Philippines Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in Philippines, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals.
Defense
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Overview 

The Philippines’ defense market is aligned with the Armed Forces of the Philippines’ (AFP) 15-year modernization program (2012-2027), designed to protect defense modernization efforts from shifts in the country’s political climate. The Revised Modernization Program (Republic Act 10349) is structured in three horizons with each horizon spanning for five years. The third milestone or Horizon 3 (H3) will likely evolve to encompass 15 years and will be divided into three phases: H3 Phase 1 (2023-2027), H3 Phase 2 (2028-2032), and H3 Phase 3 (2033-2037). H3 Phase 1’s projected budget is $33 billion.

U.S.-Philippine relations are based on strong historical and cultural links and a shared commitment to democracy and human rights. The United States has designated the Philippines as a Major Non-NATO Ally, and there are close and abiding security ties between the two nations. The strong relationship developed between the Philippines and the United States in recent years has contributed to the development of significant opportunities for U.S. defense and security equipment manufacturers and service providers to enhance the Philippines’ self-defense capabilities. The U.S. Government has expressed its intent to make available to the Philippines $500 million in Foreign Military Financing (FMF) to be used by the Philippine Department of National Defense (DND) to fund its armed forces modernization programs. The United States is a key supplier of defense equipment to the Philippines but faces stiff competition from the Republic of Korea, Turkey, Italy, Spain, France, Sweden, and Germany.

Opportunities

With the current challenges faced by the Philippines such as the territorial dispute with China in the West Philippine Sea, the Department of National Defense (DND) reiterated that Horizon 3 aims to be fully mission capable for territorial defense across the whole Philippine territory. Horizon 3 is structured around distinct capability partitions, which collectively comprise a total of 37 projects scheduled for implementation from 2024 to 2028 and are prioritized based on critical mission requirements across the defense spectrum. These capability partitions contain acquisition requirements including cyber systems, subsystems and support systems, air interdiction and missile and counter-missile systems. The Philippine DND is a key player in the Indo-Pacific region as it continues to bolster its defense capabilities and maintain regional stability. 

Foreign Military Sales (FMS) and all U.S. grant assistance are handled by the Joint U.S. Military Assistance Group (JUSMAG) Philippines. Procurements through the Direct Commercial Sales (DCS) process require a thorough understanding of the Philippine government procurement system. U.S. firms interested in supplying the AFP need to find a local representative and conduct a capability brief to the appropriate service command. The local representative must be familiar with the procedures, nuances, and documentary requirements of the Government Procurement Reform Act (GPRA). Foreign companies can bid directly for large defense procurement projects.  However, a local representative is still required to monitor project development, funding source, budget release, changes in specifications, procurement schedule, and other relevant information.

Resources

Contact Information

Thess Sula, Commercial Specialist, U.S. Commercial Service Philippines
Email: Thess.Sula@trade.gov

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