Overview
The Philippine defense market is largely contingent on the implementation of the Armed Forces of the Philippines’ (AFP) ongoing modernization program, which started in 2012 and will likely continue through 2037. This program is designed to protect defense modernization efforts from shifts in the country’s political climate. In addition to modernization funding, the Philippines is the largest recipient of U.S. grant assistance for defense capabilities in the Pacific region. The Philippines receives roughly $40 million annually in Foreign Military Financing (FMF) for the acquisition of defense articles and services. Opportunities exist for sales in aircraft, ships, unmanned vehicles, intelligence and surveillance systems, communications, personal protective equipment, and satellite and space systems. The U.S. is a key supplier of defense equipment to the Philippines but faces stiff competition from Israel, South Korea, Turkey, Italy, Spain, France, Sweden, and Germany. China is also gaining momentum in the market.
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 air power is a very important component in its joint forces especially in territorial defense. Enhancing the Philippine Air Forces’ (PAF) air power could be achieved by adapting to current trends and technologies, such as unmanned aerial systems, artificial intelligence, and space capabilities.
The Philippine DND is a key player in the Indo-Pacific region as it continues to bolster its defense capabilities and maintain regional stability. Under Horizon 3, the desired capabilities are targeted to enhance C4ISTAR, air defense systems, air and surface interdiction systems, anti-tank systems and ground rocket systems, all pending approval of the newly appointed DND leadership under Secretary Gilbert Teodoro Jr.
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
· Department of National Defense
· Armed Forces of the Philippines
· Philippine Government Electronic Procurement System (PHILGEPS)
· Joint U.S. Military Assistance Group (JUSMAG) Philippines
Contact Information
Thess Sula, Commercial Specialist, U.S. Commercial Service Philippines
Email: Thess.Sula@trade.gov