72049221R00001 (SPEED) Attachments.pdf

Attachment J.1 1

Attachment J.1: Statement of Objectives (SOO)

I. Introduction

This Statement of Objectives (SOO) is for the Contractor to provide technical services to implement the Strengthening Private Enterprise for the Digital Economy (SPEED) activity.

This activity will engage a contractor that can effectively and efficiently provide technical advisory services and commodities support that will enable greater participation of Philippine small and medium enterprises (SME) in the digital economy.

Mobilizing the digital economy for enterprise-led development is integral to USAID’s goal of helping countries on their journey to self-reliance. This activity is closely aligned with USAID’s core mission of enabling businesses to operate in the digital economy resulting in more employment and higher incomes; expanded trade and investment; increased profitability and reduced costs for businesses; greater technology advancement and innovation; improved productivity and competition in the economy; and greater transparency in the flow of information. E-commerce allows consumers to benefit from greater choices at lower prices and lowers entry barriers for entrepreneurs. Amidst the COVID pandemic, the digital economy can enable consumers and sellers to comply with social distancing measures through on-line shopping and delivery systems. Post-pandemic, the digital economy has the potential to minimize operational and opportunity costs for government, the private sector and individual consumers. Digital development holds the potential to be inclusive, particularly bridging last mile connectivity, and make an economy more resilient especially when mobility is constrained or economic activities are hampered by the limited presence of brick and mortar ships and payment facilities—ultimately playing a key role in helping countries become more self-reliant.

This SOO invites potential offerors to develop cost effective solutions and innovative approaches to meet the intended results. It also presents USAID/Philippines with an opportunity to assess potential offerors’ understanding of all aspects of the effort to be performed and how to achieve outcomes and attain the results.

Offerors are encouraged to provide responses that include information, evidence-based and data-informed analyses, strategies, and recommendations that demonstrate approaches for the implementation of a technical assistance activity that will help address the problem of weak competitiveness and non-inclusivity of economic growth in the Philippines.

For purposes of this RFP, the words “activity”, “program”, or “project” are used interchangeably to refer to SPEED.

Attachment J.1 2

II. Background and Context

Growth prospects for the Philippines’ digital economy is high2. According to a Google report, the Philippine internet economy grew 32 percent since 2015, registering at $7 billion in 2019 growing from US$2 billion in 2015 and is further estimated to grow three times more to US$25 billion by 20253. According to the World Bank, the share of the value added of the digital economy to GDP, in constant prices, grew from 7 percent in 2012 to over 10 percent in 2018.

During the same period, the value added of the digital economy posted double-digit annual growth averaging over 13 percent4. The Philippines have more than 69 million internet users according to GlobalWebIndex; three-fourths of that shop on-line5. A PayPal report noted that 87 percent of Filipino merchants sell products on social media with Facebook as a major driver of traffic and engagement on Lazada, Shopee, and Zalora6. Most of these transactions take place over mobile devices7. According to the iPrice State of E-commerce in Southeast Asia 2017 report, mobile commerce traffic in the Philippines grew by 15 percent between 2016-20178.

However, the Philippines’ e-commerce market is still relatively small. The country has the smallest internet economy of the six primary markets in Southeast Asia, despite being home to the region’s second-largest population. E-commerce transactions accounted for only 1.6% of GDP in 2018, the smallest in the region (see table below). Despite having one of the largest number of internet users in the region, the Philippines has the lowest penetration rate. Statista’s Digital Market Outlook survey indicated that the country delivers the lowest revenue earnings in the region. The average Filipino e-commerce shopper also spent the least - just US$21.7 on online consumer goods purchases – compared to its neighbors such as Indonesia ($143), Thailand ($136) and Vietnam ($58.4). Statista reports that e-commerce spending in the Philippines was the lowest and growing more slowly than the rest of Southeast Asia in 2018, growing by 16 percent compared to a regional average of 21 percent. According to the World

2 The term “digital economy” refers to the use of digital and Internet infrastructure by individuals, businesses, and government to interact with each other, engage in economic activity, and access both digital and non-digital goods and services. As the ecosystem supporting it matures, the digital economy might grow to encompass all sectors of the economy—a transformation driven by both the rise of new services and entrants, as well as backward linkages with the traditional, pre-digital economy. A diverse array of technologies and platforms facilitate activity in the digital economy; however, much activity relies in some measure on the Internet, mobile phones, digital data, and digital payments.

3 See Google. 2019. E-Conomy in SEA 2019. In contrast, the Indonesian internet economy is estimated at $40 billion in 2019, quadrupling in size since 2015 at an average growth rate of 49 percent a year. The internet economy in Southeast Asia, which accounts for almost 3 percent of the region’s GDP, is projected to hit $300 billion, growing by 8 percent, by 2025.

4 World Bank, 2020. The Philippines Digital Economy Report.

5 Filipinos spend an average of 10 hours and two minutes browsing the Internet each day with nearly half of that time—four hours and 12 minutes— spent on social media, according to Hootsuite.

