Amended NOFO New Higher Education Dec19 2022.pdf

Issue Date: November 7, 2022 Deadline for Questions: November 18, 2022 (12:00 NN, Manila Time) Closing Date and Time: January 13, 2023 (3:00 PM, Manila Time)

Subject: Notice of Funding Opportunity (NOFO) Number:

72049223RFA00001

Program1Title: USAID/Philippines’ New Higher Education Activity

Federal Assistance Listing Number: 98.001

Ladies/Gentlemen:

The United States Agency for International Development (USAID) is seeking applications for a Cooperative Agreement from qualified entities to implement the “New Higher Education Activity.” Eligibility for this award is unrestricted. U.S. non-profit nongovernmental organizations (NGOs), for-profit NGOs willing to forego their fee, private voluntary organizations, Philippine-based NGOs, universities, foundations, consortiums, and international organizations may submit their applications.

USAID intends to make an award to the applicant who best meets the objectives of this funding opportunity based on the merit review criteria described in this NOFO subject to a risk assessment. Eligible parties interested in submitting an application are encouraged to read this NOFO thoroughly to understand the type of program sought, application submission requirements and selection process.

To be eligible for award, the applicant must provide all information as required in this NOFO and meet eligibility standards in Section C of this NOFO. This funding opportunity is posted on www.grants.gov, and may be amended. It is the responsibility of the applicant to regularly check the website to ensure they have the latest information pertaining to this notice of funding opportunity and to ensure that the NOFO has been received from the internet in its entirety.

USAID bears no responsibility for data errors resulting from transmission or conversion process.

If you have difficulty registering on www.grants.gov or accessing the NOFO, please contact the Grants.gov Helpdesk at 1-800-518-4726 or via email at support@grants.gov for technical assistance.

1Note: The term “program” as used in 2 CFR 200 and this NOFO is typically considered by USAID to be an Activity supporting one or more Project(s) pursuant to specific Development Objectives. Please see 2 CFR 700 for the USAID specific definitions of the terms “Activity” and “Project” as used in the USAID context for purposes of planning, design, and implementation of USAID development assistance.

http://www.grants.gov/ mailto:support@grants.gov

NOFO#72049223RFA00001

New Higher Ed Activity

USAID may not award to an applicant unless the applicant has complied with all applicable unique entity identifier and System for Award Management (SAM) requirements detailed in Section D.6.g. The registration process may take many weeks to complete. Therefore, Applicants are encouraged to begin registration early in the process.

Please send any questions to the point(s) of contact identified in Section D. The deadline for questions is shown above. Responses to questions received prior to the deadline will be furnished to all potential applicants through an amendment to this NOFO posted in www.grants.gov.

Issuance of this notice of funding opportunity does not constitute an award commitment on the part of the Government nor does it commit the Government to pay for any costs incurred in preparation or submission of comments/suggestions or an application. Applications are submitted at the risk of the applicant. All preparation and submission costs are at the applicant’s expense.

Thank you for your interest in USAID programs.

Sincerely, Jennifer L. Crow Supervisory Agreement Officer Regional Office of Acquisition and Assistance http://www.grants.gov/

TABLE OF CONTENTS

SECTION A: PROGRAM DESCRIPTION……………………………………… 4

SECTION B: FEDERAL AWARD INFORMATION……………………………. 32

SECTION C: ELIGIBILITY INFORMATION………………………………….. 35

SECTION D: APPLICATION AND SUBMISSION INFORMATION………… 36

SECTION E: APPLICATION REVIEW INFORMATION…………………….. 49

SECTION F: FEDERAL AWARD ADMINISTRATION INFORMATION…

SECTION G: FEDERAL AWARDING AGENCY CONTACTS…………………… 65

SECTION H: OTHER INFORMATION…………………………………………… 66

Annex 1: Summary Budget Template Annex 2: Standard Provisions Annex 3: Abbreviations and Acronyms

SECTION A: PROGRAM DESCRIPTION

This funding opportunity is authorized under the Foreign Assistance Act (FAA) of 1961, as amended. The resulting award will be subject to 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and USAID’s supplement, 2 CFR 700, as well as the additional requirements found in Section F.

1. Summary

The United States Agency for International Development (USAID)’s New Higher Education Activity will strengthen the Philippine higher education system to support broad-based, inclusive growth and become a key driver of development. It will do this by strengthening the innovation capacities and workforce development functions of Philippine higher education institutions (HEIs) in faculty development, curriculum improvements, and engagement with industry and international partners, as well as overall improvements in HEI management and administration.

It will also support improvements in the regulatory environment to improve governance in the sector, support Philippine policies in strengthening human capital development, and provide a platform for convergence for local stakeholders to work together in achieving shared development goals.

