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Economic Development and Governance

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The U.S. government partners with the government of the Philippines to address constraints to growth in the Philippines, largely by enhancing the country’s economic competitiveness. USAID facilitates trade and investment by reducing regulatory bottlenecks, entry barriers and discriminatory provisions to investment; improving the environment for competition; enhancing Philippine participation in regional and international trade agreements; and enabling financial inclusion. USAID works with cities outside Metro Manila to bring about broad-based development by advancing appropriate policies and incentives, greater transparency and accountability and increased competitiveness. USAID also supports the Philippine government to strengthen the rule of law by improving court efficiency and increasing access to justice and by reducing corruption through the promotion of the enforcement of anti-corruption laws. USAID engages key stakeholders to increase community cohesion, reduce conflict and strengthen government capacity in Mindanao to collaboratively address grievances and deliver services. USAID also enhances the capacity of local organizations to provide assistance in the critical areas of trafficking in persons, disaster relief and environmental protection.

PROJECTS

Applying Binding, Bonding and Bridging for Peace Program (A3B)

Inter-group tensions and divisions can weaken the influence of communities against violent conflict. The A3B project works in 25 barangays (villages) to foster greater cooperation and respect among groups of religious and ethnic identities, and mitigate the risk of violent conflict. The project trains religious and traditional leaders to prepare them to participate in a three-phased social cohesion process. Under the binding stage, A3B assist key actors to address biases and facilitate self-transformation. This is followed by the bonding stage, which strengthens relations of peace actors within the same identity groups and prepares them for inter-group dialogues. The third phase, or the bridging stage, brings together key actors from different religious and ethnic identity groups to explore common objectives. A3B also trains community leaders to manage and mitigate disputes and prevent them for escalating into violence. In response to the Marawi siege, A3B extends psychosocial and trauma healing counseling to displaced families in Iligan, Baloi and Saguiaran.

Development Credit Authority Loan Portfolio Guarantee I (DCA LPG I) and II (DCA LPG II)

Supporting small- and medium-sized enterprises is crucial to achieving inclusive economic growth in the Philippines. In 2016, microenterprises comprised almost 90 percent of business establishments and generated 30 percent of jobs in that year, according to the Department of Trade and Industry. These enterprises generate wealth, business opportunities and employment in rural and urban areas. The Development Credit Authority Loan Portfolio Guarantee encourages lending to businesses - predominantly small- and medium-sized enterprises - for qualified projects throughout the Philippines. The guarantee stimulates targeted domestic commercial investment in cities outside Metro Manila and their surrounding regions. Priority sectors include: manufacturing, healthcare, energy, construction, tourism, postharvest agricultural processing/agribusiness. As of July 2018, partnering financial institutions reported a utilization of $48 million worth of loans to 134 small and medium enterprises enrolled in the loan guarantee facility.

E-PESO

In the Philippines, about 98 percent of payments take place through cash. Electronic payments (e-payments) promote efficiency in financial transactions and boost transparency and accountability in government finance and operations. E-PESO works with the government and private sector to achieve a twenty-fold increase in e-payment usage. It supports the development of economic infrastructure that will enable Filipinos to access new financial products and services, further contributing to inclusive economic development. E-PESO assisted the Philippine Government, through the Bangko Sentral ng Pilipinas, in building a more competitive payments environment by opening it up to more players, domestic and foreign investors alike. Through E-PESO assistance, the Philippine government launched the National Retail Payment System in 2015, a policy and regulatory framework to establish a safe, efficient, reliable and affordable retail payment system in the country. The government also established automated clearing houses that will enable more efficient movement of money from one account to another, and beneficiaries are credited with the funds within the same day and are not charged reception fees. E-PESO also assisted the Bureau of Internal Revenue to develop additional options for the payment of taxes, including debit, credit, prepaid card and mobile payments.

Enhancing Governance, Accountability and Engagement (ENGAGE)

Mindanao faces multiple development challenges, even with ongoing peace negotiations between the Moro Islamic Liberation Front and the national government. Many areas of the region remain affected by conflict and vulnerable to violent extremism, fueled by grievances including marginalization and discrimination, poor governance, poverty and underdevelopment. ENGAGE 12 advances peace and stability by promoting good governance. It helps local governments and communities to work together to constructively address core grievances, further discouraging radicalization in highly vulnerable areas. ENGAGE also helps local government units (LGUs) improve their delivery of services. It promotes transparency and accountability, which helps establish the LGUs’ legitimacy among their constituents. It also increases civic engagement by building the capacity of civil society organizations to better serve the public, engage with LGUs and represent public interest. This advances a shared responsibility for development among LGUs, civil society and citizens, and provides a counter-narrative to extremists and their efforts to recruit citizens to their cause. ENGAGE currently works with 30 local government partners and close to 50 Mindanao-based civil society organizations. Following the Marawi siege, ENGAGE has been working to improve the living conditions of more than 100,000 home-based internally displaced persons (IDPs) and host residents in 45 barangays in Lanao del Norte and Lanao del Sur. Specifically, the project focuses on: 1) Strengthening local government and civil society capacity to support recovery, strengthen social cohesion and prevent violent extremism; 2) Improving local government delivery of basic services in communities with IDPs; and 3) Enabling home-based IDPs and host communities to participate in decision-making.

