German-Philippine development cooperation in the priority area “Economic reform and development of the market system” aims to increase the competitiveness above all of small and medium-sized enterprises (SMEs) and to promote sustainable employment, thus contributing to a broad-based development of the Philippine economy.

The economic performance of the Philippines is constrained by a combination of external and internal factors. Untransparent fiscal policies, a deficient infrastructure and an insufficient framework for private sector development are the main causes of a weak economic performance that lags behind other countries in the region.

Existing economic growth does not suffice to meet the needs of a rapidly growing population and absorb the increasing number of those looking for work. Rising under- and unemployment is excluding an increasing share of the population from social and economic participation, in turn creating persistent poverty.

To address this challenge, German-Philippine Development Cooperation has implemented several interventions that aim to increase the competitiveness of small and medium-sized enterprises (SMEs) and promote sustainable employment. SMEs are in the spotlight here as they account for some 99 percent of all enterprises in the Philippines and employ 70 percent of the labour force, yet contribute only 32 percent of the nation’s aggregate value added.

GTZ assists the Philippines by

• supporting the granting of loans to SMEs
• promoting markets for business development services
• supporting training institutions
• improving the regulatory environment at urban and national level
• introducing ecological management practices in economic zones
• fostering economic integration between Brunei, Indonesia, Malaysia and the Philippines
• supporting trade policy development and promotion.

The following projects are currently being executed:

• Small and Medium Enterprise Development for Sustainable Employment Programme
• Developing a Management Approach for Eco-Industrial Development in Philippine Economic Zones.