6 According to PayPal, social media users in Asia surpassed one billion users in 2018, double the number in 2012.

See PayPal. “Beyond Networking: Social Commerce as a Driver of Digital Payments Asia Report. Available at https://www.paypalobjects.com/digitalassets/c/website/marketing/global/stories/images/paypal-asia-social-commerce-report.pdf 7 Hootsuite and We Are Social’s findings that 89 per cent of adult Filipinos use mobile phones of any type.

8 However, this was the slowest in the region. The increase was steepest in Vietnam (+26%) while the regional average was 19% in 2017. IPrice, State of eCommerce in Southeast Asia 2017.

https://www.paypalobjects.com/digitalassets/c/website/marketing/global/stories/images/paypal-asia-social-commerce-report.pdf https://www.paypalobjects.com/digitalassets/c/website/marketing/global/stories/images/paypal-asia-social-commerce-report.pdf

Attachment J.1 3

Bank’s Digital Adoption Index (DAI), the Philippines falls behind regional peers when it comes to digital adoption9. The Philippines also ranked last among its ASEAN neighbors in UNCTAD’s 2019 B2C E-Commerce Index10 and the IMD’s 2019 Digital Competitiveness survey11.

E-commerce Comparative Metrics as % of

GDP

(2018)

Penetration rate (%)

Users (in million)

ARPU*

(in USD)

Revenue (USD million)

Indonesia 2.9 66.3 181.5 143.36 26,922

Malaysia 2.7 62.9 20.3 213.16 4,337

Philippines 1.6 45.9 50.3 21.68 1,091

Singapore 3.2 70.4 4.1 675.71 2,784

Thailand 2.7 52.1 36.4 136.36 4,960

Vietnam 4.0 59.5 57.9 58.44 3,385 Source: Compiled data from IPrice and Statista, 2020 data *Refers to Average Revenue Per User

The COVID-19 pandemic has accelerated the uptake of digital solutions, tools, and services, speeding up the transition towards a digital economy. Restrictions on the movement of people and business operations in response to the outbreak of Covid-19 are changing the way Filipinos are consuming and paying for goods and services12. Prior to the pandemic, statistics show that only 2% of Filipino netizens purchased goods or services online13. In the first six months of 2020, growth has already doubled in terms of number of buyers and the peso value of purchases, when compared to 2019. In a May 2020 survey conducted by Rakuten Insight, 41 percent of the respondents stated they purchased more online during the COVID-19 pandemic in the Philippines with only 20 percent of those surveyed not making online purchases. According to Zalora Philippines, as many as 91% of Filipino internet users searched for goods and services to purchase during the quarantine period and 76% of these users completed the transaction. An

9 According to the WB’s 2016 DAI, the Philippines ranked 102 out 184 countries ahead of Indonesia (110) but behind Singapore (2), Malaysia (42), Thailand (62), and Vietnam (92).

10 According to the 2019 UNCTAD B2C E-Commerce Index, which measures an economy’s preparedness to support online shopping, the Philippines ranked 89 out of 152 countries behind Singapore (3), Malaysia (34), Thailand (48), Vietnam (64) and Indonesia (84).

11 According to the 2019 IMD Digital Competitiveness report, which assesses the capacity of economies to adopt and explore digital technologies, ranks the Philippines 55 out of 63 economies, behind Singapore (2), Malaysia (26), and Thailand (40) but ahead of Indonesia (56).

12 According to Google’s COVID-19 community mobility reports, usage of retail and recreation facilities such as restaurants, shopping malls and cinemas plunged 82 percent in the Philippines compared to the baseline period.

Use of groceries and pharmacies saw a drop of 60 percent during the same period. On the other hand, data from the BSP showed that transactions using PESONet and InstaPay significantly increased compared before the restrictions on movement of people outside their residences.

13 Businessworld. August 2020. State of E-commerce in the Philippines.

Attachment J.1 4

April 2020 Digital Statshot report by Hootsuite and We Are Social revealed that 64% of Filipino internet users are spending more time on social media during the pandemic, with 23% indicating an increased activity in their online shopping activity. With both consumers and entrepreneurs resorting more to online shopping amid pandemic restrictions, the government is revising upwards the targets set in the Philippine E-Commerce Roadmap (PECR) 2020-2022.

The main challenge is enabling SMEs to transition to the digital economy14. To be able to tap business opportunities in the evolving digital economy, digital transformation of the SME sector is key. In an ASEAN survey, the following challenges faced by SMEs include: (1) lack of knowledge and low awareness of digital technologies; (2) reluctance to adopt new technologies and change business processes; (3) lack of expertise and skilled human resources; and (4) weak collaboration with government and poor awareness of government support programs15. Local SMEs often complain about not having access to affordable and reliable internet connections.

Seller protection, data privacy, intellectual property protection and the overall information security of online transactions are a huge concern. The importance of logistics integration and efficient delivery services were also cited16.

III. Strategic Approach and Purpose

1. Strategic Approach

This activity supports the U.S. government’s Indo-Pacific vision which aims to promote “a free and open Indo-Pacific in which independent nations with diverse cultures and different aspirations can prosper side-by-side in freedom and in peace.” Specifically, SPEED aligns with the Digital Connectivity and Cybersecurity Partnership (DCCP) initiative under the economic pillar of Indo-Pacific vision. The DCCP seeks to promote open, interoperable, reliable and secure communications infrastructure and internet connectivity. This activity also implements USAID’s Digital Strategy which seeks to improve USAID development assistance outcomes through responsible use of digital technology and to promote an open, inclusive, and secure digital ecosystems17. This activity also implements USAID’s Private Sector Engagement (PSE) policy that seeks to collaborate with companies and business associations where there is strong alignment between business interests and development objectives18. This activity will undertake efforts to engage companies and investors to explore opportunities for collaboration and where and when possible, co-create new solutions and innovative approaches to achieve project outcomes.