2. Authorizing Legislation

The authority for this Notice of Funding opportunity is found in the Foreign Assistance Act of 1961, as amended. For U.S. organizations, 2 CFR 200, 2 CFR 700, OMB Circulars, and USAID Standard Provisions for U.S. Nongovernmental recipients will be applicable. For non-U.S.

organizations, the Standard Provisions for Non-U.S., Nongovernmental recipients and the applicable cost principles (OMB Circular A-122 for non-profit organizations and OMB Circular A-21 for universities) will apply. The OMB circulars are available in the following link:

http://www.whitehouse.gov/omb/circulars/index.html.

For both U.S. and non-U.S. for-profit organizations Federal Acquisition Regulation (FAR) Part 31 will be applicable. While 2 CFR 200 and 2 CFR 700 do not apply directly to non-U.S.

Applicants, the Agreement Officer (AO) will use the standards of 2 CFR 200 and 2 CFR 700 in the administration of the award. Further information including the referenced documents may be obtained via our agency website http://www.usaid.gov directly or via links in USAID Automated Directive System (ADS) Chapter 303:

https://www.usaid.gov/policy/ads/300/303.pdf. Copies may also be obtained from the listed agency points of contact for this NOFO.

http://www.whitehouse.gov/omb/circulars/index.html http://www.usaid.gov/ https://www.usaid.gov/policy/ads/300/303.pdf

3. Background

Introduction

Higher education is the key to increased productivity and innovation. The skills taught at post-secondary and higher education institutions2 allow people to participate in the economy more meaningfully and effectively, and the knowledge generated through higher education research serves as the foundation for more inclusive growth. (See ANNEX 3 for Abbreviations, Acronyms and Bibliography.)

Quality workforce development training in post-secondary training institutions can provide a pathway to quality employment or entrepreneurship opportunities -- even for those without college degrees -- and power the skills needs of industry.

Higher education research on the other hand, is foundational to long-term, sustainable and accelerated development. As the the main source of innovation and when linked to the private sector, higher education research catalyzes the growth of new industries in high-value sectors or expands existing industries, both of which lead to better jobs. Higher education research is also critical to addressing local challenges through its community extension work as it provides relevant, actionable research across the full range of development issues.

This is summed up in USAID’s Higher Education Program Framework3 which identifies three core functions of the higher education system:

1. Provides quality and relevant education and training: Higher education systems strengthen the workforce through continuous, market-relevant improvement of teaching, learning, assessment, curriculum, and pedagogical practices.

2. Advances knowledge and research: Higher education systems advance generation of knowledge through basic and applied research, support its application, and develop solutions that contribute to development and innovation in a variety of sectors.

3. Engages and strengthens networks and communities: Higher education systems develop and engage with local, regional, and international communities to both ground their work in local challenges and connect to the most cutting-edge ideas the higher education community has to offer.

As the Philippines transitions from a factor-driven to an efficiency-driven economy4, the skills and knowledge that are honed and generated in post-secondary and higher education institutions

2 The 2018 USAID Education policy defines a higher education institution as an organization that provides educational opportunities that build on secondary education, providing learning activities in specialized fields. It aims at learning at a high level of complexity and specialization. Higher/tertiary education includes what is commonly understood as academic education but also includes advanced vocational or professional education. This may include public or private universities, colleges, community colleges, academically affiliated research institutes, and training institutes, including teacher training institutes.

3https://www.edu-links.org/resources/higher-education-program-framework 4 World Economic Forum’s Global Competitiveness Report 2016 https://www.edu-links.org/resources/higher-education-program-framework become critical in securing the long-term competitiveness of the economy and make growth broader based and more inclusive.

High quality research underpins sustainable, inclusive growth especially when directed towards addressing local enterprise needs or development challenges. High-quality human capital attracts or results in the creation or expansion of high-value industries that provide quality jobs, which then directly address the in-work poverty pervasive in the country5.

Challenges in Human Capital Development in the Philippines: Some Metrics

The quality of higher education has both immediate and long-term consequences to inclusive economic growth, due to its effects on the two interrelated issues of productivity and innovation.

Significant challenges in the quality of the system need to be overcome before higher education can be an effective driver of inclusive growth.

The quality of faculty within the Philippine higher education system is one indicator of the overall quality of the system. Two measurements of faculty quality are credentials and publications. Data from the Philippine Commision on Higher Education (CHED) show that almost half (46 percent) of all faculty possess only a bachelor’s degree, 39 percent have a Master’s degree, and only 15 percent of faculty have a Ph.D. (mostly in Educational Administration or Public Administration). With regard to publications, less than five percent of faculty have any type of international publications.

