汤头条

January 29, 2002

The Government of Canada (hereinafter referred to as "Canada") and the Government of the Republic of the Philippines (hereinafter referred to as "the Philippines"), desiring to record an understanding concerning the Private Enterprise Accelerated Resource Linkages Project II (hereinafter referred to as "the Project"), have reached the following understanding:

ARTICLE I
NATURE OF THE MEMORANDUM OF UNDERSTANDING

Section 1.01

This Memorandum of Understanding ("MOU") constitutes a subsidiary arrangement made pursuant to the General Agreement on Development Cooperation between the Government of Canada and the Government of the Republic of the Philippines dated 13th November 1987 and is intended to set out the responsibilities of the two Governments in relation to the Project that is described under Article III. It does not constitute an international treaty.

ARTICLE II
RESPONSIBLE AUTHORITIES

Section 2.01

Canada designates the Canadian International Development Agency (hereinafter referred to as "CIDA") as the Agency responsible for the implementation of its undertakings under this Memorandum of Understanding.  CIDA will award a contract to a Canadian Executing Agency (hereinafter referred to as "CEA") who will be responsible for the overall financial, administrative and technical management of the Project under the direction of the Project Steering Committee (PSC).

Section 2.02

The Philippines designates the Department of Trade and Industry (hereinafter referred to as "DTI") as the Agency responsible for the implementation of its undertakings under this Memorandum of Understanding. DTI will work through the Board of Investments (hereinafter referred to as "BOI") in the implementation of the Project.

ARTICLE III
THE PROJECT

Section 3.01

Canada and the Philippines will participate in the Private Enterprise Accelerated Resource Linkages Project II in the Philippines (hereinafter referred to as the "Project"). The goal of the Project is: To contribute to the reduction of poverty in the Philippines through equitable, sustainable development. The purpose of the Project is: To support the development of small and medium enterprises that create meaningful jobs for both men and women.

The Project is described in Annex "A" of this Memorandum of Understanding.

ARTICLE IV
PROJECT IMPLEMENTATION PLAN

Section 4.01

For the implementation of the Project, the CEA will prepare a Project Implementation Plan for approval by the PSC and signature by Canada and the Philippines, within one hundred and eighty days (180) from the date of the contract referred to in Section 2.01 executed by CIDA and the CEA.  When duly executed by Canada and the Philippines, the Project Implementation Plan will be attached hereto as Annex "D".  The Project Implementation Plan will constitute an operational document between DTI and CIDA.  The Plan will contain, inter alia, the following:

(a) a detailed description of the Project;

(b) an outline of the management strategy, process, methods and means to be used to carry out the Project;

(c) a schedule for the implementation of the project activities, including  a milestone chart;

(d) budget and duration of the Project;

(e) the reporting requirements for the Project;

(f) the nature, timing and responsibilities for project monitoring and evaluations and the means by which they will be made;

(g) the project organization including resources required for the project; and

(h) a statement of additional responsibilities of Canada and the Philippines together with their contributions.

Section 4.02

The Project Implementation Plan may be amended, from time to time, with the agreement of both Parties and without formal modification to this Memorandum of Understanding.

ARTICLE V
CONTRIBUTION OF CANADA

Section 5.01

The contribution of Canada will consist of professional and technical services as well as monitoring and evaluation of the Project, more particularly set forth in Annex "B" of this Memorandum of Understanding.  The total value of Canada's contribution will not exceed eight million six hundred thousand dollars (Cdn$8,600,000).

Section 5.02

The proceeds of the contribution will not be used by the Philippines to pay any taxes, fees, customs duties or any other levies or charges imposed directly or indirectly by the Philippines on any goods, materials, equipment, vehicles or services purchased or acquired for, or related to, the execution of the Project.

ARTICLE VI
CONTRIBUTION 0F THE PHILLIPINES

Section 6.01

The contribution of the Philippines will consist of technical and administrative inputs provided by the government representatives to the Project more particularly set forth in Annex "C".

