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The Philippines needs more than 2 trillion pesos to build a minimum credible defense capability and project power within its maritime zone. Congress has not provided the defense and military establishments with enough funding for its 15-year, three-phase military modernization program, according to a senior defense official.
For instance, Congress has only allocated 50 billion pesos under a special-purpose fund for the 2026 military modernization program. The senior defense official said there would be a 15 billion peso increase from 2025. Originally, the military modernization fund was 50 billion pesos, but lawmakers had cut the program and realigned the fund to the Department of Public Works and Highways (DPWH).
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Thus, in 2025, the DPWH got about 1.1 trillion pesos, but a quarter of the funds could have gone to corruption, with many non-existent, substandard, and overpriced infrastructure projects. This was based on Senafe’s Blue Ribbon Committee’s public hearing. “Congress is just restoring what it had taken from the military modernization program this year,” the senior defense official said.
Additionally, he said the lawmakers have provided an additional 40 billion pesos in unprogrammed funds for the 2026 budget, bringing the total proposed appropriations to 90 billion pesos.
However, the allocation is not enough to cover the unfunded modernization projects amounting to 2.138 trillion pesos. the defense establishment’s fund requirement to modernize the military had ballooned to 2.445 trillion pesos, combining the unfunded projects in phases 1, 2 and 3. Defense Secretary Gilberto Teodoro had suggested to Congress to scrap the military modernization law and instead implement a project-based acquisition program.
Teodoro also proposed to follow Ukraine’s rapid retooling model, a more practical, flexible, and responsive modernization framework. He said the military modernization law is already outdated which limits the defense department to a limited repayment period. He said some defense manufacturers abroad are willing to extend repayment period to 15 to 20 years, making amortizaton more chewable for the country’s economy. When the revised military modernization law was passed under the Aquino administration in December 2012, it mandated a 15-year, three-phase plan of 300 billion pesos.
In the first phase, from 2013 to 2017, a total of 53 projects worth 98 billion pesos wee approved. At least 33 contracts were signed under the Aquino administration and another 20 contacts were signed by former President Rodrigo Duterte. There are still 17 on going projects which will be completed by 2028, the senior defense official said. Teodoro had also recommended to scrap some projects under Horizon I because these were already obsolete and the manufacturers had stopped production of the equipment. Under phase 2, from 2018 to 2022, Duterte approved a total of 98 projects amounting to 451.7 billion pesos, overspending and leaving no more room for President Ferdinand Marcos to spend under the third phase, 2023 o 2028.
Only 19 projects were completed under the second phase, and 79 other projects were in various stages of implementation. In 2024, President Marcos overhauled the remaining phase of the military modernization law, introducing 37 projects worth 1.89 billion pesos to be completed in 10 years, or beyond his term.
The senior defense official said President Marcos’ phase III projects “seeks to embark on capability enhancement and modernization program ranging from domain awareness to connectivity, intelligence capabilities, command and control, and deterrence capabilities in maritime and aerial domains.” “It is really a big challenge given the limited resources the government has,” the senior defense official said, adding the country lags behind its peers in Southeast Asia in terms of deterrence capability.
The senior defense official said the military modernization program is not part of the 295 billion pesos annual defense budget, which the Marcos government had requested Congress to approve. “This wa 8.5 percent higher than the 299.3 billion pesos budget this year,” he added. Congress is set to approve a 6.7 trillion pesos budget for next year before the year ends.
The opinions expressed are those of the author and do not necessarily represent the views of this publication.
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