The performance of graduates in licensure examinations is another indicator of the quality of the higher education system. CHED regulates the sector and has published the performance data of Filipino graduates in licensure examinations in 46 disciplines. The latest data from 20186 shows an average passing rate of just under 38 percent. The top five disciplines in terms of number of test takers show the following results:

Discipline No. of takers No. of passers Passing rate

Licensure Exam for Teachers - Secondary 200,936 83,302 41.46%

Licensure Exam for Teachers - Elementary 146,756 31,953 21.77%

Criminology 62,991 21,588 34.27%

Accountancy 24,158 6,457 26.73%

Nursing 21,538 9,028 41.92%

5 World Bank’s “Employment and Poverty in the Philippines” 2015

6 CHED, 2018

This wide gap between licensure takers and passers has significant implications for employment and underemployment, as well as the skills gap and mismatch. As graduates fail to gain credentials in the field in which they specialize, they are forced to seek employment in alternative fields that do not make use of their years of training and knowledge. Even those who actually pass the licensure exams find themselves working in other sectors, if they find that their preferred employment option – usually overseas – is not viable. Nursing is the best example of this. Nurses end up getting employed in the business process outsourcing industry and in other sectors. In a 2018 study, it was estimated that around 200,000 licensed nurses were in jobs not related to healthcare7 while recent reports point to a shortage of practicing nurses in the country predicted to reach almost 250,000 by 2030 by the World Health Organization.8

The size, complexity and diversity of the Philippine higher education sector is also a challenge from a regulation standpoint. The country has one of the largest numbers of higher education institutions (HEIs) in the world, with 2,443 institutions enrolling around 4.17 million students.9 This is more than 10 times the number of institutions, compared to its ASEAN neighbors:

Thailand has only 154, Vietnam has 235, and Malaysia has 530.10

Of the total number of HEIs 1,746 or around 72 percent are private, run by individuals and corporations. Of this number, however, only 4.2 percent of private institutions have earned the coveted “autonomous” status granted by the government, which means that they have passed a rigorous, multi-year review process certifying their quality, which then exempts them from further government regulation.

Public institutions are composed of State Universities and Colleges (SUC’s) and their satellite campuses, Local Universities and Colleges (LUC’s), and other specialized HEIs. Data from CHED show that despite accounting for only 28 percent of the sector in terms of institutions, public institutions have seen steadily increasing enrollment.

In 2003, the proportion of students enrolled in state-funded HEIs was only 34 percent. Data from CHED for the most recent school year (2021-2022) shows that there are now more students enrolled in SUCs and LUCs at 50.1 percent. This will most likely continue to rise due to the recent developments of free tuition in state-run institutions and increasing resources available for investment from local governments through the LUC’s.

There has been a steady rise in the number of LUCs – higher education institutions funded by local government units. There are now 138 LUC’s throughout the country, and account for close to 10 percent of enrollment with 389,000 students. This recent development bodes well for increased equity and access to higher education. However, issues with quality and capacity of LUC’s have started to emerge.

7 Carlos, 2018

8WHO, 2022

9 CHED, 2022

10 SHARE ASEAN, 2019

This shift to public institutions has a large impact on private HEI’s. Most private institutions do not receive any public funding and are completely dependent on tuition revenue. Private institutions are regulated by CHED through accreditation bodies managed by peer reviewers.

There are at least six national associations of higher education institutions in the country, and at least five different accrediting bodies. This makes the accreditation process very complex.

Private institutions then complain about the lack of balance in terms of public funding support and regulation: public HEI’s like SUC’s and LUC’s, are completely funded by the government but are in large part autonomous. Whereas the heavily regulated private HEI’s receive very little, if any, public funding.

Private HEI’s have argued for better complementation: in areas where they are already doing well in providing access to quality education, government should no longer directly compete with private providers and instead provide other forms of support to the public. For example, in places where there are good Nursing programs in private universities or colleges, government should just sponsor students to enroll through vouchers or scholarships to enroll in these private institutions, instead of offering a Nursing program in an SUC or an LUC. Public HEI’s can then offer programs that are needed for national development but have very low enrollment rates, such as agriculture.

One study summarizes the situation: “The Philippine system of higher education offers diversity of content, quality, and price. Very high quality exists at high prices in some select private institutions. Huge government subsidies are provided per student at the very highly selective and high-quality UP [University of the Philippines] system. However, low quality and relatively low costs of mass private education (diploma mills) also characterize the system.” 11

Higher Education and Skills Development Disconnects

In a 2012 study of higher education in Southeast Asia, the World Bank posits that the failure of higher education to deliver skills for economic growth is due to disconnects, and that one of the most critical of these is the disconnect between higher education and one of main “end-users” of the graduates – the private sector. In the time frame under study, while nearly 10 million Filipinos were unemployed or underemployed, employers still had difficulties filling vacancies because applicants lacked the requisite competencies and qualifications for available jobs. The time it took to fill professional positions in the country -- often used as a proxy indicator for the availability of qualified applicants -- was also on the high side, as long as six months.12 In the U.S. for example, the average number of working days it takes to fill a job vacancy is approximately 28.13

A World Bank survey also shows that 79 percent of firms in Manila, 82 percent of firms in Cebu, and 99 percent of firms in Davao had a difficult time hiring qualified staff.