14 There are approximately 900,000 businesses operating in the Philippines, 99.5 percent of which are SMEs.

15 See Economic Research Institute for ASEAN and East Asia (ERIA). 2019. “Study on MSMEs Participation in the Digital Economy in ASEAN” available at https://asean.org/storage/2012/05/ASEAN-MSME-Full-Report-Final.pdf 16 Based on a 2018 survey conducted by the Philippine Exporters Confederation of their members. In another 2019 survey, 75% of the respondents from the Philippines cited cybersecurity as a major challenge. Other challenges include sluggish customer demand (68.4%), human capital challenges (67.7%), competition from new entrants (67%) and rising production costs (66.7%). See Ernst and Young Global, 2019. “Redesigning for the Digital Economy: A Study of SMEs in Southeast Asia”.

17 See https://www.usaid.gov/usaid-digital-strategy 18 See https://www.usaid.gov/sites/default/files/documents/1865/USAIDPSEPolicy_ExecutiveSummary.pdf https://asean.org/storage/2012/05/ASEAN-MSME-Full-Report-Final.pdf https://www.usaid.gov/usaid-digital-strategy https://www.usaid.gov/sites/default/files/documents/1865/USAIDPSEPolicy_ExecutiveSummary.pdf

Attachment J.1 5

SPEED contributes to the USAID/Philippines’ Country Development and Cooperation Strategy (CDCS) 2020-2024’s goal of a “well-governed and more self-reliant Indo-Pacific partner.” Specifically, this project supports Development Objective (DO) 2, Inclusive, Market-Driven Growth Expanded, and Intermediate Result (IR) 2.4 Private Sector-led Growth Promoted and sub-IR 2.1.4 Enabling environment for the digital economy strengthened.

This activity is an integral part of the USAID/Philippines “Economic Growth, Democracy and Governance with Equity” (EGDGE) Project which seeks to assist the Philippines to strengthen its path to self-reliance, improve democratic practices, and become a stable, middle-income country by 2040. Specifically, it supports the EGDGE Program’s goal of “economic development is made more inclusive” and the sub-objectives of “environment for trade and investment is made more open and competitive.” This activity will also support USAID’s Cities Development Initiative (CDI) and work in localities where there is an opportunity to expand the digital economy.

This activity will support Philippine government programs and priorities in the country’s transition to a digital economy. The government has recently come out with a new Philippine E-Commerce Roadmap 2020-2022 and is updating the present law19 with the aim of promoting robust e-commerce growth. Assistance will also support the implementation of the Philippine Innovation Act (RA 11293), signed into law in July 2019, that seeks to harness technological advancements to enhance the competitiveness of the country’s micro, small and medium enterprises (MSMEs). This activity also supports the BSP’s goal of increasing adoption of electronic retail payments and access to financial services through the National Retail Payment System (NRPS). Assistance will also support SME participation in the Department of Trade and Investment’s National Logistics Master Plan 2017-2022 and the Department of Transportation’s Philippine Transportation System Master Plan to ensure efficient logistics and supply chains. This activity also aligns with the e-commerce goals as laid out in the government’s national resilience plan and “We Recover as One” program focus on COVID-19 recovery.

2. Purpose

The primary goal of SPEED is to increase SMEs participation in the digital economy. This activity will primarily focus on business-to-business (B2B) and business-to-consumer (B2C) type of e-commerce transactions. To expand the participation of the SME sector, this activity will (1) improve SME capacity and access to e-commerce platforms; (2) expand and increase the use of e-payment systems and other FinTech innovations; (3) improve the integration of e-commerce platforms with logistical supply chains, and (4) increase consumer awareness and protections.

19 Republic Act 8792 or the E-Commerce Act of 2000.

Attachment J.1 6

Results framework

Illustrative Indicators:

● Increased percentage GDP share of e-commerce transactions

● Increased percentage of SMEs engaged in e-commerce activities (with sales coming from on-line or digital transactions)

● Increased share of electronic payments in total retail payments

● Increased number of alternative digital financial infrastructure (e.g., payment systems, multilateral payment arrangements)

● Increased number of Internet users doing e-commerce (and increase ARPU)

● Number of policies, laws and regulations informed, developed, or implemented to facilitate growth in the digital economy (including in telecommunications, finance, digital payment expansion, technology, innovation, competition, consumer protection and cybersecurity)

● Improvements in the country’s performance in the WEF’s Network Readiness Index (i.e. Sub-pillars 2.2.2, 3.2.2, 3.2.3, 3.2.4, 3.3.2, 3.3.5)

● Improvements in the country’s ranking (at par with Vietnam and/or Thailand) in the IMD’s Digital Competitiveness survey and UNCTAD’s B2C E-Commerce Index

● Improvements in BSP’s Inclusive Finance survey

● Improvements in the country’s performance in the World Bank’s Global Findex

IV. Objectives

Objective 1: SME capacity and access improved

The demand from local enterprises seeking to participate in e-commerce is high. In a 2018 survey of 500 Philippine SMEs by Harris Interactive on behalf of FedEx Express, 96 percent of SMEs use e-commerce to source goods and find new customers in other markets. The survey also showed that e-commerce transactions accounted for 52 percent of total SME revenues20. The report also shows 89 percent of SMEs use mobile

20 FedEx Express. 2018. “Global is the New Local: The Changing International Trade Patterns of Small Businesses in Asia Pacific.”

