Peer Review of the Philippines’ Shipbuilding Industry

Executive summary

The OECD Shipbuilding Committee Peer Review of the Philippines’ shipbuilding industry provides a comprehensive assessment of the shipbuilding and ship repair industry (SBSR) in the Philippines, including analysis of domestic industry structures, market developments and national shipbuilding strategies. The report highlights the Philippines’ important position in global shipbuilding, characterised by dual structure of export-oriented, foreign-owned shipyards and domestically focused repair facilities. It discusses structural challenges, such as ageing infrastructure and limited local supply chains, and opportunities linked to new market segments, digitalisation and decarbonisation. The report is divided into three parts: a wider maritime perspective, an analysis of the structure and trends of the Philippine’s SBSR industry, and an assessment of the main policies influencing the sector along with actionable recommendations. The main findings are the following:

Trends and competitiveness of the shipbuilding and repair industry

The Philippines is a key player in global shipbuilding, ranking fourth-largest shipbuilding nation in 2022, supported by major shipyards like Tsuneishi and Seatrium. Foreign investments from Japan, Korea, and Singapore have driven this growth, although production has declined since peaking in 2014-2015. Bulk carriers have historically dominated production, but recent market shifts highlight opportunities for diversification and recovery.

Export-oriented production has been a hallmark of part of the industry, i.e. foreign owned shipyards, but the sector faces challenges in maintaining its global market share. Shipbuilding exports peaked in 2014-2015 but have since declined, while vessel imports surged post-2021. Addressing cost inefficiencies through local marine equipment production and achieving economies of scale could help strengthen the global competitiveness of the Philippine shipbuilding industry.

Non-foreign owned domestic shipyards primarily focus on repair activities, with 95% engaged in maintenance rather than newbuilds. Domestic demand for repair is significant, with local shipyards accounting for 64% of the domestic market and 53% of foreign demand for ship repairs and retrofits. Repair activities present an opportunity to strengthen local shipbuilding capabilities to meet both domestic and international needs.

The Philippine ship repair industry is strategically positioned to cater to growing demand in Southeast Asia, with East Asia and Europe as its largest foreign markets. Post-pandemic recovery has seen substantial growth, with a peak of 60 repair activities in Q3 2023. However, the sector faces infrastructure challenges, as 66% of the country’s 186 shipyard facilities require rehabilitation. Upgrading facilities will be crucial to sustaining sustainable industry development and improving efficiency.

A lack of domestic ancillary industries, including domestic manufacturing capabilities for marine equipment, impacts costs and increases downtime for yards. Reliance on imported components further exposes the industry to supply chain vulnerabilities. Developing local manufacturing capabilities for selected technologies and products or incentivising international manufacturers to establish operations in the Philippines could strengthen the shipbuilding and repair industries.

Ongoing industry transformations: decarbonisation and digitalisation

Environmental protection and decarbonisation are an increasing priority, with 25% of vessels to be completed in 2026 being alternative fuel capable. Green technologies, such as bow enhancements and stator fins, are primarily implemented in foreign-owned shipyards for export markets. Ports are actively greening operations, but greater efforts are needed to integrate sustainability practices within non-foreign owned domestic shipyards.

Digitalisation is increasingly prioritised across the maritime sector, but its adoption remains limited within the domestic shipbuilding and ship repair industry. National policies primarily focus on enhancing safety and improving operational efficiency. MARINA initiatives, such as MARINA BEST, and the Philippine Ports Authority’s 2024 “Blueprint for Resilient and Efficient Ports” aim to modernise operations and infrastructure through major tech investments. This shift supports better decision-making, enhance safety, and position the sector for long-term growth.

Labour, safety and technology development

Expanding training programmes and improving safety standards are essential for creating a robust talent pipeline and sustaining industry development. The maritime sector is a major employer in the Philippines, with 1.8 million workers in 2021. While 82% of the workforce is classified as skilled or semi-skilled, challenges such as high dropout rates in maritime education, outdated facilities, and workforce emigration persist. Domestic shipyards lag international counterparts in training and safety compliance, underscoring the need for improved alignment between training programmes and industry requirements. MARINA is collaborating with institutions like Technical Education and Skills Development Authority (TESDA) and the University of the Philippines (UP) to upgrade the skills of the maritime workforce.

Research and development (R&D) efforts in the Philippines target modernisation, with a focus on digitalisation, energy efficiency, and cost-effective technology alternatives. Collaborative partnerships between Marine Industry Authority (MARINA) and the Department of Science and Technology (DOST) support technology development and the adoption of emerging technologies. However, the lack of critical R&D infrastructure, such as towing tanks, limits the industry’s capacity for advanced research and innovation.

Regulatory framework

Government policies play a critical role in shaping the SBSR industry in the Philippines. The Maritime Industry Development Plan 2019–2028 (MIDP) serves as the cornerstone for sectoral development, emphasising sustainability, workforce upskilling, and capacity building. Additionally, the ‘Shipbuilding and Ship Repair Development Bill of 2025’ introduces a targeted policy framework to attract investments, modernise infrastructure, and promote green technologies. By addressing structural challenges and streamlining regulatory frameworks, these policies aim to reduce barriers for domestic and foreign investors, foster innovation, and enhance the industry's competitiveness on a global scale.

Policy recommendations to support the sustainable growth of the Philippines’ SBSR industry. The report provides policy recommendations which are organised into four key areas: (1) SBSR industry modernisation, (2) labour and technology development, (3) decarbonisation, digitalisation, and safety, and (4) specific guidance for the SBSR Development Bill of 2025. These recommendations aim to tackle critical issues, capitalise on sustainable growth opportunities, and strengthen the industry’s global competitiveness.