11 Johnasson 1999, in Orberta 2009 12 World Bank, 2012

13 DHIDFH, 2016

The Department of Labor and Employment (2012) asserts, “(u)nemployment in the country arose mainly from a mismatch between skills needed for available jobs and skills possessed by job-seekers and a geographic mismatch between locations of job opening and job seekers.”

Further complicating the job-skills mismatch, working overseas for significantly higher pay continues to be attractive for millions of Filipinos. Families enroll their children in courses perceived to present the best chance to secure a job overseas. The graduates of these courses then feed into an “oversaturated domestic and global workforce, leading to both local unemployment and a mass exodus of the educated and the skilled.”14

This creates a glut in some disciplines and a shortage in others, contributing to the mismatch between what is in demand in the local economy, and what is being produced in higher education institutions as can be seen in the nursing example above. Aside from the impact on enrollment, overseas work siphons off skilled labor from the Philippines – the so-called “brain drain.” In 2014, of the 2.4 million Filipinos that went abroad to work, close to 20 percent were professionals, technicians, and associate professionals.15

In its 2010 report titled “Philippines Skills Report: Skills for the Labor Market in the Philippines”, the World Bank states that, while there are many reasons for these mismatches and emerging skill gaps, such as skill supply and labor market, the “quality and relevance of education and training is the most preeminent constraint.”16

The lack of input from industry, in terms of defining needed skills and competencies, has contributed to the widening skills gap and mismatch and has resulted in the production of human capital that is neither needed nor wanted in the local economy.

This lack of coordination between industry and academia as well as the pull of global demand has led to the establishment of academic and skills training programs that are not relevant to local economic needs. The result, ultimately, is unemployment and underemployment, and those affected the most are the youth.

A Department of Labor and Employment (DOLE) labor market survey in 2012, which identifies “key employment generators” -- high-growth drivers -- echoes the same concerns. The report identifies three major issues for employment considered to be crosscutting: 1.) Lack of experienced and highly skilled workers; 2.) School curriculum is not responsive to industry needs; 3.) Poor dissemination of labor market information.17

This last point on poor dissemination of labor market information indicates poor coordination and information sharing among key stakeholders in higher education and training. These include the higher education and training institutions themselves, the business community, and more importantly, individuals making education and labor decisions.

14 Benneworth and Arbo, 2006

15 PSA, 2016

16 World Bank, 2010

17 DOLE, 2012

On the one hand, students and their families have no idea of the costs, rates of returns, and employment prospects for different fields of specialization when they make decisions on which academic path to pursue. On the other hand, higher education institutions need to know and understand industry demands. 18

Regulators and consumers also need to know the performance of higher education institutions and their programs vis-à-vis licensure examinations, employment, and other critical criteria.

Otherwise, Filipinos will continue to make uninformed – and costly – higher education decisions.

Today some companies require a college degree or some college education for jobs that did not previously require them. This is called certification or credential inflation, where the high numbers of unemployed, college-educated youth willing to accept jobs that do not require high-level certification have raised the bar to entry for these jobs. This further constricts the opportunities for the youth without college degrees: if companies can hire a college graduate for a low-skilled job, why would they hire a young person with lower educational qualifications?

Higher Education Research and Innovation

The Philippines has made significant progress in innovation. A Philippine Innovation Act was passed in 2019 which underscores the country’s pursuit of innovation as a key strategy for development. In recent years, innovation has seen unprecedented levels of collaboration among different government agencies, with support from USAID. Aside from the landmark law, other important milestones include the development of a national harmonized research and development agenda, a national intellectual property strategy, and convergence programming between key departments in the regions to make innovation benefit local enterprises.

All of the investments and policies that support innovation have pushed the country to its highest-ever ranking in the annual Global Innovation Index (GII) in 2020: 50th out of 131 countries --- a massive improvement from its rank of 100th in 2014. Even as the country slipped one spot to 51st place in the latest ranking in 2021, it was cited as one of four “Innovation Achievers” across the world, along with Tukey, India and Vietnam. These four countries “are systematically catching up and have the potential to change the global innovation landscape for good.”19

The Philippine government has made a concerted effort to improve innovation, and to orient university research to benefit micro, small, and medium enterprises (MSME’s). Its signature program – the Regional Inclusive Innovation Center (RIIC) – is a collaborative approach spearheaded by the Department of Trade and Industry (DTI) and the Department of Science and Technology (DOST), and includes the National Economic and Development Authority (NEDA), CHED, the Department of Information and Communications Technology (DICT), the Department of Agriculture (DA), and the Department of Education (DepED) who signed a

18 Orberta, 2009

19 WIPO, 2021

memorandum of understanding in 2019 to work together under the umbrella of “Filipinnovation”

– the Philippine brand of innovation.

The RIIC20 is a platform for convergence at the regional level for the many, heretofore uncoordinated, government programs to benefit enterprises in priority economic sectors in the region. It brings key stakeholders together so that innovation investments from different agencies (such as research grants from DOST, CHED or DA, or fabrication labs from DTI), support university research and development, which are then connected to or defined by the needs of local industry.

