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In November 2011, the United States Agency for International Development (USAID) and US Peace Corps celebrated 50 years of partnership with the Philippines. Today, USAID continues to drive development in Mindanao through the Growth with Equity (GEM) program and implement other key development initiatives, while the Peace Corps still maintains one of its largest contingents in the world in the Philippines. Yet, the US is but one of many sources of foreign aid contributions to this developing Southeast Asian country where well over 25% of a population of 95 million live under the poverty threshold. Most agree that this debilitating poverty, along with poor governance and corruption, has stalled the country’s socio-economic progress and growth compared to its regional neighbors.

Since President Benigno “Noynoy” Aquino III was elected into office in 2010, however, donors have revitalized their relationships with the Philippines believing that better governance will result in more impact and value for aid money spent. World Bank President Robert Zoellick recently affirmed the international community’s commitment to the Philippines during a visit in late October and highlighted the World Bank’s support of the country’s conditional cash transfer program. The Philippines continues to be one of Japan’s top aid beneficiaries with the Japanese contributing an astounding $2.659 billion to development activities. Australia, a country pledging higher aid flows to neighboring countries across Southeast Asia, has also boosted official development assistance. At the same time, emerging donors, particularly China, are steadily increasing development assistance as well as private investment and Korea has made the Philippines its top recipient of foreign aid.

Here is a summary of the financial commitments, sectors of focus, and existing programs/projects of the top 10 donors assisting the Philippines.

1. Japan

As of June 2011, Japan is the largest donor to the Philippines, extending roughly $2.66 billion in aid or 31.69 percent share of the country’s total official development assistance (ODA) commitments. Japan’s Country Assistance Program for the Philippines identifies three priority areas: sustainable economic growth, empowerment of the poor, and peace and stability in Mindanao. This year, Japan’s aid programs include the $538.5 million (¥40.847 billion) Road Upgrading and Preservation Project (RUPP) for the improvement of the country’s transportation system and the sustainability of its national roads. 

To be implemented by the Department of Public Works and Highways (DPWH), the RUPP aims to develop the Bongabon-Rizal/Pantabnaga-Baler, Lipa-Alaminos, and the Catanduanes Circumferential Road by 2020. The $121.3 million (¥9.2 billion) Forestland Management Project emphasizes community participation in the ecological restoration and productive utilization of three critical river basins: the Upper Magat and Cagayan, the Pampanga in Luzon, and the Jalaur in Visayas. Meanwhile, the $9.7 million (¥739 million) Project for Evacuation Shelter Construction in Disaster Vulnerable Areas in Albay Province addresses the challenges faced by the disaster-prone region.

 2. China

China is one of the Philippines major aid donors, with an estimated $1.16 billion or 13.73 percent share of total ODA commitments this year. Guided by its developmental needs, China’s aid package includes development assistance, international trade, overseas investments, cultural influence, humanitarian aid, disaster relief, education, travel, and tourism. Since 2004, China’s developmental efforts in the country appear to prioritize the infrastructure sector, with seven projects in total. However, only three projects are covered by China-Philippines agreements. These are the Northrail Project ($673.67 million), Main Line South Railway Project ($314.8 million), and the Non-Intrusive Container inspection system ($115 million). The remaining four still in the pipeline are the Laiban Dam Project ($1 billion), Metro Manila Skyway Project ($633.54 million), Angat Water Utilization and Aqueduct Improvement Project ($63.85 million), and the Laoag International Airport Expansion Project. In addition, the Chinese government recently pledged to assist the Philippines in developing its agriculture through the provision of farm technologies and hybrid rice lines in Nueva Ecija.