ARTICLE VII
INFORMATION

Section 7.01

The Philippines and Canada will ensure that this Memorandum of Understanding is carried out with due diligence and efficiency and each will furnish to the other all such information relating to the Project as will reasonably be requested.

ARTICLE VIII
COMMUNICATIONS

Section 8.01

Any communications or documents given, made or sent by either the Philippines and Canada pursuant to this Memorandum of Understanding will be in writing and will be deemed to have been duly given, made or sent to the Party to which it is addressed at the time of its delivery by hand, mail, facsimile or the electronic mail system at its respective address, namely:

For Canada:
	The President
	Canadian International Development Agency
	200 Promenade du Portage
	Hull, Quebec
	K1A 0G4
	Canada
	Fax: (819) 953-5469
	Email: len_good@acdi-cida.gc.ca
For the Philippines:
	The Undersecretary
	Industry and Investments Group
	Industry and Investments Building
	385 Sen. Gil Puyat Avenue
	Makati Avenue
	Tel. 890-9303
	Fax 895-3512

Section 8.02

Either Party hereto may, by written notice to the other Party hereto, change the address to which any notice or request is to be received.

Section 8.03

All communications and documents submitted to CANADA will be in either the English or the French language, and those submitted to the Philippines will be in the English or the Filipino language.

ARTICLE IX
INTERPRETATION

Section 9.01

Differences, which may arise in the interpretation and/or application of the provisions of this Memorandum of Understanding will be settled by means of negotiations between Canada and the Philippines or by any other manner mutually agreed upon by Canada and the Philippines.

ARTICLE X
ENTIRE UNDERSTANDING

Section 10.01

This Memorandum of Understanding together with Annexes "A", 鈥淏鈥�, "C" and "D" which form an integral part hereof, constitute the entire understanding between the Parties with respect to the Project.

ARTICLE XI
CONSULTATION

Section 11.01

The Philippines and Canada will endeavour to consult each other in respect of any matter that may from time to time arise in connection with this Memorandum of Understanding.

ARTICLE XII
GENERAL PROVISIONS

Section 12.01

This Memorandum of Understanding will come into effect on the date of signature and will expire on completion of the Project.   This Memorandum of Understanding may be amended from time to time as deemed necessary, by mutual agreement by an exchange of letters.

ARTICLE XIII
ENVIRONMENTAL ASSESSMENT

Section 13.01

This Memorandum of Understanding may involve the carrying out of sub-projects which will constitute "projects" under the Canadian Environmental Assessment Act ("CEAA"). Except where the sub-projects are exempt from the application of CEAA, Canada will ensure that an environmental assessment of such sub-projects will be carried out as early as practicable in the planning stages of the sub-projects in accordance with CEAA, before CIDA decides upon allocating funds for the purpose of enabling the sub-projects to be carried out.

Section 13.02

Canada will ensure that the screening report and all other records relating to the assessment of the environmental effects of the sub-projects are placed in the public registry as required by CEAA.

DONE in Ottawa, in two copies, this 29^th day of January 2002, in the English and French languages, each version being equally valid.

(Sgd.)	(Sgd.)
For the	For the
Government of the	Government of Canada
Republic of the Philippines

 

ANNEX "A"
PROJECT SUMMARY

LINKS TO THE COUNTRY DEVELOPMENT POLICY FRAMEWORK ("CDPF")

This new project supports CIDA policies and objectives at all levels. Promoting Private Sector Development ("PSD") is one of CIDA's six programming priorities and supports the Canadian Official Development Assistance ("ODA") objective of: "support sustainable development in developing countries in order to reduce poverty and contribute to a more secure, equitable and prosperous world" (Canada in the World). It also contributes to the Asia Branch goal of growth with equity, and directly to two of the Branch's three objectives namely: contributing to poverty reduction; and strengthening the basis for prosperity.