With the support of USAID’s investments in higher education, eight RIICs have been established across the country and are now actively creating synergies among the different programs to benefit local industries.

However, this initiative has just started, and much remains to be done. Even as the country breached the rank of top 50 economies in the Global Innovation Index, its most recent rankings on the pillars of Human Capital and Research (80th), Infrastructure (86), Market Sophistication (86th), and Institutions (90th) indicate many areas for improvement.

Taking a closer look at the sub-indices of the GII provides a clearer picture of where the country is lagging behind. While the country fares well in the Tertiary Education measure (41st), its ranking on “Researchers full-time equivalent” (87th) and the “Gross expenditure on [research and development] R&D as a percent of GDP” (95th) pull down its “Human capital” ranking.

Similarly, while the country is ranked 55th in “Knowledge Creation,” it is ranked 124th in the sub-index of “Scientific and technical articles/bn PPP$ GDP.” And while the Philippines was ranked 47th in Knowledge Workers, it was only ranked 94th in “Innovation Linkages.”

The DOST states that “for the last three years, the innovation inputs or the investments for these activities in the Philippines remain low, with our ranking now at 72 compared to rank 70 in 2020 and rank 76 in 2019.”21

Using innovation-related metrics such as domestic value added (DVA) and total production output in high technology sectors, one analysis concludes that the Philippines has been unable as of yet to capitalize on its gains on innovation, and that “...innovation’s promise to deliver superior economic performance and development outcomes remains elusive.”22

“The Philippines is the only country among the ASEAN-6 nations (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) whose DVA in its gross exports failed to reach US$100 billion in 2018, garnering only US$60 billion.” The low DVA indicates that local industries do not necessarily have the innovation capabilities for higher, value-added production.

20 https://innovate.dti.gov.ph/programs/riics/

21 DOST, 2021

22 Tan Li, 2021 https://innovate.dti.gov.ph/programs/riics/

When correlated with the fact that the total production in the high-technology sector of the Philippines actually comes from multinational companies rather than domestic firms,23 then a lot more has to be done to translate R&D into tangible benefits for local industry, and make local industry the driver of improving innovation..

In terms of investments, the country has just seen its R&D budget shrink. While the budget for R&D has averaged about 0.65 percent since 2007, this has seen a significant drop in the last two years. From 0.76 percent in 2019, the R&D budget of the national government dropped to 0.39 percent in 2021.24 This decrease may also be due to adjustments made in response to the COVID-19 pandemic.

USAID through its Science, Technology, Research and Innovation for Development or STRIDE program commissioned a study in 201925 to take a look at the Philippine Innovation Ecosystem from the perspective of key stakeholders embedded in the ecosystem. This was a follow-up study to the first Assessment done in 2014.

In the study, 68 percent of respondents reported improvements in the innovation ecosystem, citing factors such as intentional interventions from government, increased focus from academia to align with industry, and industry’s increased openness and willingness to collaborate with academia on human capital development.

But stakeholders also identified continuing challenges in the innovation ecosystem. These include: academia still not fully aligned with the needs of employers; industry-funded research or licensing from universities to industry remains rare; science and technology spinoffs are still rare; many gaps still need to be addressed for the startup scene to be globally competitive;

regulatory barriers still exist, and the ecosystem needs higher availability of risk capital.26

These findings have been validated by a third-party evaluation conducted on the STRIDE program which identified continuing challenges in the innovation ecosystem: the need to support start-ups and spin-offs in order for micro, small and medium scale enterprises to flourish, the “need for policy support to ease relationships with industry and cultivate trust and confidence with innovators at universities,” the need to strengthen the nascent RIICs, and the need to operationalize the National Innovation Center and its funding mechanism.27

Structural and policy issues remain that continue to hamper growth in research and innovation, and how it is used to benefit local communities. There is a concerted effort on the part of the Philippine government to address these, but many of these initiatives have just started.

23 Tan Li, 2021

24 DOST, 2021

25 https://pdf.usaid.gov/pdf_docs/PA00ZGD2.pdf 26 RTI International, 2019 27 https://report.panagoragroup.net/stride/ https://pdf.usaid.gov/pdf_docs/PA00ZGD2.pdf https://report.panagoragroup.net/stride/

The New Philippine Government Priorities

The Philippines has laid out a long-term vision for national development called Ambisyon Natin (Our Ambition) 2040.28 The vision is that by 2040, the country would be a middle-class society, lacking poverty, in which its peoples live long and healthy lives, are smart and innovative, and have a high level of trust for their government and between themselves in the next 25 years (from 2015 to 2040).

With the vision of achieving a predominantly middle-class country, AmBisyon Natin 2040 has three objectives: (1) increasing growth potential (promote technology adoption, stimulate innovation, and maximize demographic dividend); (2) inequality-reducing transformation (expand and increase access to economic opportunities, accelerate human capital development, and reduce vulnerability of individuals); and (3) enhancing the social fabric (ensure people-centered, clean and efficient governance, pursue swift and fair administration of justice, and promote Philippine culture and values). The first two objectives are clearly relevant to higher education, innovation, and workforce development.