SME participation in the digital economy increased

SME capacity and access improved

Use of e-payments expanded and increased Logistics supply chain improved

Consumer awareness and protection increased

Attachment J.1 7 commerce, generating 46 percent of their total revenues. The Harris survey showed that eight of out 10 Philippine SMEs use both software automation (88 percent) and mobile payments (87 percent) in their business21. The study also revealed that 73 percent of the SMEs surveyed said they expect their e-commerce business to rise next year. A 2019 survey conducted by Ernst & Young Global noted that local SMEs are increasing their investments in digital technologies22. In a separate survey conducted by the Philippine Exporters Confederation, about 42 percent of respondents were engaged in e-commerce while 71% of the non-users said they had plans of starting.

This activity will develop solutions that will address the barriers and/or disincentives that SMEs face in the digital economy. It will identify key gaps and the root causes that prevent the digital economy from serving as an effective vehicle for SME growth. The project will address the sources of distrust that might be due to lack of regulatory protections, industry norms/practices, technological protections, or literacy/capability at the SME level. It will extend technical services that enable SME access to markets, finance, and information and realize their e-commerce opportunities. It will provide support services that will enable SMEs to develop their e-commerce strategies, including access to on-line selling platforms, use of e-commerce software, digital marketing and participation in on-line marketplaces. This will include digital applications covering supply integration for SMEs, such as inventory and sourcing; data analytics and security and risk-management. This activity will catalyze partnerships with local, US, and diaspora-led technology firms and other non-government partners via pay-for-results mechanisms, small grants, and other financial arrangements that would equip, incentivize, and enable SMEs e-commerce participation. Under a private sector engagement lens, the activity will also explore ways to engage with e-commerce platforms as mechanisms for building the capacities of and further incentivizing the evolution of SMEs into e-commerce. However, the Offeror should ensure a neutral approach and be cognizant of the risks involved in engaging with platforms that may have significant links to countries that affect the Philippines' cybersecurity situation.

This activity can also assist the establishment and growth of technology start-ups23, through challenge grants, to support SMEs. This can include issuing grants to outfits (e.g.

accelerators) that provide support to a range of SMEs. This project will also work with the Philippine government to better assess their e-commerce readiness and prioritize public policies and investments in removing the binding constraints to e-commerce and cross-border e-commerce. This activity will support the passage of an updated e-commerce law and implement an updated Philippine E-Commerce Roadmap. It will

21 Ibid.

22 The survey found that 88% of respondents from the Philippines will invest in network upgrades and expansion of existing ICT assets while 83.3% said they would invest heavily in transformative technologies include artificial intelligence, blockchain, internet of things and smart sensors. See Ernst and Young Global, 2019. “Redesigning for the Digital Economy: A Study of SMEs in Southeast Asia” 23 Republic Act No 11337 created a Philippine Startup Development Program that provides benefits and incentives for startups and "startup enablers." Department of Science and Technology (DOST), Department of Information and Communications Technology (DICT), and Department of Trade and Industry (DTI) are the primary agencies responsible for the program.

Attachment J.1 8 facilitate the involvement of the private sector and industry associations in the policy dialogue and support their advocacy.

Desired minimum outcomes:

● $300 million in new investments in SMEs engaged in e-commerce

● Revenue increases (on average) of 25% (real terms) for SMEs participating in e-commerce

● 20,000-30,000 SMEs newly engaged in e-commerce

● 30% increase (from baseline) in individuals who have bought goods or services online (as percentage of population)

Objective 2: Expand and increase SME use of e-payment platforms

One of the reasons behind the relatively slow uptake of eCommerce in the country is the continued dominance of cash-based transactions. According to the Philippines’ central bank, cash still accounted for 99 per cent of all local transactions as of January 201824.

Over 80 per cent of online retail players in the Philippines have had to offer cash-on-delivery or payment centers as a payment option25. The Philippine Retailers Association reported only 1 to 2 percent of its transactions are made online. In addition, the country has been slow to adopt eWallets, with only 1.3 percent of Filipinos owning electronic money accounts based on BSP’s 2017 Financial Inclusion Survey. Nearly 9 out of 10 adults use payment transactions but 67% prefer to pay in cash. According to the Global Findex Database, only 5 percent of Filipinos pay their utility bills through their bank accounts or mobile money accounts. The World Bank’s report on the Philippine digital economy noted that the pervasiveness of cash is reflected even in e-commerce where orders and transactions are made digitally where the majority of payments are still made through cash on delivery. Consequently, over 80 per cent of online retail players in the Philippines have had to offer cash-on-delivery or payment centers as a payment option26. According to the APEC e-Payment Index, which assesses the level of readiness and potential to engage in, adopt, and reap the broad range of economic and societal benefits that e-payments hold, the Philippines ranked 17th behind Singapore (2), Malaysia (10), Thailand (15), and Indonesia (16).27 Mobility restrictions due to COVID mandated

