Malaysia’s automotive parts manufacturing industry has become a regional success story, contributing over $4 billion (P233 billion) annually to its economy and accounting for 30% of its total automotive output. With a well-defined policy framework and strong government support, Malaysia has transformed its auto parts sector into a vibrant and globally competitive industry. For the Philippines, which currently generates only $1.2 billion (P70 billion) from its auto parts sector, Malaysia’s achievements offer a roadmap for revival and growth.
The Philippine Parts Makers Association (PPMA), under the leadership of its president Ferdi Raquelsantos, is urging the government to adopt similar strategies to breathe new life into the country’s ailing auto parts industry. “Malaysia’s success didn’t happen overnight. It was the result of clear policies, targeted incentives, and a commitment to innovation. The Philippines can achieve the same if we take decisive action now,” Raquelsantos said.
One of Malaysia’s key strategies is its National Automotive Policy (NAP), which prioritizes technology adoption, sustainability, and market expansion. By focusing on energy-efficient vehicles (EEVs), Malaysia has attracted over $2.5 billion (P145.4 billion) in investments and created 50,000 jobs in the auto parts sector. Raquelsantos emphasized that the Philippines could replicate this approach by incentivizing the production of EEV components, such as batteries and lightweight materials. “With the global shift toward green technology, we have a unique opportunity to position the Philippines as a hub for sustainable auto parts manufacturing,” he added.
Malaysia’s local content requirements have also played a crucial role in its success. By mandating that a significant percentage of vehicle components be sourced locally, Malaysia has strengthened its domestic supply chain and reduced its reliance on imports. In contrast, the Philippines’ local content rate stands at a mere 20%, leaving the industry vulnerable to external pressures. Raquelsantos proposed implementing a similar policy, coupled with tax incentives for compliance. “If we can increase our local content rate to 40%, we could add $1 billion (P58.2 billion) to the industry’s annual output and create 30,000 new jobs,” he explained.
Another lesson from Malaysia is its focus on export promotion. Through tax exemptions and grants, Malaysia has encouraged its auto parts manufacturers to tap into global markets, with exports now accounting for 25% of its total production. The Philippines, meanwhile, exports less than 10% of its auto parts. Raquelsantos believes that with the right support, the country can boost its export revenue to $500 million (P29.1 billion) annually within 5 years.
Malaysia’s auto parts industry is worth more than $4 billion annually. In contrast, the Philippines is only about P1.2 billion
Malaysia’s success proves that with the right policies, a struggling auto parts industry can be transformed into a thriving economic driver. For the Philippines, the time to act is now. As Raquelsantos puts it, “We have the talent and the potential. What we need is the will to take bold steps and learn from those who have succeeded before us.”
By adopting Malaysia’s strategies—clear policies, local content rules, export incentives, and a focus on innovation—the Philippines can unlock the full potential of its auto parts sector, create jobs, and boost economic growth. The road to success is clear; all that’s needed is the courage to take the first step.