20%, making the industry susceptible to foreign market fluctuations. Raquelsantos is advocating for policies that encourage local manufacturing and offer tax incentives for compliance. “If we can raise our local content to 40%, we can inject an additional $1 billion into the economy and create 30,000 new jobs,” he explained.
Malaysia has also capitalized on export growth by offering tax breaks and grants to encourage manufacturers to tap into international markets. Today, exports make up 25% of Malaysia’s auto parts production, whereas the Philippines exports less than 10%. With the right government support, Raquelsantos envisions the country boosting its export revenue to $500 million annually within five years.
Malaysia’s transformation proves that a struggling auto parts industry can be revitalized with the right strategies. “We have the skills, the workforce, and the potential. What we need is the commitment to take bold, strategic steps,” Raquelsantos emphasized.
By learning from Malaysia and implementing forward-thinking policies, the Philippines can unlock its auto parts industry’s full potential, creating jobs and driving economic progress. The opportunity is here—the time to act is now.
