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December 18, 2003

Hereafter referred to as "the Signatories".

The Signatories have decided as follows:

PARAGRAPH 1
OBJECTIVES OF THE PROGRAMME

a) This Programme aims to support private sector development by promoting and supporting economic cooperation between the business sectors of the Philippines and The Netherlands on the basis of equal partnership and mutual benefit with the focus on private investments.

b) Support is provided to initiatives of the business communities of The Netherlands and Philippines in setting up joint innovative pilot-projects in specific sectors, making use of the international and local know-how, goods and services.

c) It is expected that successful try-outs will be continued and/or duplicated by the private sector.

d) The business projects are expected to contribute to poverty alleviation. Projects creating substantial local employment, transferring knowledge, making extensive use of local SMEs in the supply chain, operating in geographically disadvantaged regions, generating income for a substantial group of beneficiaries and/or contributing in other ways substantially to poverty alleviation will receive priority in the selection process. Projects however have to be at all times sound business proposals that lead to a sustainable business relation.

PARAGRAPH 2
BUDGET

Official Development Assistance will be provided by the Government of The Netherlands to provide support to joint Netherlands-Philippines business projects starting from 2004 under the Programme for Cooperation with Emerging Markets (PSOM) with a target budget of four (4) projects per year. The average PSOM contribution per project is expected to be approximately €500,000.

PARAGRAPH 3
TAXES

All taxes (import duty and other direct and indirect taxes) shall be borne by the beneficiary of the Programme. The "beneficiary" would be the established project/consortium. The beneficiary shall be entitled to benefit from the privileges as provided by existing Philippine laws and rules to encourage foreign and local investments.

PARAGRAPH 4
EXECUTIVE AGENCY

The Programme shall, on behalf of the Government of the Kingdom of The Netherlands, be executed by the Netherlands Government Agency SENTER, in consultation with the Royal Netherlands Embassy in the Philippines. On behalf of the Government of the Philippines, the Department of Trade and Industry - Board of Investments (DTI-BOI) will act as the focal point for the Programme.

PARAGRAPH 5
AREAS OF THE PROGRAMME

The Signatories will not restrict the Programme to a limited number of economic sectors. Therefore projects in all economic sectors will be considered.

Geographic preference will be given to projects located in less developed areas/regions hereto identified as follows:

In all sectors, specific attention shall be given to corporate social responsibility issues. The pro-poor aspects referred to in Paragraph l.d will receive special weight in the selection procedure of the projects.
The Signatories will help, where possible, to ensure the smooth implementation of the Programme.

PARAGRAPH 6
SUBMISSION OF PROPOSALS

SENTER will invite at least once a year (consortia of) companies to submit proposals for projects with special emphasis on the sectors and/or region(s) mentioned in Paragraph 5. Every consortium will contain at least one Netherlands and one Philippine partner. The Netherlands partner in the consortium will make the application to SENTER and serve as the contact point with SENTER. The PSOM agreement between the Netherlands Ministry of Foreign Affairs and SENTER contains the detailed procedures through which PSOM proposals will be selected and funds are allocated. SENTER will inform the Philippine Department of Foreign Affairs about the proposals that are awarded financial contribution under the PSOM.

PARAGRAPH 7
MONITORING

SENTER will monitor the projects and report half-yearly about the progress made to the Royal Netherlands Embassy in Manila and the Philippine Department of Foreign Affairs. The Royal Netherlands Embassy and the DTI-BOI personnel will meet at least once a year to discuss the progress of the project implementation.

PARAGRAPH 8
DISPUTE SETTLEMENT

Any dispute between the signatories concerning the interpretation and/or implementation of this Memorandum of Understanding shall be settled amicably through consultations and/or negotiations.

PARAGRAPH 9
DURATION AND AMENDMENT

The MOU shall enter in force for a period of two years on the date of the later written notification by the Signatories, through diplomatic channels, indicating compliance with their domestic legal requirements for its entry into force. Further extensions may be decided and agreed upon by an exchange of letters.

Any amendment of the MOU shall be done by mutual consent of the Signatories.

Either of the Signatories may terminate this MOU earlier by giving the other Signatory at least six (6) months prior notice. Such termination shall not affect projects for which the call for proposals has already been launched by SENTER and neither shall it affect ongoing projects.

Done in duplicate in Manila, Philippines this 18th day of December 2003 in the English language.