The new Philippine government is now in the process of crafting its own medium-term vision to be released as the next-generation Philippine Development Plan (PDP) by the end of 2022 or early 2023. The new (and returning) NEDA Director General and Socioeconomic Planning Secretary, Arsenio Balisacan, initiated the AmBisyon 2040 process in 2015, during his first stint as socio-economic planning secretary.

The administration has also released an eight-point agenda which will be the backbone of the next-generation PDP. The first three items are focused on recovery in the near term, and the five agenda items below are for the medium term:

1. Create more jobs: Promoting trade and investments; improving infrastructure; achieving energy security

2. Create quality jobs: Increasing employability; encouraging research & development, innovation; enhancing the digital economy

3. Create green jobs: Pursuing both a green economy and a blue economy, which focuses more on sustainable use of marine resources; establishing livable and sustainable communities

4. Uphold public order and safety, peace and security

5. Ensure a level playing field: Strengthen market competition; reduce barriers to entry and limits to entrepreneurship

Thus, the catchphrase being used for this plan is “Jobs, Jobs, Jobs.”

There is a clear appreciation for the role of innovation and human capital development in the government’s pronouncements for the next medium term plan, with the goal of creating a robust economy and inclusive and resilient society.

28 https://2040.neda.gov.ph/ https://2040.neda.gov.ph/

Another important development is that the Secretary of the Department of Trade and Industry, Alfredo Pascual, was formerly the president of the University of the Philippines system, which bodes well for appreciating the challenges and opportunities in higher education from the perspective of government-industry-academia linkages. He has also retained the Undersecretary for the Competitiveness and Innovation Group, who spearheads the agency’s innovation and skills development agenda.

Finally, of note is that the Chairperson of the Commission on Higher Education, Dr. Prospero De Vera, has been reappointed to another term, and the new Secretary of Science and Technology, Renato Solidum, is a former Undersecretary of the agency.

These appointments signify continuity and stability, especially in the higher education and innovation space, which provides opportunities for focus on policy implementation and scaling up.

Philippine Higher Education and Innovation Policy Reform

There is a robust policy environment that sets mandates on human capital development, innovation, and higher education for all government agencies, anchored on Ambisyon 2040’s vision of accelerating human capital development.

In response to the long-standing crisis faced by its education system, the Philippines embarked on a comprehensive education reform movement with the passage of the Enhanced Basic Education Act of 2013 (Republic Act 10533) or the K to 12 Law in 2013. This law lengthened the compulsory basic education cycle to 13 years, covering kindergarten until Grade 12 to align with global standards. The law also made it necessary to adjust the higher education curriculum, as certain college courses were brought down to senior high school.

The consolidation of all government-funded student financial assistance under the Unified Student Financial Assistance System for Tertiary Education Act (UniFAST Law or Republic Act 10687) passed in 201529 is another important milestone. All government-funded scholarships, student loans, grants-in-aid, and other forms of student financial assistance (including free technical-vocational training) were consolidated under one body, offering the prospect of maximizing government resources for higher education scholarships, and improving access to higher education for poor but qualified students.

In 2017, the Philippines introduced the Universal Access to Quality Tertiary Education Act (Republic Act 10931)30 which provided free tuition and other school fees to all students enrolled in (at that time) 112 state universities and colleges (SUCs), 78 local universities and colleges (LUCs), and all technical-vocational education and training (TVET) programs registered under the Technical Education and Skills Development Authority (TESDA). This was another milestone in the quest to broaden access to higher education in state-run education institutions.

29 https://www.officialgazette.gov.ph/2015/10/15/republic-act-no-10687/ 30 https://www.officialgazette.gov.ph/2017/08/03/republic-act-no-10931/ https://www.officialgazette.gov.ph/2015/10/15/republic-act-no-10687/ https://www.officialgazette.gov.ph/2017/08/03/republic-act-no-10931/

That same year, another landmark legislation was passed which some experts have dubbed as the second-largest educational reform package in the country, next to the K-12 Law. The Philippine Qualifications Framework (PQF) Act or Republic Act No. 10968 of 201731 mandates the establishment of a collaborative program to improve human capital development in the Philippines through the DepEd, TESDA, CHED, Professional Regulation Commission (PRC) and the DOLE. DepED is the Chair of the National Coordinating Council.

The PQF describes the levels of educational qualifications and sets the standards for qualification outcomes, and “is a quality assured national system for the development, recognition and award of qualifications based on standards of knowledge, skills and values acquired in different ways and methods by learners and workers of the country. Its objectives are:

a) To adopt national standards and levels of learning outcomes of education;

b) To support the development and maintenance of pathways and equivalencies that enable access to qualifications and to assist individuals to move easily and readily between the different education and training sectors and between these sectors and the labor market;

and

c) To align domestic qualification standards with the international qualifications framework thereby enhancing recognition of the value and comparability of Philippine qualifications and supporting the mobility of Filipino students and workers.”