Private Sector Development continues as a principle focus within the updated Philippines Country Development Policy Framework (CDPF). The PSD strategic objective within the CDPF is: "to support the development of small and medium enterprises that create meaningful jobs for both men and women". This will be achieved through strengthening the capacity of business organizations (e.g., industry, manufacturers and exporters associations, cooperatives, chambers of commerce, and others) with these organizations delivering better support and services to their small and medium enterprises ("SMEs") constituents. PSD programming recognizes the importance of SMEs in the equation of job creation, income generation, community economic development, and poverty reduction, particularly in the larger context of post-economic crisis recovery. The promotion of labor- intensive SMEs is well recognized as a key to poverty reduction in the PHILIPPINES and has become an expressed priority of the PHILIPPINES. The project also addresses three crosscutting themes which are priorities of die PHILIPPINES: gender equality; environment; and information technology.

EXPECTED RESULTS

The expected results from this project reflect those which have been achieved to date in the Enterprise Support Project ("ESP") and Private Enterprise Accelerated Resources Linkages ("PEARL"). At the impact level, the primary result expected: an increased role of SMEs in job creation and economic growth within the Philippines. A second expected result: a better policy environment, conducive to enhancing SMEs' operating environment. At the outcome level: 1. SMEs expanding and increasing competitiveness; 2. sectors strengthened in terms of domestic and export markets; 3. improved programs supporting Philippines SMEs are operational and sustainable; 4. improved access of SMEs to technical assistance, technology, and support services. At the output level: 1. sectors stronger, introducing new products and entering new markets; 2. associations and institutions develop new programs, training, or services for SMEs; 3. Philippine investment promotion groups are better able to facilitate business ties between Philippine SMEs and firms/groups outside the Philippines.

PROJECT DESCRIPTION

Scope

The design of this Project reflects the successes and experience gained from die previous two projects (Enterprise Support Project; Private Enterprise Accelerated Resources Linkages project) as well as guidelines from the draft Philippines PSD Strategic Framework. Certain principles apply to all aspects of die project and these include: undertaking interventions through business organizations (meso level) to allow greater leverage of efforts; carefully selecting partners committed to working with dynamic SMEs and providing sustainable services; focusing energies on specific sectors and regions where possible; and working with organizations that are targeting enterprises which have a clear orientation on growth and increasing competitiveness.

Three project components will be undertaken which will be inter linked and allow a strategic approach to supporting key SME business support organizations. The first component will support the development of key labor-intensive sectors within die Philippines. The Sectoral Enhancement component will work with strong sector associations which will play a lead role in delivering business support services to, and mobilizing SME members, and related suppliers, to improve their production performance, market expansion, management capabilities, and long term sustainability. Sectors will be chosen based on the following criteria: 1) SMEs currently play a strong role in the growth of the sector; 2) the sector is labor intensive (job creation opportunities for both men and women); 3) potential exists to develop an international comparative market advantage; 4) a strong industry association and support network already exists and is willing to partner with the project; and 5) Canadian capacity exists to assist development of the sector.

Based on these criteria, PEARL II will initially focus on two main sectors: furniture and house wares, both of which are labor-intensive, offer good potential for job creation, and are priority sectors of the Philippine Government. During the course of die Project, other sectors which will be chosen for an integrated support approach. Priority will be given to the Mindanao and Cebu regions.

The ability to achieve rapid results in terms of job creation is based on the fact that these interventions will work at a sectoral level and provide coordinated support to a broad spectrum of players to enhance SME performance. Both CIDA's projects and international experience shows that taking 'an integrated sectoral approach to supporting SMEs, maximizes results. Comprehensive support programs would be developed based on the articulated needs of each sector, including training, technical assistance, and organizational support. For example, the programs might involve strengthening marketing of products or improving quality control and packaging. The key sectoral association would work with a range of other partners to identify terms of supporting efforts by die industry groups to get changes to policies negatively impacting their sectoral growth (e.g. transportation costs). An emphasis would also be placed on broadening links between SMEs and microenterprise subcontractors to ensure spin-off benefits in poorer communities. Microenterprise related organizations will be an important consideration.

