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Philippines looking inward to solve defense manufacturing needs

Top Stories | Jan 13, 2020:

Mandeep Singh

As the government of the Philippines modernizes its military, lawmakers in Manila are taking steps to ensure the country’s defense industry is the primary beneficiary of the effort.

The Philippine Armed Forces began a 15-year modernization program in 2012, according to the Philippine Department of National Defense (DND). The program’s cost is expected to reach U.S. $40 billion and will include the purchase of aircraft, unmanned vehicles, intelligence and surveillance systems, communications, personal protective equipment and weapons systems.

“There should be local dividends from the equipment shopping spree,” Philippine Senate President Pro Tempore Ralph Recto said in November 2019.

In line with Recto’s wishes, parliamentary committees are considering a legal framework to ensure such dividends are paid.

The proposed Philippine Defense Industry Development Act of 2019 aims to enhance the self-reliance of the country’s defense industry through incentives and controls that promote domestic suppliers and by creating a new office of the undersecretary for defense technology research and industry development to supervise and fund these efforts. “The first thing that must be done is to impose as a policy that, when local technology is available, the equipment shall have a local component,” Recto said.

Under the proposed act, preference would be given to in-country enterprises and to local resources, including raw materials, for the development of national defense capabilities. Foreign defense goods would be procured only when they “cannot be locally produced, manufactured or otherwise created.”

When foreign suppliers are used, the undersecretary will work to ensure that technology is transferred to the Philippines and that local employment is generated as part of each deal, the act states. Moreover, when DND accepts bids from both foreign and local suppliers for a national defense tender, the proposed act stipulates that a local bidder will win unless the foreign bid is more than 15% lower in price.

Recto is bullish on the ability of Philippine manufacturers to meet his country’s defense needs, citing the quality of locally made firearms, as well as coastal patrol ships, troop carrier ships, hospital ships and police boats.

“These can be built in Cebu,” he said, referring to a province in the central Philippines, pictured, “where we have a world-class shipbuilding industry.”

Philippine President Rodrigo Duterte made clear that indigenization of his country’s defense industry was one reason he ordered that control of the Philippine Aerospace Development Corp. (PADC) be transferred to DND. In a March 2019 presidential order, Duterte cited the “need to address emerging internal and external threats, achieve self-reliance as regards defense equipment, and promote the transfer of technology from neighboring countries,” to explain DND’s takeover of the state-owned aviation manufacturer.

Defense industry indigenization makes for good overall national defense policy, wrote analyst Dhruva Jaishankar in an August 2019 report for Brookings Institution in India.

“A government bears ultimate responsibility for a country’s security,” he emphasized. “Its ability to equip its armed forces using its own industrial and technological capabilities is of great importance, particularly if a conflict were to see disruptions to supply lines, potential sanctions from arms suppliers, and urgent orders for armaments. A successful defense industry also provides strategic leverage with other countries, including as a potential supplier to neighbors who may otherwise turn to competitors.”

Mandeep Singh is a FORUM contributor reporting from New Delhi, India.

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