Arrested Development: Multinationals, TRIMs and the Philippines' Automotive Industry

Abstract

The aim of this paper is to show – through the illustrative experience of the automobile assembly industry and the car parts industry – that the failure of the Philippines to become another newly industrialised country (NIC) in Asia is due to the absence of a clear vision of national industrialisation, aggrauated by a zigzagging programme of industrial protection and deregulation. In the l970s, the Philippines imposed ‘local content’ requirements to participants in a ‘progressive car manufacturing programme (PCMP), to move up from the narrow import-and-assemble pattern of industrial development experience of the l950s-l960s. The vehicle industry at that time was engaged in the assembly of imported completely-knocked-down (CKD) or semi-knocked-down (SKD) parts. However, the programme to deepen the automobile industrial structure was a failure due to the indecisiveness of the government in pursuing the programme, compounded in the l980s-1990s by the haphazard way by which it embraced the IMF-World Bank's structural adjustment programme aimed at promoting an export-oriented industrial (EOI) structure. In 2003, the ‘local content’ requirements were formally withdrawn in compliance with the agreement on Trade-Related Investment Measures (TRIMs) under the World Trade Organization (WTO). By then, both the automobile assembly industry and parts industry were in deep crisis, like the rest of the industrial sector of the Philippines.

Keywords:

• Automotives
• local content
• Philippines
• structural adjustment programme

Notes

¹ The author contributed/participated in the following auto/technology forums: the UNU-Intech Exchange on Transnational Corporations, Learning and Innovation organized by Dr Rajah Rasiah of UNU, 2002–03 (see Rasiah, R. (ed.) (2003) Transnational Corporations Learning and Innovation: Implications of the TRIMs Agreement (Maastricht: UNU Institute for New Technologies)); the UNCTAD Conference on Investment, Technology and Related Financial Issues, held in Geneva, Switzerland, 6–12 March 2006; and the FairTrade-SOLAIR Forum on Roadmapping for the Auto Industry of the Philippines, held at UP SOLAIR, 29 March 2007. The author conducted interviews with the following people: Beth Lee, President, Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI); Homer Maranan, Executive Director, CAMPI; Frank Mero, President, Automotive Industry Workers Alliance (AIWA); and with officials of the Bureau of International Trade Relations, Department of Trade and Industry (DTI), and Motor Vehicle Products Division, Board of Investments, Department of Trade and Industry. In addition, the author used the vertical files of CAMPI, AIWA and DTI containing bits and pieces of information on the automobile industry.