Two agencies of the Philippine government convened on December 8 for a summit on “defense industrial” self-sufficiency. The event called the “Summit on Industrial Collaboration Program under the DND Procurement” was held on a Friday at the Officer’s Club in Camp Aguinaldo, which is the main headquarters of the Armed Forces of the Philippine (AFP). The overriding theme for the occasion was “Building Philippine Defense Industries through Industrial Collaboration.”
Although the program and minutes of the event weren’t released to the public, two VIPs in attendance were Defense Secretary Delfin Lorenzana and Philippine International Trading Corporation (PITC) CEO Dave Almarinez. One outcome of the summit was a renewed call for achieving “Self-Reliant Defense Posture” or SRDP. According to Lorenzana SRDP used to be a program from the 1970s for creating an arms production sector.
The PITC’s role during the summit shouldn’t come as a surprise. As a state-owned enterprise under the Department of Trade and Industry (DTI) it enjoys a broad mandate to find new products and technology for the Philippines’ large domestic market. The PITC is also tasked with procuring equipment for government agencies and helping local manufacturers export their goods.
According to a PITC press release about the summit, subject experts were invited to discuss how countertrade can help build up specific industries. Under the PITC’s mandate, countertrade is an option for buying foreign-made equipment needed by government agencies. Two speakers at the summit elaborated on its details. These were Atty. Maria Victoria Magcase, who explained the finer points of the PITC’s countertrade program, and David A. Inocencia, who talked about industrial collaboration.
The conventional understanding of countertrade is for countries to transact goods without monetary payments. This often leads to exchanges of products in bulk for needed tools or commodities. It’s still unclear if countertrading is a viable option for the AFP, who have multiple arms deals in the works but are held back by a modest annual budget. In October 2017 President Rodrigo Duterte revealed a new scheme where military bases can be leased to real estate developers for raising money.
The Philippine News Agency (PNA) reported that Defense Secretary Lorenzana mentioned in his opening remarks how the Government Arsenal Defense Industrial Estate (GADIE) is now the main hub for the country’s emerging national arm’s industry. GADIE is an industrial park with an area of 370 hectares reserved for foreign manufacturers who want to transfer their production locally.
GADIE was developed as an appendage to the Government Arsenal, which is responsible for making small arms ammunition and light weapons, between 2014 and 2015 under the shared management of the DND and the Philippine Economic Zone Authority (PEZA). GADIE’s land area is divided into four parts. There’s the Government Arsenal’s upcoming small arms assembly plant. Then a separate area for producing munitions and ordnance. Onsite housing and administrative offices make up the remaining sections.
With the AFP set to launch its Horizon II modernization from 2018 until 2022, the summit with the PITC looks like plans are now being readied for transferring machinery and expertise to GADIE for armaments production. There aren’t any timetables yet, but given the military’s well-known logistical constraints during emergencies, the DND is exploring options such as countertrade for acquiring the tools it needs for making its own war material.