This sets the stage for a more robust human capital development framework that offers the portability of qualifications from one educational sub-sector to another. It also lays the foundation for easier international accreditation and labor mobility among, initially, members of the Association of Southeast Asian Nations, or ASEAN.

In 2019, the Transnational Higher Education Act (Republic Act 11448) was passed.32 The law opens up the higher education sector to foreign higher education institutions, and allows the establishment of branch campuses of foreign universities in partnership with local universities.

This sets the stage for robust partnerships between local and foreign universities, with the end goal of “modernizing the Philippine higher education sector, and bring international quality standards and expertise into the country” to make the sector globally competitive.

To foster inclusive growth through innovative new businesses, the Innovative Startup Act (Republic Act 11337) was passed in 201833 which provides “incentives and remove constraints aimed at encouraging the establishment and operation of innovative new businesses, businesses crucial to their growth and expansion, and to strengthen, promote and develop an ecosystem of businesses, government and nongovernment institutions that foster an innovative entrepreneurial culture in the Philippines.” The law establishes the Philippine Startup Development program, which will be co-led by DOST, DICT, and DTI.

31 https://www.officialgazette.gov.ph/2018/01/16/republic-act-no-10968/ 32 https://www.officialgazette.gov.ph/2019/08/28/republic-act-no-11448/ 33 https://www.officialgazette.gov.ph/2019/04/26/republic-act-no-11337/ https://www.officialgazette.gov.ph/2018/01/16/republic-act-no-10968/ https://www.officialgazette.gov.ph/2019/08/28/republic-act-no-11448/ https://www.officialgazette.gov.ph/2019/04/26/republic-act-no-11337/

To institutionalize its work in the innovation space, the Philippine Innovation Act (Republic Act 11293) was signed in 2019.34 Among others, the law will “explore, promote, and protect the potentials for innovation of traditional knowledge, traditional cultural expressions, and genetic resources. Emphasis is placed on inclusive innovation as the law seeks to promote the creation of new ideas that will be developed into new and quality products, processes, and services aimed at improving the welfare of low-income and marginalized groups.” A National Innovation Council, headed by no less than the Philippine President, was also established by this law with NEDA serving as the National Innovation Council Secretariat.

The policy and regulatory framework that is in place is robust, and very supportive of human capital development in higher education. But most of the laws have been passed only in the past three to five years and their outcomes and impact have not yet been fully realized.

Continuing Challenges and the Impact of the Pandemic

The COVID-19 pandemic has put a dampener on many of these initiatives, however.

Implementation delays due to schools and business shutdowns, border closures (including for international exchanges), reprogramming of agency budgets to respond to the immediate needs of the pandemic (with the R&D budget expenditure example above), and other related effects have stalled many of these very promising policies.

While there has been significant progress, investments, and systemic improvements, a lot of work remains to be done, and in some cases, restarted.

For workforce development and innovation, the profound effect of the pandemic on daily lives and the way it has continued to impact the economic and social landscape is reshaping the nature and type of jobs and industries that students are being prepared for.

While some sectors were severely affected, others took off and grew at amazing rates. Even as unemployment rates hit historic highs at the start of the pandemic, the explosive growth of e-commerce emphasized the transformative role of the digital economy and Industry 4.0. It also underscored the need for skills development and innovation in the digital economy space.

Perennial concerns in the sector have all been exacerbated by the pandemic. These include regulating a vast and complex higher education sector in the context of the new policies and laws; encouraging collaboration in the very diverse landscape of workforce development and innovation; strengthening links between industry and academia; addressing regulatory bottlenecks especially in research and development; improving faculty qualifications and curricula; and strengthening administration and management of higher education institutions.

34 https://www.officialgazette.gov.ph/2019/04/17/republic-act-no-11293/ https://www.officialgazette.gov.ph/2019/04/17/republic-act-no-11293/

New challenges brought about by the COVID-19 pandemic also need to be addressed. In higher education, foremost among this is the navigation of an evolving new normal where face-to-face interaction is limited or will co-exist with virtual learning under a blended learning environment.

Institutions were forced to revise and adapt course syllabi and requirements due to the shift to alternative teaching modalities, both synchronous and asynchronous. In some instances, these arrangements were unsustainable, and some universities opted to suspend remote classes due to uneven levels of connectivity of both students and teachers.

All these changes need to be internalized by higher education and training institutions, and they in turn need to quickly respond to provide interventions for their faculty, their students, and the communities that they serve so they can continue to be relevant to local development especially with the end view of providing needed skills so that youth can find quality employment.

USAID’s Priorities in Higher Education

USAID/Philippines’ Country Development Cooperation Strategy (CDCS, 2019 -2024)35 identifies investments in human capital as a key factor to long-term national development for the Philippines, stating that “(a) more productive workforce will attract a higher level of investment, higher quality jobs, and impact growth throughout the economy.”

