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

Rene E. Ofreneo

Asia Pacific Business Review, 2008, vol. 14, issue 1, 65-84

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 In 2003, the ‘local content’ requirements were formally withdrawn in compliance with the agreement on Trade-Related Investment Measures (TRIMs) under the World Trade Organization (WTO).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.

Date: 2008
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DOI: 10.1080/13602380701661010

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