Philippines Defense Sector

The Philippines’ defense market is contingent upon the success of the Armed Forces of the Philippines’ (AFP) 15-year modernization program (2013-2028), referred to Horizon 3 (H3). This planning effort is designed to protect defense modernization efforts from shifts in the country’s political climate driven by regional geopolitical changes.  H3 will likely evolve to cover a span of 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).  U.S.-Philippine relations are based on strong historical and cultural links and a shared commitment to democracy and human rights.   

The U.S. has designated the Philippines as a ‘Major non-NATO Ally’ (MNNA), with a collaboration built on our oldest treaty ally relationship in Asia. With dramatically shifting alliances in the Indo-Pacific region and the strengthening of the partnership between the Philippines and the U.S., significant opportunities are emerging for U.S. defense and security equipment manufacturers and service providers to enhance the Philippines’ self-defense capabilities.  The U.S. provides an average of $100 million per year in defense related grant assistance to the Philippines.  This year, the U.S. Secretary of Defense announced the Philippines will receive $500 million in Foreign Military Financing (FMF). This unprecedented increase in grant assistance will support critical territorial defense capabilities. 

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 equipment or services to 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 New Government Procurement Reform Act.  Foreign companies can bid directly for large defense procurement projects.  However, a local representative is still required to monitor project development, and other relevant procurement information. 

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 the Revised AFM Modernization Program Horizon 3, the desired capabilities are focused on cyber systems, subsystems and support systems, surface and subsurface systems and missile and counter-missile systems, all pending approval by the DND.  

For more information, contact Thess.Sula@trade.gov, Commercial Specialist, U.S. Commercial Service Philippines.