As higher education creates pathways to better health, economic growth, a sustainable environment, and peaceful, democratic societies, the New Higher Education Activity responds to the Mission’s second Development Objective: Inclusive, Market-driven Growth, Intermediate Result 2.3 on “Human Capital Development Improved,” specifically sub-Intermediate Result

2.3.2 “Education systems strengthened” and sub-Intermediate Result 2.3.3. “Science, technology, and innovation capacity strengthened.”

USAID initiatives will promote regulatory quality and private sector growth to create more jobs, increase the government’s capacity for financial self-reliance: that is, the ability to mobilize domestic resources, and ensure institutions across government line departments strengthen their financial management. Education programming will support the government and public stakeholders to improve the country’s human capital development and bolster long-term self-reliance.

USAID/Philippines’ New Higher Education Activity (NHEA) will help address some of the challenges outlined earlier, all within the context of contributing to USAID’s global policy thrusts, as well as its current country strategy.

The New Higher Education Activity will strengthen higher education capacity in both the innovation and workforce development spaces, providing technical assistance and capacity strengthening to key partners in these areas, and fostering an enabling environment for workforce development, innovation, and entrepreneurship, 35 https://www.usaid.gov/philippines/cdcs https://www.usaid.gov/philippines/cdcs

Together, these will help strengthen higher education institutions that can provide the youth with relevant education and skills needed by the economy, produce a more innovative and entrepreneurial mindset, link academia to industry and their communities, connect local higher education with their international counterparts, and provide a platform for different stakeholders to collaborate in addressing the challenges of human capital development in the Philippines.

Given Ambisyon 2040 and the eight-point agenda of the current Philippine government that will be the foundation of the next Philippine Development Plan, it is anticipated that the New Higher Education activity will remain relevant even into the next PDP, as well the next CDCS, given the emphasis on job generation, innovation, and inclusive growth.

USAID Support in Higher Education

USAID’s Education Policy, released in November 2018, underscores the need to work in higher education to achieve development goals.36

USAID works in the higher education sector to prepare the workforce, raise industry standards, build research and evidence, and increase overall GDP to reduce extreme poverty. It lays down four goals, all of which are relevant to higher education programming in the context of workforce development and innovation:

1. Children and youth, particularly the most marginalized and vulnerable, have increased access to quality education that is safe, relevant, and promotes social well-being.

2. Children and youth gain literacy, numeracy, and social-emotional skills that are foundational to future learning and success.

3. Youth gain the skills they need to lead productive lives, gain employment, and positively contribute to society.

4. Higher education institutions have the capacity to be central actors in development by conducting and applying research, delivering quality education, and engaging with communities.

To achieve these objectives, USAID laid down principles that should be observed in making investments in education: Prioritize country-focus and ownership; Focus and concentrate investments on measurably and sustainably improving learning and educational outcomes;

Strengthen systems and develop capacity in local institutions; Work in partnership and leverage resources; Drive decision-making and investments using evidence and data; and Promote equity and inclusion.

36 https://www.usaid.gov/documents/1865/2018-usaid-education-policy https://www.usaid.gov/documents/1865/2018-usaid-education-policy

The Education Policy notes that:

Developing the capacity of higher education institutions strengthens their roles as central actors in local education, research, and policy systems. Supporting capacity development at higher education institutions can be beneficial in opening doors for long-term international dialogue and diplomacy through research collaboration and student exchange. As part of capacity development, higher education institutions must have linkages with industry, government, local communities, and the global academic community. USAID will build the capacity of these institutions informed by the American three-pillar model of learning, research, and service to–and engagement with–local, national, and global communities, while also considering the local context, needs, and conditions of each institution.

To operationalize the policy’s higher education component, USAID released a Higher Education Program Framework in October 2020.37 It identifies three key outcomes for any USAID higher education program:

1. Through capacity development, HEIs improve their administrative, research, and instructional performance, thereby affecting higher education systems and the individuals who engage with them through achieving a range of sector-specific outcomes. HEIs with improved performance are better positioned to achieve a variety of developmental outcomes, both within the higher education system and within broader systems that affect a country’s development.

2. Through strong partnerships and transnational relationships, HEIs (and the individuals affiliated with them) are able to sustain and continue to improve performance across the three higher education functions. Transnational relationships, however, are about mutual engagement: they promote cross-learning and capacity development that produces stronger academic, research, and professional bonds.

3. USAID is also committed to promoting higher education as a central actor in developing local solutions to local problems regardless of sector or education level. USAID uses its convening power to make a place for HEIs in policy discussions. Indeed, while HEIs are often a target of USAID capacity development support, they are just as often—and often simultaneously—partners or key stakeholders in USAID programming in a variety of sectors and for a variety of outcomes.

Higher education, workforce development and innovation are also…