3. World Bank Group

The World Bank (WB) support, which is anchored by the Bank’s Medium-Term Philippine Development Plan, aims to help the country achieve inclusive growth. The objectives of the WB’s Country Assistance Strategy for the Philippines 2010-2012 are a stable macro economy; improved investment climate; better public delivery of education, health, water and sanitation services; reduction in vulnerabilities through expansion of the social safety net and improvements in disaster risk management; and the realization of good governance. Beginning 2010, the programmable aid budget for the Philippines is set at a minimum of $950 million annually. However, as of September 2011, WB assistance to the country amounted to $2.185 billion. WB recently scaled up support for the Department of Social Welfare and Development’s (DSWD) the Pantawid Pamilyang Pilipino Program, from $50 million to $405 million. Additional financing is also earmarked for the Kapit Bisig Laban sa Kahirapan – Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS). The Kalahi-CIDSS program helps develop the community’s capacity to design, implement, and manage activities that reduce poverty. Recipients of WB aid, generally coursed through nationwide DSWD programs, are municipalities with at least 50 percent of poverty incidence which includes the majority of provinces in Mindanao.

         4. Asian Development Bank

Consistent with the “Philippine Development Plan, 2011-2016,” the focus areas of the Asian Development Bank’s Country Operations Business Plan for the Philippines, 2012-2014 are infrastructure, environment, renewable energy, and social services. The $667 million programmable aid budget for FY2011 is broken down as follows: $300 million for justice reform, including the establishment of a case flow management system to speed up handling of case loads in lower courts at Metro Manila; $200 million for investments in energy-efficient electric vehicles in metropolitan Manila; $92 million for the maintenance of select national roads such as the Bauang-Baguio, Iloilo-Capiz, and Butuan-Cagayan de Oro; and $75 million for operation efficiency improvements of irrigation systems in Visayas. The Plan also recognizes the role of private sector participation, allowing for flexibility in the choice of projects to invest in and guided by the following criteria: alignment with the country partnership strategy, development impact, and financial viability.

5. United States

The United States (US) foreign assistance to the Philippines aims to realize a democratic government that is able to meet the needs of its people, especially the poor. The goals of the US Country Assistance Strategy for the Philippines 2009-2013 are accelerated growth through improved competitiveness, strengthening good governance, poverty reduction, and improved peace and security. To accomplish these goals, American programmable aid budget for 2011 is estimated at $186 million, of which 25 percent is for peace and security, 9 percent for good governance and democracy, 33 percent for poverty reduction, and 33 percent for economic growth.  This estimated budget, however, reflects only US foreign operations account and does not include funds from the Millennium Challenge Corporation (MCC) which represents another $434 million. The best known USAID project is the Growth with Equity in Mindanao (GEM) program the third phase of which began in January 2008 and is expected to operate until the end of 2012. GEM operates throughout Mindanao, with a special focus on the Autonomous Region in Muslim Mindanao (ARMM) and other conflict-affected areas of Mindanao. Other US-funded projects include the Local Implementation of National Competitiveness for Economic Growth (LINC-EG) in relatively stable and economically-prominent areas of Mindanao; Microenterprise Access to Banking Services-4 (MABS-4) which assists rural banks in providing financial services to micro entrepreneurs and small farmers; Philippines Election Reform Project; assistance to the Office of the Ombudsman in its legislative agenda for increase effectiveness in anticorruption enforcement; and programs/trainings meant to strengthen the capabilities of the Armed Forces of the Philippines and the Philippines National Police.

6. Global Fund

The Global Fund to Fight AIDS, Tuberculosis, and Malaria is currently implementing three grants in the Philippines, with total funds disbursed amounting to $160,138,360 for 2011. From this amount, $21,722,111 is allotted for HIV/AIDS, $69,568,354 for tuberculosis, and $68,847,896 for malaria.  The principal recipients/implementing partners of Global Fund aid initiatives are the Tropical Disease Foundation, Inc., Pilipinas Shell Foundation Inc., Department of Health, and Philippine Business for Social Progress. Global Fund aid programs in the country aim to prevent and treat malaria and tuberculosis in rural areas; and HIV/AIDs in vulnerable groups, which include migrant workers, people engaged in prostitution, and men who have sex with men.