24 Data from BSP indicates that only 15.8 million Filipinos or 22.6% of the total population have a formal bank account. Of this segment, only 18% use their accounts for payments. Almost two-thirds (64%) of adults who did not use their accounts for payments cited that they still prefer cash in paying while 20% said that they are not aware that they could pay electronically using their account. Nearly half (46%) of account holders who have access to the internet are ambivalent about e-payments due to issues such as hacking, personal security breaches, and unsafe access. See BSP 2017 Financial Inclusion Survey.

25 This partly because only 1.9 percent of Filipinos over the age of 15 have a credit card and 68 percent of Filipinos with savings keep them at home instead of a bank according to a 2019 survey. A MoneyMax survey reported that many Filipinos are reluctant to get credit cards because they fear it will lead to overspending and debt. Credit card penetration is even lower amongst women – just 1.4 percent, or 1 in 70 women.

26 While the country has made significant progress in offering interoperable retail payments with InstaPay and PESONet, many banks have yet to join InstaPay, and most rural and thrift banks remain outside of this payment infrastructure. And despite the availability and awareness of digital payments, including mobile wallets, people are unwilling to use them due to perceived risks of online security and safety according to the BSP.

27 The Index measures countries’ (1) policy and regulatory environments, (2) infrastructure, (3) demand, and (4) innovative products and services.

Attachment J.1 9 measures, however, are increasing demand for electronic payment for services such as food delivery and utilities. Consumers and businesses increasingly view e-payment methods as a low-risk solution given the pandemic28.

This activity will support local businesses’ and consumers’ access to safe, accessible, interoperable and reliable digital payment systems, including account-based systems or transaction accounts (credit cards, debit cards, mobile payment systems, and facilitated services such as PayPal) and electronic currency or e-wallet (such as prepaid cards or digital currencies). This will build on the achievements of USAID's E-PESO program that helped establish a National Retail Payments System in the country and promoted the transition from a cash-based economy to an electronic one. Beyond business-to-consumer (B2C) payment transactions, the activity will also help address current issues hampering adoption of digital funds transfer between businesses (B2B). Trust and confidence in the use of electronic payment channels also depend on the integrity and security of payment systems. This activity will help plug-in the remaining policy and implementation gaps in that digital financial security and cybersecurity.

While payments will continue to be a fundamental enabler of any e-commerce marketplace, this activity will also cover the range of financing needs of SMEs. This activity may support innovations in financial technologies (FinTech) to enable SMEs better access to finance, asset management, and, as mentioned, provide solutions for payments29. This activity will promote greater financial literacy covering transaction accounts and other digital financial services. The activity will also ensure that the availability of digital financial services enhances economic opportunities for women and other traditionally excluded or underserved communities.

Desired minimum outcomes:

● 40% of retail transactions made through digital payment platforms (based on BSP survey)

● 30% increase in individuals who have purchase goods or services online through e-payments (percentage of Internet users)

● 10,000-20,000 SMEs newly adopting e-payments as mode of payment

● 3-5 new payment systems established under the NRPS that address financial inclusion (including SMEs and the larger consumer economy)

Objective 3: Improve SME integration across the logistics supply chain

As the growth of e-commerce continues, the demand for logistics, for a seamless and efficient flow of goods from supplier to the customers, likewise expands30. One study

28 While COVID has seen an increase in on-line transactions, many still prefer cash as a mode of payment.

According to a recent Businessworld report, while 79% of all e-commerce transactions are done over mobile phones, 67 percent preferred cash on delivery as mode of payment followed by credit cards at 24%, 5 percent used Paypal while 2 percent used GCash.

29 The transaction value of the fintech market in the country amounted to $5.7 billion in 2018 and the figure is expected to rise to $10.5 billion by 2022, according to the Department of Trade and Industry.

30 Logistics cuts across the whole supply chain, including transport, insurance, customs clearance, inspection, storage, packing, handling and distribution of goods.

Attachment J.1 10 noted that the express delivery market in the Philippines has grown 9% over the last six years and is expected to further increase by 24.6% by 202331. Major logistics firms in the Philippines have shifted their focus on timely, reliable and safe delivery of products, thereby making them an integral part of the digital ecosystem. Local SMEs engaging in e-commerce will need to integrate with seamless logistics solutions, such as the delivery and return of goods with an online real-time tracking system. Unfortunately, delivery across the country remains expensive. A World Bank study showed logistics costs in the Philippines took up 27.16% of the total sales of companies, making the country the most expensive compared to regional peers Indonesia (21.4%), Vietnam (16.3%) and Thailand (11.11%). Cost of logistics is especially prohibitive for SMEs that face high delivery and shipping costs. There are also many regulatory compliance requirements, spanning both the national and local levels of government, affecting the logistics industry. There is a general lack of coordination between agencies involved in the logistics chain.