The Partnership Development Facility (PDF) component is an adaptation of a responsive mechanism that has been operating in die Philippines under PEARL for three years. The current PDF will be changed to better serve the needs of key SME related organizations in their efforts to promote SME development and job creation. Two types of funding will be available under the facility. First, for groups with an SME track record, funding will be available for up to 3 years to support strategic initiatives proposed by the organizations to further develop their SME programming. Second, short term support (up to one year) will be available to two types of organizations: those with limited SME track records but which are developing SME programs and require partnership funding; or groups which have specialized or short term programs which require additional funding.

All PDF funding will be cost-shared on a 50/50 basis between the project and the participating organization. The organizations eligible will include (in order of priority): business and industry associations working with SMEs; research and academic institutions having SME programs; financial institutions working with SMEs; and government agencies mandated to provide SME sendees. Special consideration will be given to organizations which promote innovative mechanisms for supporting SME development. Individual companies or informal groups of companies will not be eligible, nor will organizations requesting financing of recurrent or capital costs.

The intention of the PDF is to work with these groups to enhance their SME service delivery and promote both SME growth and job creation. Some areas for possible funding would include: improving the coordination of existing sendees; broadening the range of services available to SMEs; strengthening associations to provide better sendees; developing methods to deal with gaps in the current support network; and building linkages between groups. Using the experience gained during the PEARL project, the selection criteria will become more focused to maximize results at the SME level. For example, activities that permit direct involvement of SMEs by providing technical advice, management training or other support services will be given priority over more general activities such as conferences, general training courses, or institutional capacity building. The project will actively work with the groups in developing their concept and monitoring results to ensure maximum effectiveness. Special consideration will also be given to proposals which address the three crosscutting themes including: enhancing the role of women as owners and workers within SMEs; promotion of environmental programs within SMEs; and application of Information Technology (IT) to SME development.

The Capacity Development for Investment Promotion (CD IP) component will play a supportive role to the two other components with the Board of Investments (BOI) and local investment promotion groups to increase their capacity to promote Philippine SMEs as potential strategic partners with foreign companies. This would include training of BOI's investment promotion counsellors. These SME partnerships would cover a wide range of arrangements from joint ventures to distribution agreements. The Project will work with counterparts of these investment agencies to build the inventory of eligible SMEs to be promoted and develop more effective models for assessing the potential of Philippines SMEs to undertake international partnerships. Support would include assistance to potential Canadian investors as well. The promotion of the Philippine SMEs will be done by other agencies, other foreign desk officers at the BOU, and Canadian partners, regional government agencies, and business associations. While a sectoral focus will be in line with the other two components, the current sectors of agri-food, information technology, construction materials and environment will be reviewed. The geographic focus will remain on die National Capital Region (Metro Manila), Cebu and Davao since a critical mass of potential SMEs are seen in these areas.

These three project components will allow the development of a strategic approach to supporting SME development. For example, firms participating in the sectoral enhancement portion may be identified for support with linking to international partners. Some of the associations under the sectoral enhancement portion could assist in identifying complementary activities by other groups to be funded under PDF. Policy issues which emerge across initiatives will be identified and the project will disseminate this information to other groups active in the SME policy field, including other CIDA funded projects.

Timeframe

The Project will be implemented over a five-year period.

Proposal Development and Partners

The development of the Project by CIDA has involved extensive consultations with key stakeholders in the Philippines over the last two years. These groups have included the Department of Trade and Industry (DTI), industry associations, chambers of commerce, and SMEs. The partners on ESP and PEARL were instrumental in developing the concepts which are represented in this document and are strongly committed to their implementation. Transferring from PEARL Phase I to Phase II will be facilitated by two factors: i. DTI will continue to be the project's main partner in die Philippines; ii. current PEARL staff are committed to facilitating the transition to Phase II (e.g. briefings, orientations, networking introductions, file transfers, systems/equipment transfers, etc.)