Facilitating Public Investment (FPI)

Improving fiscal performance in the Philippines strengthens the country's development prospects and enhances its ability to reduce poverty. FPI expands public and private investment through higher tax revenues and improved public expenditure management. It enhances the effectiveness of the tax regime while strengthening public expenditure oversight. FPI's assistance to upgrade the Bureau of Internal Revenue's (BIR) e-filing systems resulted in a thirteen-fold increase in the number of tax returns e-filed, from 1.5 million in 2013 to approximately 19.2 million in 2017, representing about 75 percent of all tax returns. With FPI assistance, the BIR developed additional options for the payment of taxes, including debit, credit, prepaid card and mobile payments. FPI assistance has also informed the development and subsequent passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which will generate an additional $2.6 billion annually starting 2018, and will help finance the government's infrastructure program and increase the budget for priority health, education and social welfare programs. Additionally, with FPI assistance, the Philippines was named as the first country to have met the standards of the Extractive Industries Transparency International. USAID assistance boosted tax revenues by $14 billion from 2013 to 2017.

Judicial Strengthening to Improve Court Effectiveness (JUSTICE)

JUSTICE supports courts in growth centers to speed up the trial process through electronic case management systems, case decongestion and procedural interventions. USAID promotes the rule of law by modernizing the court system, allowing the Philippines to more effectively process cases, including drug-related cases that make up a significant portion of all criminal cases. As of March 2018, the e-Court case management system was installed in 290 trial courts, providing judges and court staff with information on the progress of estimated 350,000 pending cases and the capability to conduct automated hearings. More than 172,000 cases have been carefully inventoried, 24 percent of which have been removed from the active court dockets. Finally, more than 3,600 judges, court personnel, prosecutors, public defenders and mediators working in 955 regional trial courts have been trained to implement the guidelines for the continuous trial of criminal cases issued by the Supreme Court. JUSTICE works to reduce delays in court procedures and improve court processes in order to increase legitimacy and citizen support for the role of law system.

Logistics Support for Mindanao Activity (LOGISTICS)

Logistics Support for Mindanao provides logistical and security coordination, information management services and monitoring assistance for USAID/Philippines and broader U.S. Embassy activities in Mindanao. Since 2014, LOGISTICS has facilitated 306 visits and has produced 528 Mindanao security advisories, including weather-related flash reports and road network accessibility information.

Philippine-American Fund (Phil-Am Fund)

USAID launched the Phil-Am Fund to strengthen the capacity of civil society organizations to develop solutions for the country's development challenges. The grant-making facility supports activities that combat human trafficking, develop technology-based solutions to child and adult illiteracy, and improve the management of natural resources and biodiversity. Phil-Am Fund also funds local enterprises and organizations to support business start-ups; promote innovation through entrepreneurship; and advance citizen advocacy for greater public accountability, transparency and integrity. Phil-Am Fund also provides capacity building programs on organizational development and project management for its grantees. Phil-Am Fund had awarded 37 grants, consisting of 15 projects for biodiversity, seven for economic growth, five for good governance, four for basic education and six for anti-trafficking in persons.

PeaceConnect

PeaceConnect engages religious leaders and youth organizations to stimulate social cohesion in select Mindanao sites that are vulnerable to violent conflict, including violent extremism. It fosters social cohesion by training and engaging religious and youth leaders to think and act politically and effectively represent their identity groups in support of peace. The project also creates safe spaces for intra- and inter-group dialogues to mitigate and address violent conflict and violent extremism. Social cohesion activities are implemented in Marawi IDP sites, such as Iligan, Marantao, Kapai and Piagapo.

Strengthening Urban Resilience for Growth with Equity (SURGE)

With wealth concentrated in Metro Manila and a few other primary cities, secondary and tertiary cities must elevate their role in spreading economic development. As the flagship project of the Cities Development Initiative, SURGE helps develops conditions for inclusive and resilient economic growth for a critical mass of cities and surrounding areas outside Metro Manila, Cebu and Davao. SURGE provides technical assistance to help cities and adjacent areas plan effectively, guarantee basic public services particularly access to water and sanitation, enhance the investment climate, promote competitiveness, support sustainable development and reduce disaster risks. For example, the project has improved business permit licensing in the Cities Development Initiative partner cities of Puerto Princesa, Tagbilaran and Zamboanga. The project also provides technical assistance to improve water delivery services in Tagbilaran and General Santos cities. SURGE works to rehabilitate Marawi City and its environs. The project is providing technical assistance to restore safe and sanitary water services, as well as economic livelihood activities, and establishing permanent and temporary market or trading facilities.

The Arangkada Philippines Project II (TAPP)

In 2010, the Joint Foreign Chambers (JFC) launched Arangkada Philippines to increase investment in key business sectors to spur employment opportunities for Filipinos. USAID, in partnership with the American Chamber of Commerce of the Philippines, launched The Arangkada Philippines (Accelerate Philippines) project to support this initiative, implementing the JFC's recommendations to accelerate economic growth. TAPP II similarly advocates for key reforms to encourage a better and more open business environment and strengthen the investment climate. TAPP II conducts high-level annual forums to review and discuss progress on JFC recommendations; helps prepare letters and statements from the JFC to the Office of the President, concerned national government agencies and Senate and Congressional Representatives to advocate for legislative priorities; and publishes several policy briefs on key economic reform areas.

U.S. Federal Trade Commission Technical Assistance (Field Support)

In the Philippines, underdeveloped competition laws and economic policies hinder the nation’s ability to move from a low growth path to a higher, sustained and more inclusive growth trajectory in line with high-performing emerging economies. USAID and the U.S. Department of Justice are working with the Philippine government to address these challenges, facilitating the passage of the Anti-Trust Law; educating consumers, business and political bodies about the role of competition; and establishing systems for investigating potential law violations. The assistance helped draft the Philippine Competition Act, which regulates anti-competitive behavior and fosters a better environment for the entrance of new market players; it was later enacted into law. It also conducted training workshops for the Office of Competition under the Philippine Department of Justice.

Last updated: November 16, 2018

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