This activity will identify the constraints to greater and more cost-effective logistics service delivery and determine ways to promote the greater availability and SME access to those services. Apart from cost, considerations about safety, security, reliability, transparency, flexibility, efficiency and other additional challenges to storage, parcel delivery, and express postal services may be included. Support may be extended to map out the logistics chain, identify redundant steps and barriers, and assess costs and efficiency gaps. This assessment can help identify technical capacity needs and opportunities to streamline, automate, merge or eliminate certain processes along the logistics chain. This activity will work with border and customs agencies to encourage them to strive for greater speed and efficiency in clearance processes, for both incoming parcels and returns. Assistance can be extended to lowering the time and cost of moving goods at the border.

Assistance can also be extended to help SMEs manage requests and orders that their online businesses generate and how these goods are delivered to the customers. Local businesses, for instance, will need digital tools that integrate their operations with popular shopping cart platforms and link them with the right logistics company in a one-stop-shop arrangement to connect with their customers both locally and globally. They can be interfaced with local logistics companies or assist them in transitioning to automated in-house systems including new systems of risk management and data analytics. This will include value-added services including data analytics and management, warehousing and demand forecasting for inventory. As many SMEs are currently engaged or interested in leveraging e-commerce platforms, the activity can also explore addressing logistics and supply chain issues these businesses face.

Desired minimum outcomes:

● 20-30 percent reduction in time and cost in the delivery of goods across logistics chain (based on baseline)

● 10,000-20,000 new SMEs with improved access to delivery services

● 10,000-20,000 new SMEs with improved in-house logistics operations

31 See Ken Research, “Philippines Express and E-Commerce Logistics Market Outlook to 2023”.

Attachment J.1 11

Objective 4: Increase consumer awareness and protections

As e-commerce expands, so does the need for more effective protection for consumers and the integrity of information from digital transactions. Many Filipinos are still reluctant to engage in online transactions because they lack confidence in the security of the system and fear being victimized by fraudulent and fly-by-night sellers or unauthorized or erroneous digital payments. Filipino consumers may also be simply not sufficiently aware of their rights and legal protections when they engage in e-commerce.

Consumer awareness and education of the use and benefits of digital platforms will also help spur demand for e-commerce. As the digital economy develops, competition and consumer protection authorities must develop strong digital market regulations for this growing industry. There are a number of laws that protect consumers but they need to be updated to cover on-line transactions. The Philippines also does not have sufficient capacity to implement and enforce its consumer protection laws to prevent e-commerce related consumer issues and to create a more trusting legal environment for Philippine e-commerce.

This activity will strengthen consumer protection in the pre-purchase, purchase and post-purchase phases of an on-line transaction. The project will work with the government to update existing laws and guidelines on consumer protection to include on-line transactions following international standards and best practice32. This project will support reforms to strengthen national policies that encourage good practices in areas such as information disclosure, contract terms, secure payment mechanisms, and consumer privacy. This may include rules on misleading information and deceptive marketing practices, predatory pricing policies, return or refund policies, on-line scams and frauds, product safety, non-compliance or delivery and after-sales service. This activity will also strengthen the processes and institutions where consumers can seek redress and resolve commercial disputes. This activity will also strengthen consumer associations and support their advocacies working with the business community, civil society and technology companies.

Desired minimum outcomes:

● A majority “very satisfactory” rating by consumers of e-commerce transactions (based on survey baseline)

● A 50% increase in consumer awareness of their e-commerce rights and protections (based on survey baseline)

● 10,000-20,000 new SMEs adopting consumer protection standards on their e-commerce transactions

32 There is proposed legislation called the Internet Transactions Act that seeks to regulate all business-to-business and business-to-consumer commercial transactions conducted over the internet, including those related to internet retail, online travel services, digital media providers, ride hailing services and digital financial services. The bill also proposes the creation of an e-commerce bureau will be the “central authority” tasked to regulate online trade and shall act as a virtual one stop shop for consumer complaints on internet transactions.

Attachment J.1 12

V. Additional Considerations

1. Gender and Social Inclusion

The Offeror must demonstrate that gender and social inclusion issues are suitably integrated into various components of the project and will undertake specific efforts to ensure that interventions do not discriminate against or disproportionately benefit either gender insofar as they relate to the digital economy33. To the extent possible, the implementing partner is required to encourage the equal participation of men and women in all aspects of this contract. People with disabilities are isolated from the communities due to physical infrastructure barriers, ICT technology can be an enabler and help them connect to the community and engage them in the global economy. This activity will also support the goal and objectives of the Womens’ Global Development and Prosperity (WGDP) initiative34

SPEED activities should also comply with Section 508 of Rehabilitation Act35 to promote equal access. Specific steps should be made to provide ICT technology to people with disabilities and to engage them in the global market. The Offeror is also required to identify and outline any potential gender and social inclusion issues that might be encountered during the implementation and how these issues will be addressed. Specific interventions should be identified that will benefit women-owned SMEs and those owned by persons with disabilities and that women and disabled persons are not unduly harmed by the digital economy. This project will undertake efforts to ensure that (a) gaps as they exist are narrowed and (b) risks/gaps are not worsened by virtue of greater engagement in the digital economy.

