The government is moving to remove tax hurdles that have long weighed on the Philippines’ aircraft maintenance, repair and overhaul (MRO) industry, betting that policy tweaks could unlock fresh aerospace investments and keep billions of pesos in business from flying overseas.
The push comes as the Board of Investments (BOI) sharpens its focus on advanced manufacturing, with aerospace identified as one of the country’s top investment priorities over the next two years.
During an industry consultation, Aerospace Industries Association of the Philippines (AIAP) representative Wilfredo Estoque said the country has spent more than two decades building a credible aerospace manufacturing base through global firms such as Moog Controls and Collins Aerospace. The next challenge, he said, is attracting higher-value production of aircraft structures, landing gear, tail sections and other complex systems.
But a tax issue continues to clip the industry’s wings.
Estoque said some Philippine airlines still send aircraft to neighboring Southeast Asian countries for maintenance because servicing planes locally can be subject to value-added tax (VAT), making offshore MRO providers more competitive.
“As a country, we lose that economic activity,” he said, noting that jobs, revenues and technical expertise are leaving with every aircraft maintained abroad.
BOI Executive Director Eries Cagatan said aerospace remains a strategic sector as the government seeks to climb the manufacturing value chain and attract more technology-intensive investments.
BOI Industry Development Services Executive Director Ma. Corazon Halili-Dichosa said the tax concern has already reached the aerospace sectoral working group and will be reviewed with the Department of Finance and other agencies.
“If there is a policy review that we need to do, we can bring it to the relevant agencies,” she said.
Beyond possible tax reforms, the government is updating the Philippine Aerospace Roadmap, strengthening global investment promotion, mapping domestic suppliers and helping local firms secure international certifications, laying the groundwork for the Philippines to compete for bigger, more sophisticated aerospace projects.
