DTI mulls policy requiring local materials for government projects

MANILA, Philippines — The Department of Trade and Industry (DTI) is studying a proposal to make it a policy for government-funded projects as well as companies registered with the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) to source materials from local suppliers to promote the country’s manufacturing sector.

Trade Secretary Ramon Lopez told reporters the DTI is considering a general policy where there would be preference for local suppliers or locally assembled products for government projects or for projects enjoying BOI or PEZA incentives.

“We have a proposal where if a project is government-funded in the BBB (Build Build Build) or for example, you’re enjoying incentives, you’re PEZA or BOI or others, the materials you buy will have high local content, locally made materials. That is what we are studying as a policy tool so we can leverage on benefits we are giving out,” he said.

For projects under the government’s BBB program for infrastructure development, he said there should be preference for construction materials like cement, steel, pipes or metal sheets which are locally made and up to standards.

“On a broader scale, Buy Philippine Product movement is something we will also revive so there will be awareness to buy locally made, prefer local [products] because there is impact in manufacturing and jobs,” he said.

DTI is studying the proposal to promote local manufacturing amid the announcement of Honda Cars Philippines Inc. (HCPI) that it is closing its production plant in Sta. Rosa in Laguna next month to be able optimize its resources while providing reasonably priced vehicles.

While HCPI’s plant used to assemble the City and BR-V vehicles has an annual capacity of 15,000 units, the firm’s output was just at 8,000 units last year as production is based on market demand.

Apart from having a policy to promote purchasing locally produced materials to boost domestic manufacturing, Lopez said the DTI is looking at other tools which could support automotive manufacturing in particular.

Among the tools being studied is the imposition of safeguard measure or duty on vehicle imports to encourage local manufacturing.

Earlier this month, the DTI launched its preliminary probe on a petition for safeguard measure on vehicles filed by the Philippine Metalworkers Alliance amid increasing imports and threat to local manufacturing and employment in the sector.

Under Republic Act 8800 or the Safeguard Measures Act, the government can put in place safeguard measure or duty on products when increased imports of such cause serious injury to local players.

Lopez said another tool being considered to promote local automotive manufacturing is the imposition of tariff on vehicle imports from Thailand as it has not complied with a World Trade Organization (WTO) ruling favoring the Philippines on a cigarette tax case.

Trade Undersecretary Ceferino Rodolfo said earlier the DTI has chosen to target motor vehicles in seeking compensation from Thailand as such account for bulk of its exports to the Philippines.

Thailand was the Philippines’ biggest source of motor vehicle imports for the period of 2014 to 2018.

WTO rules allow cross sector retaliation or the imposition of sanctions in a different sector when the complainant sees it impracticable or ineffective to focus on the same sector.