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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

Advancing Philippine Competitiveness (COMPETE)

Bolstering the Philippines’ economic competitiveness improves the country’s ability to attract investment that would generate employment, raise equitable incomes and achieve the goal of inclusive growth. COMPETE improves the business environment in the Philippines, for which the United States is the second largest trade partner. The project helps lower transport and logistics costs, promote the expansion of businesses in priority sectors, primarily tourism and agribusiness, and increase access to credit, ultimately heightening the country’s competitiveness. COMPETE has facilitated $4.54 billion worth of investments in infrastructure, power and enterprise development. It also significantly increased financing for tourism road infrastructure from $15 million in 2010 to $444 million in 2015.

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

Intergroup tensions and divisions can drive violent conflict. The A3B project works in 25 barangays (villages) to foster greater cooperation and respect among groups of religious, clan, ethnic and other identities. By stimulating social cohesion, A3B builds mutual trust and mitigates the risk of violent conflict. The project trains and engages identity groups and their representatives through a three-phased peacebuilding process. First is through the “binding” stage, during which participants address biases and facilitate self-transformation. This is followed by the “bonding” stage, which strengthens relations of peace actors within identity groups and prepares them for intergroup dialogues. The third phase, or the “bridging” stage, brings together identity groups in a safe space for purposive interaction to discuss communal objectives, ultimately to resolve or prevent conflict.. In response to the ongoing conflict in Marawi City, Lanao del Sur, A3B will extend psychosocial counseling to displaced families.

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

Supporting small- and medium-sized enterprises is crucial to achieving inclusive economic growth in the Philippines. In 2015, microenterprises comprised almost 90 percent of business establishments and accounted for almost 30 percent of total employment in the country, 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 August 2017, partnering financial institutions reported a utilization of $43.9 million worth of loans to 129 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. As of March 2017, the Bangko Sentral ng Pilipinas’ Monetary Board approved the policy directives to operationalize the National Retail Payment System, a policy and regulatory framework to establish a safe, efficient, reliable and affordable retail payment system in the country, which E-PESO helped develop. E-PESO also assisted the Bureau of Internal Revenue in launching e-payment of taxes and is continuing to expand e-payment options with other public and private institutions. As of June 2017, the project has assisted eight local governments to draft and issue ordinances that institutionalize the use of e-payments for the collection of taxes and/or payment of social benefits in their cities or municipalities.

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 improves 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.

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 e-filing systems resulted in a tenfold increase in the number of tax returns e-filed, from 1.5 million in 2013 to approximately seven million in 2016, representing about 70 percent of all tax returns, and adding approximately $6 billion in revenue collection. FPI assistance has also informed the development key fiscal measures that are currently under deliberation in Congress, i.e. the Tax Reform for Acceleration and Inclusion and the Budget Reform Bill. To improve the national government's spending capacity, FPI helps improve key business processes in budget preparation and execution, as well as in public procurement. In the area of fiscal transparency, FPI supports the implementation of the Extractive Industries Transparency Initiative at the local level and the Philippines Open Government Partnership initiative.

Integrity for Investments Initiative (i3)

Corruption restricts a country’s growth prospects by raising the costs of doing business, limiting competition and drawing resources from priority investment areas. i3 is currently supporting the Securities and Exchange Commission in leading policy dialogues on bank secrecy laws, which constrain the ability of law enforcement authorities to detect corruption and other financial crimes. With i3’s assistance, anticorruption offices heightened the punitive risks tied to corrupt behavior in government. The project has trained over 4,000 anti-corruption practitioners from public and private organizations and improved the case management systems of the Ombudsman’s Office and the Commission on Audit. It helped pass charter amendments to create two additional anti-corruption courts. i3 facilitated formal agreements to solidify interagency cooperation that will improve effectiveness in pursuing criminal, civil and administrative cases. It introduced performance audit, inspired by the successful experience of the U.S. Government Accountability Office, which will shape public policies and account for results beyond financial and compliance oversight.

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. By August 2017, the e-Court case management system has been installed in 295 trial courts, providing judges and court staff with information on the progress of over 350,000 pending cases and the capability to conduct automated hearings. Close to 135,000 cases have been carefully inventoried, 15 percent of which have been removed from the active court dockets. Finally, more than 3,000 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. 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. As of May 2017, 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 three select regions in Mindanao that are vulnerable to violent conflict. USAID reinforces the potential these groups have as agents of peace that can support changing attitudes within their religious communities and improve interaction across communal divides. The project enhances the capacity of the religious leaders to engage more effectively in public debates that promote mutual trust and restore confidence in the peace process. Through the project’s broadcast and social media messaging strategies, positive news of inter-religious cooperation and people-to-people activities reach a greater population, generating more support for peace across communities.

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 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, 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 Arangkada Philippines Project II (TAPP)

In 2010, the Joint Foreign Chambers (JFC) launched Arangkada Philippines to increase investment and employment. 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 06, 2017

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