7. Australia

The overarching objective of Australia’s Development Assistance Strategy 2007-2011 for the Philippines is to assist the country in meeting its development goals. As such, Australia’s Philippine aid program prioritizes the areas of economic growth, basic education, and national stability and human security. Total ODA for 2011-2012 is $123.1 million. Ongoing Australian projects include the approximately $100 million provincial road rehabilitation and management project in Visayas and Mindanao from 2009-2014; and $60 million in assistance to select institutions for their human resource and organizational development from 2010-2015. Australia also made contributions to the Philippine Basic Education Reforms (SPHERE) Trust Fund, Strengthening Implementation of Visayas Education (STRIVE), rehabilitation of Metro Manila schools affected by typhoon Ondoy, and the Mindanao Trust Fund-Reconstruction and Development Programme (MTF-RDP). Further, Australia also extended $5.7 million for reducing maternal and neonatal mortality from 2009-2011, and $19.76 million for improving disaster and climate risk management, specifically in the Greater Metro Manila Area from 2006-2013.

8. European Union Institutions

Working for the sustainable reduction of poverty in the country, the European Union (EU) earmarked approximately $96 million (€69 million) for its assistance to the Philippines for 2011 until 2013. Based on the EU’s Multi-annual Indicative Plan during this time, developmental priorities of European aid consist of health, governance, support to vulnerable populations, and trade related assistance. The EU programmable aid budget allocations are as follows: $48.6 million (€35 million) for the Health Sector Reform Agenda, which improves access to quality health services for disadvantaged groups and indigenous peoples, specifically those in Mindanao; $23.6 million (€17 million) for enhancing good governance through improved access to justice, support for public finance management reform, and support for improved migration management in collaboration with DSWD, Department of Justice (DoJ), Department of Interior and Local Governance (DILG) and other relevant agencies; $16.7 million (€12 million) for support to vulnerable populations, with special emphasis on promoting the peace process in Mindanao through the MTF-RDP; and $6.95 million (€5 million) to facilitate trade and investments by strengthening the capacities of the Department of Trade and Industry and Department of Agriculture.  

9. Canada

Aligned with the Medium-Term Philippine Development Plan, Canada’s aid program aims to ensure the country’s sustainable economic growth. Canada’s 2010 programmable aid budget this year is expected to increase from last year’s $25.78 million given the government’s plan to double international assistance to $5 billion annually by 2010-2011. Canada works to strengthen the investment climate by simplifying business regulations and processes, improving sector-specific value chains, and helping local government units (LGUs) implement their economic development plans. Canada’s partners for the ongoing 2008-2016 Local Governance Support Program for Local Economic Development (LGSP-LED) include LGU units/alliances in Pangasinan, Metro Naga, Metro Iloilo-Guimaras, Leyte, Panglao-Dauis-Baclayon (PADAYON), Bohol, DDPKaRoMa, and Allah Valley. Canadian aid also aims to develop business skills, increase productivity, and improve access to financing and markets through the Gender-Responsive Economic Actions for the Transformation of Women (GREAT Women) Project and the Peace Links Program.

10. Korea

Recognizing the role of Filipinos in the 1950-1953 Korean War, South Korea recently made the Philippines its largest aid recipient. Kim Jinoh, resident representative of the Korea International Cooperation Agency (KOICA) said that the aid agency plans to increase its assistance to the Philippines to $20 million starting this year. Priority sectors of Korea’s aid program are agriculture, health, infrastructure, environment, and disaster relief. Current aid projects include: 1) the construction of modern rice milling and processing complexes in Pangasinan, Iloilo, Bohol, and Davao del Sur; 2) the establishment of early warning and monitoring facilities for disaster mitigation along the Pasig-Marikina River in Metro Manila; 3) construction of a complementary health center to the Korea-Philippines Friendship Hospital in Cavite; and conducting feasibility studies on 4) the establishment of provincial multi-industry clusters in partnership with the Department of Agriculture and other relevant agencies; 5) the New Passenger Terminal and Master Plan of the Mactan-Cebu International Airport; and 6) the C6 Expressway Project.

Christine Dugay contributed to this report.

About the author

  • Pete Troilo

    Former director of global advisory and analysis, Pete managed all Devex research and analysis operations worldwide and monitors key trends in the global development business. Prior to joining Devex, Pete was a political and security risk consultant with a focus on Southeast Asia. He has also advised the U.S. government on foreign policy and led projects for the Asian Development Bank and International Finance Corp. He still consults for Devex on a project basis.