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Philippines accelerates support for domestic defense industry

Maria T. Reyes

New legislation and initiatives are fueling the Philippines’ push toward greater self-reliance in defense innovation and procurement.

After traditionally relying on other nations’ defense industries, Manila passed the Self-Reliant Defense Posture Revitalization Act in October 2024 to strengthen the domestic defense sector with incentives such as tax breaks and government-backed financing.

The law comes as the Armed Forces of the Philippines (AFP) continues to enhance its capabilities amid rising tensions with the People’s Republic of China (PRC), including maritime confrontations and protracted diplomatic disputes. Manila has allocated about $35 billion for the AFP’s modernization over the coming decade.

The revitalization act will help the country reduce its dependence on foreign supply chains and the interests of “other parties,” Philippine President Ferdinand Marcos Jr. said at the signing ceremony. “It’s a logical move forward for a country that finds itself at the fulcrum of geopolitical shifts and volatilities. At its core, this act is about cultivating a robust and sustainable national defense industry,” he said.

“We will prioritize R&D [research and development] to develop systems that meet our unique requirements [and] stay ahead of evolving threats, particularly asymmetrical threats that traditional systems may not be completely equipped to address,” Marcos added.

He said the strategy behind the law is clear: “Start by strengthening the foundations — the research, the production capabilities and institutional support — then build upwards, layer by layer, until we have an industry that can stand strong and succeed on its own.”

The Philippines Department of National Defense (DND) announced in December 2024 that the law will focus on developing weapons and ammunition; land, sea and air vehicles; communication and surveillance systems; and emerging technologies such as drones and cybersecurity tools.

In addition to enhancing the AFP’s ability to protect the nation and ensure peace and stability, the projects will create local jobs in manufacturing, technology and research, and stimulate the overall economy, the DND said.

Rommel Jude Ong, a retired Philippine Navy rear admiral, said Russia’s unprovoked invasion of Ukraine and other ongoing conflicts highlight the importance of a domestic industry capable of supporting sustained military operations.

The Philippines could look to Indonesia and South Korea as examples for building its defense industry, Ong told FORUM.

“Their governments have invested in key industries such as aircraft manufacturing and shipbuilding and enhanced themselves to accept the transfer of new technologies. They also invested in STEM [science, technology, engineering and mathematics] education for their workers and innovated through research and development,” he said.

“Addressing supply chain issues requires collaboration between government, academics and industry,” Ong noted. “At the end of the day, the defense industry should be a profitable enterprise with a global or regional market in mind.”

One milestone was reached in November 2024 when the Philippine Navy launched a domestically assembled version of Israeli Shipyards Ltd.’s Shaldag, or “Kingfisher,” fast-attack interdiction craft under a 2021 technology transfer contract.

The DND is exploring similar agreements with Japan and other countries. In November 2024, Philippine Defense Secretary Gilberto Teodoro Jr. and Japanese Defense Minister Gen Nakatani discussed joint production and technology transfers on the sidelines of the Association of Southeast Asian Nations’ defense minister meetings in Laos.

Maria T. Reyes is a FORUM contributor reporting from Manila, Philippines.

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