AFP, PNP supplier wary of PHL policy shifts as government turns over

AN Indian maker of body armor and military electro-optic devices said on Thursday that its main challenge in deciding to manufacture in the Philippines is the policy uncertainty accompanying the imminent change of government.

“The challenge in building a facility here in the Philippines is continuity. An administration only has six years. A President may come and go shortly,” according to Anton Chan, Jr., local representative of MKU Ltd., an Indian defense contractor, speaking at a briefing.

“Any investor would require continuity and return on investment,” he said, citing previous incidents like the cancellation of a UK armored vehicle contract.

“Aside from continuity, developing the supply chain is also an issue here,” according to Manish Khandelwal, a director at MKU. “These are the two issues that prevent us from putting up a manufacturing site here.”

“Supply chain challenges may involve small components, including the delivery of materials and products.”

The company remains interested in exploring opportunities in the Philippines, he said.

“We want to invest in the Philippine defense (industry) to boost its capability,” Mr. Khandelwal said, noting that the company is willing to respond to the Armed Forces of the Philippines’ needs and help the defense establishment achieve its long-term goals “That’s one of our commitments to the market.”

In 2017, the company supplied the Philippines with helmets that were used in operations in the southern Philippines.

MKU has exported body armor and night vision devices to the Philippine Army and the Philippine National Police (PNP) via the government’s international procurement arm, the Philippine International Trading Corp.

Mr. Chan said that the company would only set up a manufacturing site in the Philippines under a joint venture agreement with the government.

“The Philippines in the near future might not be interested in investing in or pursuing joint venture agreements because the world will be flooded with equipment,” said security and defense consultant Jose Antonio Custodio, citing the increased demand and production resulting from the war between Russia and Ukraine.

“We are likely to buy surplus defense equipment because production across the world has increased due to recent events.”

He said Philippine defense spending has historically been “driven by fiscal policy, not political priorities.”

“The government cannot increase its defense spending when it doesn’t have the budget to do so,” he said in a Messenger call.

Mr. Custodio said the government needs to smooth out inefficiencies in procurement to attract investment. — Kyle