Project Implementation

The Project implementation will involve the following organisations and management structures:
CIDA will award a contract to a Canadian organization (hereinafter referred to as the "Canadian Executing Agency" or "CEA") who will be responsible for the overall financial, administrative and technical management of the project, under the direction of the Project Steering Committee.
A two-layer decision making structure will be established, consisting of a Project Steering Committee and a Partnership Development Facility (PDF) Approval Committee.

The Project Steering Committee will be responsible for coordination between CANADA and the PHILIPPINES. It will set Project policy and direction. This Committee will be comprised of a DTI-BOI representative as the representative of the PHILIPPINES, and a CIDA representative as the representative of CANADA, who will act as co-chairs. In addition, it will include members from the National Economic and Development Authority (NEDA); the Canadian Embassy to the Philippines; and the DTI Bureau of Small and Medium Enterprise Development. The CEA will act as Secretariat to the Committee.

The Partnership Development Facility (PDF) Approval Committee will approve the proposals for funding under the PDF. The PDF Approval Committee will review proposals which have been pre-screened by the CEA against specific criteria and will approve or reject selected proposals. The Committee will be chaired by CIDA and include DTI.

The CEA will be accountable for ensuring that the various elements of the project are implemented appropriately and a synergy develops across components. The Sectoral Enhancement portion will have sectoral coordinating groups representing enterprises, industry associations, non-government groups, and government and will be led by the specified sectoral institution. The sub-projects within the PDF will be done by the approved organizations. The Cooperation Development for Investment Promotion (CDIP) will have CEA staff working as counterparts to Philippine staff in the relevant institutions.

LESSONS LEARNED

Other SME projects within the Philippines provided a wide range of lessons on which the current initiative is built. These include:

* Organizational partners and firms must be carefully selected to ensure they are committed and will produce strong, fast, and sustainable results;
* Sectors supported must be strategically selected and have potential for building competitive advantage within die region and in global markets;
* Working through organizations to support SMEs will result in longer term impact and sustainability of initiatives; and
*Programming should focus on groups of firms such as industry sectors or business clusters in order to provide benefits to a larger number of enterprises, as this is more cost effective than offering one-on-one service support.

EXPECTED BENEFITS TO CANADA AND THE PHILIPPINES

The expected benefits to the PHILIPPINES: employment creation; income generation; community development; poverty reduction; higher levels of exports; increased international recognition of product quality; expansion of SMEs to develop a more balanced industrial structure; improved programs supporting SME development; and increased ability of Philippine SMEs to compete in international markets. The expected benefits to CANADA: improved awareness of business opportunities in the Philippines; improved awareness by Philippine SMEs of Canadian companies as a potential partners and source of technology; higher profile of Canada in the Philippines resulting in more trade and investment; and opportunities for the delivery of Canadian sendees to Philippine organizations and SMEs.

ANNEX "B"
CONTRIBUTION OF CANADA

CANADA, through CIDA, will:

1.Enter into a contract with the CEA to manage CIDAs input to the Project. As a condition for obtaining a Canadian contribution, CIDA will require that the CEA be responsible for the overall financial, administrative and technical management of the Project and be accountable to CIDA for Project outputs and Project results;

2.Provide a representative for the Project Steering Committee as Co-Chair with DTI; and

3.Provide the services of a Project Monitor and an Operation Review Evaluator, as deemed necessary.

ANNEX "C"
CONTRIBUTION OF THE PHILIPPINES

The PHILIPPINES, through the DTI, will:

1.Provide a representative for the Project Steering Committee as co-chair, and participate in the PDF Approval Committee;

2.Provide administrative assistance to the Project as needed including access to required information;

3.Ensure the Canadian Project staff are provided with necessary documentation to facilitate their stay in the Philippines and arrange for customs clearance for eligible and documented PEARL II Project shipments entering the Philippines; and

4.Provide office facilities and related support within the Board of Investment (BOI), Department of Trade and Industries (DTI), for operations of the Capacity Development for Investment Promotion (CDIP) component of the Project.

ANNEX "D"
PROJECT IMPLEMENTATION PLAN

(To be signed within one hundred and eighty (180) days of the contract signing between CIDA and the CEA.