2. Engagement with the private sector, donors and other USAID activities

The private sector has significant participation throughout the e-commerce landscape, including on-line marketplaces, e-payments platforms as well as logistics services. The Offeror will directly engage with the private sector and leverage their knowledge, technology and resources to accomplish the objectives of this activity. The Offeror will engage private firms to bring solutions to scale, ensure sustainability, promote innovation, and achieve outcomes. The Offeror should articulate a strategy on how it will engage the private sector and develop partnerships with business firms and associations. These initiatives will be guided by USAID’s Private Sector Engagement policy that seeks to consult, strategize, align, collaborate, and implement with the private sector for greater scale, sustainability, and effectiveness of development outcomes36.

33 USAID ADS 201.3.9.3 states: “Gender issues are central to the achievement of strategic plans and Assistance Objectives (AO), and USAID strives to promote gender equality, in which both men and women have equal opportunity to benefit from and contribute to economic, social, cultural and political development; enjoy socially valued resources and rewards; and realize their human rights.”

34 See https://www.usaid.gov/sites/default/files/documents/1865/FINAL_WH_Factsheet_Nov_18_FINAL.pdf 35 See https://www.fcc.gov/general/section-508-rehabilitation-act 36 See https://www-origin.usaid.gov/sites/default/files/documents/1865/usaid_psepolicy_final.pdf https://www.usaid.gov/sites/default/files/documents/1865/FINAL_WH_Factsheet_Nov_18_FINAL.pdf https://www-origin.usaid.gov/sites/default/files/documents/1865/usaid_psepolicy_final.pdf

Attachment J.1 13

This activity will leverage resources and expertise from other development partners, particularly the World Bank, the Asian Development Bank, the Japan International Cooperation Agency (JICA), Australia’s Department of Foreign Affairs and Trade (DFAT), the European Union and other donors extending assistance in the digital economy and enterprise development in the Philippines.

This activity will coordinate with the Better Access and Connectivity (BEACON) project that focuses on ICT and logistics infrastructure development, enabling environment reforms, and cybersecurity. BEACON is targeted to strengthen government capacity and support policy and regulatory reform initiatives that improve ICT and logistics connectivity in the Philippines. This project will also work closely with the Regulatory Reform Support for National Development (RESPOND) activity that ease barriers to entry, reduce regulatory burdens and transaction costs for business, strengthen regulatory oversight, and promote transparency and accountability. It will likewise coordinate efforts with the Delivering Effective Government for Competitiveness and Inclusive Growth (DELIVER) activity that is working on infrastructure development, public financial management and SME development.

This activity will also coordinate with other digital transformation initiatives in education, health and other sectors supported by other USAID activities.

3. Sustainability

Sustainability and scalability are central to the objectives and design of the activity. The Offeror must identify the elements of sustainability and scalability considered essential to achieve the activity purpose and describe how sustainability objectives will be integrated and how benefits and results will continue and be scaled up beyond USAID funding. The Offeror must identify key sustainability issues and considerations around a host of issues, as necessary, including economic, financial, social soundness, institutional capacity, political economy, technical/sectoral, and environmental (including climate change vulnerability).

The Offeror’s Performance Work Statement must propose interventions on these issues that will be considered to more sustainable outcomes for the activity as a whole and for specific agency engagements.

4. Environmental Guidelines and Climate Risk Management

The Offeror will perform the work in accordance with the approved programmatic Initial Environmental Examination (IEE) and its subsequent amendment(s), USAID’s environmental regulations at 22 CFR 216, and in accordance with application local environmental laws and regulations. SPEED’s activities will largely entail technical assistance and capacity building initiatives and is not expected to be directly carrying out construction activities. As such, the initial environmental assessment may recommend a Categorical Exclusion threshold decision. Activities under the Categorical Exclusion do not require an Environmental Assessment because the actions do not impact the natural or physical environment. However, some activities may be recommended for Negative Determination with Conditions to capture the nature of some tasks that may have a potential harmful environmental impact. All activities recommended for a Negative Determination with Conditions are subjected to further environmental review for approval by the project’s

Attachment J.1 14

COR and the MEO using the Environmental Screening Report (ESR) prior to implementation.

As reported in USAID’s Climate Change Risk Profile for the Philippines in 2017, the country is highly vulnerable to the impacts of climate change, sea level rise, increased frequency of extreme weather events, rising temperatures and extreme rainfall. The ADS 201 puts in place the new Climate Risk Management guidance for USAID activities. This requires the Offeror will develop climate risk management measures to ensure that the SPEED Activity is more climate resilient and avoids maladaptation.

5. Monitoring, Evaluation and Learning (MEL)/Collaborating, Learning and

Adapting (CLA) Plan

The Offeror is also expected to develop a monitoring, evaluation and learning plan. As stated in ADS 201, the project MEL Plan serves to measure progress towards planned results and to identify the cause of any delays or impediments during implementation. The MEL Plan for the project provides a framework for monitoring, evaluation and learning that pulls together performance information from all activities contributing to a project. Evaluations will provide opportunities to learn by doing and generate knowledge for the agency. Lessons from the monitoring, evaluations and budget analysis will be integrated into the project cycle to improve efficiency and effectiveness of the interventions.

