Malaysia’s automotive parts manufacturing industry has emerged as a regional powerhouse, contributing over $4 billion annually and making up 30% of the country’s total automotive output. This success is built on a solid policy framework and strong government backing, transforming Malaysia’s auto parts sector into a globally competitive industry.
In contrast, the Philippines’ auto parts industry generates just $1.2 billion per year. Seeing Malaysia’s achievements as a blueprint for success, the Philippine Parts Makers Association (PPMA), led by President Ferdi Raquelsantos, is urging the government to adopt similar strategies to revive the struggling sector.
“Malaysia’s growth didn’t happen by chance. It was driven by well-crafted policies, strategic incentives, and a focus on innovation. The Philippines has the same potential—we just need to act now,” Raquelsantos emphasized.
A key pillar of Malaysia’s success is its National Automotive Policy (NAP), which promotes technology adoption, sustainability, and market expansion. By prioritizing energy-efficient vehicles (EEVs), Malaysia has attracted $2.5 billion in investments and created 50,000 jobs. Raquelsantos believes the Philippines can replicate this success by incentivizing the production of EEV components, such as batteries and lightweight materials. “As the world moves toward green technology, we have a golden opportunity to become a hub for sustainable auto parts manufacturing,” he added.
Malaysia also strengthened its local supply chain by implementing local content requirements, ensuring a significant percentage of vehicle components are produced domestically. This has reduced import dependence and fortified its industry. In contrast, the Philippines has a local content rate of just 20%, leaving manufacturers vulnerable to global market fluctuations. Raquelsantos is calling for a similar policy, supported by tax incentives, to increase local content to 40%. “This alone could inject $1 billion into the economy and create 30,000 new jobs,” he explained.
Export promotion is another key factor behind Malaysia’s success. Through tax exemptions and grants, the country has encouraged auto parts manufacturers to expand internationally, with exports making up 25% of total production. Meanwhile, the Philippines exports less than 10% of its auto parts. With the right support, Raquelsantos believes the country can increase export revenue to $500 million annually within five years.
Malaysia’s story proves that with the right policies, a struggling auto parts industry can be transformed into a thriving economic driver. “The Philippines has the talent and the potential. What we need is the determination to take bold steps and learn from those who have succeeded,” Raquelsantos said.
By implementing Malaysia’s winning strategies—strong policies, local content regulations, export incentives, and a focus on innovation—the Philippines can unlock the full potential of its auto parts sector, creating jobs and driving economic growth. The road to success is clear; now is the time to take action.
