27 September 2021

Philippines prioritises counter-purchases in defence trade

by Jon Grevatt

According to Janes Defence Budgets, the Philippines will have one of the fastest growing defence budgets in the Indo-Pacific over the next 10 years. (Janes Defence Budgets)

The Philippines is continuing to place strong emphasis on ensuring government procurement in sectors including defence support counter-purchases of local commercial commodities, official statistics provided to Janes show.

Statistics from the government's Philippine International Trading Corporation (PITC) show that 80% of completed countertrade projects between 1993 and 2020 supported the counter-purchase or export of local commodities.

The total value of completed countertrade projects during this period was USD835 million, the PITC statistics show. While the majority of these deals supported counter-purchases, 15% enabled offsets including technology transfers, and 5% were designated by the PITC as “debt for goods”.

The PITC did not disclose what proportion of these countertrade programmes were linked directly to procurements by the Department of National Defense (DND).

However, according to statistics showing data between 1989 and 2014, about 26% of the total value of completed countertrade projects were linked to defence and military procurements.

An official from the PITC also told Janes that the agency is aiming to enhance the Philippines' countertrade programme through the introduction of an “industrial collaboration programme for ammunition”.

The focus of this effort is expected to encourage foreign suppliers to partner local firms on ammunition manufacturing. The PITC official said the effort is linked to the Philippines' Self-Reliant Defense Posture (SRDP) project.

The SRDP was introduced several decades ago but suffered from a lack of funding. However, the current Rodrigo Duterte administration has prioritised the project as a means to boost jobs and skills.

The Philippines is continuing to place strong emphasis on ensuring government procurement in sectors...

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