USAID has defined Collaborating, Learning and Adapting (CLA) as a guiding framework for its work throughout the Program Cycle. The Contractor must link the CLA activities and interventions with its MEL plan. The Contractor must engage stakeholders meaningfully in generating and analyzing learning. Sources for learning include data from monitoring, portfolio reviews, findings of research, evaluations, analyses conducted by USAID or third parties, knowledge gained from experience, stocktaking exercises, and other sources. The Contractor will look critically at what has been learned and how to build on strengths;

interventions and approaches that do not work are adapted or eliminated; and project implementation adapts and adjusts to capitalize on opportunities and innovations. Proposal of new knowledge to implementation decisions must be reflected in the Annual Work Plan, and the Contractors’ MEL plan.

6. Grants Under Contract

The Contractor will be authorized to use grants under contract (GUCs) to issue grants to support the activities under the relevant components of the SPEED. The Contractor must reserve $800,000 of total project funds for grants under contract to locally registered for-profit and nonprofit organizations. USAID must be significantly involved in establishing grants guidelines and selection criteria and must approve the grant recipients. All requirements that apply to USAID-executed grants in ADS 302.3.4.13, will also apply to grants executed by the contractor. USAID does not authorize contractors to execute or administer agreements on its behalf.

Attachment J.1 15

The purpose of the GUC component is to extend resources to local organizations and entities, including academic institutions, private sector organizations, civil society organizations, and other private enterprises whose participation is deemed crucial in achieving SPEED’s goals and objectives. Grants may also be used to achieve sustainability objectives as provided in Section V.3 above. The Offeror should develop and propose a system to effectively administer a GUC mechanism, in compliance with ADS 302.3.4.13. The Offeror should also propose a set of criteria for the selection of grantees subject to approval by USAID. USAID reserves the right to approve all grant recipients.

Attachment J.2 1

Attachment J.2: USAID Form 1420-17 – Contractor Biographical Datasheet37

37 A hard copy is attached at the end of this document. For an electronic version, the form is located at https://www.usaid.gov/forms/aid-1420-17 https://www.usaid.gov/forms/aid-1420-17

AID 1420-17 Page 1 of 2

OMB Control No: 0412-0520; Expiration Date: 3/31/2021

CONTRACTOR EMPLOYEE BIOGRAPHICAL DATA SHEET

The Privacy Act Statement is found at the end of this form.

1. Name (Last, First, Middle)

2. Contractor’s Name

3. Employee’s Address (include ZIP code)

4. Contract Number

5. Position Under Contract

6. Proposed Salary

7. Duration of Assignment

8. Telephone Number (include area code)

9. Place of Birth

10. Citizenship (If non-U.S. citizen, give visa status)

11. Names, Ages, and Relationship of Dependents to Accompany Individual to Country of Assignment

12. EDUCATION (include all college or university degrees) 13. LANGUAGE PROFICIENCY (see Instruction on Page 2)

NAME AND LOCATION OF INSTITUTION MAJOR DEGREE DATE LANGUAGE Proficiency Speaking

Proficiency Reading

14. EMPLOYMENT HISTORY (List last three (3) positions held by the individual)

POSITION TITLE EMPLOYER’S NAME AND ADDRESS

POINT OF CONTACT &TELEPHONE #

Dates of Employment (M/D/Y)

From To

15. SPECIFIC CONSULTANT SERVICES (give last three (3) years). Continue on a separate sheet of paper, if required, to provide this information.

SERVICES PERFORMED EMPLOYER’S NAME AND ADDRESS

POINT OF CONTACT &TELEPHONE #

Dates of Employment (M/D/Y) From To

16. RATIONALE FOR PROPOSED SALARY (Provide the basis for the salary proposed in Block 6 with supporting rationale for the market value of the position. Continue on a separate sheet of paper, if required) Salary definition – basic periodic payment for services rendered. Exclude bonuses, profit-sharing arrangements, commissions, consultant fees, extra or overtime work payments, overseas differential or quarters, cost of living or dependent education allowances.

17. CERTIFICATION: To the best of my knowledge, the above facts as stated are true and correct.

Signature of Employee Date

18. CONTRACTOR'S CERTIFICATION (To be signed by responsible representative of Contractor)

Contractor certifies in submitting this form that it has taken reasonable steps (in accordance with sound business practices) to verify the information in this form. Contractor understands that USAID may rely on the accuracy of such information in negotiating and reimbursing personnel under this contract. Certifications that are false, fictitious, or fraudulent, or that are based on inadequately verified information, may result in appropriate remedial action by USAID, taking into consideration all the pertinent facts and circumstances, ranging from refund claims to criminal prosecution.

Signature of Contractor’s Representative Date

AID 1420-17 Page 2 of 2

INSTRUCTION

Indicate your language proficiency in block 13 using the following numeric Interagency Language Roundtable levels (Foreign Service Institute Levels). Also, the following provides brief descriptions of proficiency levels 2, 3, 4, and 5. “S” indicates speaking ability and “R” indicates reading ability. For more in-depth description of the levels refer to ADS 438

2. Limited working proficiency

S Able to satisfy routine special demands and limited work requirements.

R Sufficient comprehension to read simple, authentic written material in a form equivalent to usual printing or typescript on familiar subjects within…