The OECD Called Out Philippine Governance. Here’s What Boards Should Do Next.

The OECD’s February 2026 Economic Survey named Philippine corporate governance as a structural weakness. Concentrated ownership. Limited board independence. Weak oversight of related-party deals. But naming the problem isn’t the same as fixing it. The real question for Philippine boards isn’t whether these gaps exist — it’s where to start closing them.

The diagnosis is in

The OECD was unusually direct. Philippine governance structures lag ASEAN peers in three areas: ownership concentration, board independence, and related-party transaction oversight.

None of this surprised anyone in a Philippine boardroom. What’s different is what the OECD recommended: group-level inspections, public ownership databases, stronger disclosure rules. These aren’t suggestions. They’re calls for structural reform.

And the OECD isn’t alone. The BSP now requires Explainable AI in all automated lending decisions. The SEC is enforcing sustainability disclosures for large listed companies this year. The Insurance Commission has tightened risk assessment requirements. And the Anti-Financial Account Scamming Act deadline lands in June.

The message is clear: building strong internal governance was the last decade’s work. The next frontier is external.

The gap nobody’s filling

Philippine companies have invested heavily in internal controls. Audit committees, risk frameworks, compliance teams — all in place.

But try asking a different question: How do you govern the financial health of the thousands of borrowers in your lending portfolio? The hundreds of vendors in your supply chain? The international contractors you just awarded a multi-billion peso project?

For most companies, the answer is ad hoc.

This is the external counterparty governance gap — the space between what boards control inside the company and what they depend on outside it.

The OECD focused on internal governance. But the external gap may be bigger.

Look at what’s happened in the past two weeks alone:

Energy. Over PHP 200 billion in infrastructure projects were announced with international contractors — PowerChina, Toshiba, Andritz, ABB — entering the Philippine market with little or no local credit track record. Who’s checking their financial health?

Insurance. Premiums surpassed PHP 500 billion. New market entrants are expanding fast. Every new distribution partner and InsurTech vendor needs accreditation under the Insurance Commission’s rules. But there’s no way to do this at scale.

Lending. Digital lenders now manage hundreds of billions in loans. The BSP says the AI models scoring borrowers must be explainable and auditable. But a model is only as transparent as its inputs. If the credit data feeding it is opaque, the model can’t be compliant — no matter how good the algorithm.

From diagnosis to defensibility

The shift isn’t about new ideas. It’s about new infrastructure. Boards need to move from governing what they see inside the company to governing what they depend on outside it.

That means building three things most Philippine enterprises don’t have today:

1. Counterparty visibility. Not a one-time due diligence check before signing a contract that never gets updated. Continuous monitoring of every material counterparty’s financial health and governance posture. The OECD’s call for group-level inspections only works if companies can show what they’re actually inspecting.

2. Audit trails that hold up. Regulators aren’t just asking if you have governance policies. They want evidence — traceable, time-stamped, decision-grade. The BSP’s Explainable AI mandate makes this concrete: it’s not enough for the algorithm to be transparent. The entire chain from raw data to decision needs to be auditable. If your governance can’t produce a trail, it doesn’t exist in the regulator’s eyes.

3. Scale. A major Philippine bank deals with thousands of counterparties. An energy conglomerate has hundreds of vendors across subsidiaries. An insurance company onboarding distribution partners at market speed can’t review each one by hand. Governance needs to work at the scale of the business, not the scale of the compliance team.

What to ask in your next board meeting

For audit and risk committees meeting in Q2 2026, the question for management is simple:

Do we have a documented, auditable, and scalable system for governing the financial health of our counterparties?

If not — and for most Philippine enterprises, the answer is no — the follow-up is just as simple:

What’s our plan to build one before regulators come asking?

The OECD has already flagged it. The BSP has already mandated it. The SEC has already required it. The Insurance Commission has already tightened it.

The question isn’t whether Philippine enterprises need external counterparty governance. It’s which ones will build it before the next regulatory review — and which ones will be scrambling during one.

If counterparty governance is on your board’s agenda, let’s talk.

Lia Francisco is the founder and CEO of CreditBPO, an AI governance partner for the Philippines’ largest enterprises.