Construction Industry To Sustain Growth This 2015

Construction in the Philippine economy can be understood in two ways. First, as an industry, the construction sector includes activities of establishments primarily engaged in the putting up of buildings and structures and other land improvements and second, construction as an investment or capital formation.

And while the construction industry has eased in some parts of Asia, special attention should be given to the growth potential in the Philippines. The global economic conditions have heavily influenced the performance of Philippine economy and as expected, the Philippine economy accelerated faster and increased positively.

As the turnover in both public and private sector construction activities is seen to reach about P1.7 trillion, the Philippine construction sector is expected to sustain its strong growth this year. According to Manolito P. Madrasto, executive director at the Philippine Constructors Association Inc., despite this, the forecast assumed that the government would be able to fully roll out the more than P500 billion infrastructure spending programmed for the year. He also said that the amount should be on top of the expected outlay for the implementation of the public-private partnership (PPP) projects that have already been awarded.

But Madrasto emphasized that a more conservative estimate would be a turnover of about P1.2 trillion that will mostly be accounted for by the private sector. This forecast acknowledged possibilities of certain government projects being stalled due to some controversies, as what had happened last year.

The Philippine Constructors Association issued a country report that noted “2014 has been a remarkable year for construction sector despite the underspending of the government that was consistently observed throughout the year.” The same report also stated that “delays and/or suspension of government infrastructure projects due to several factors such as Supreme Court’s decision declaring that major provisions of Disbursement Acceleration Program (DAP) illegal and the slow progress in the construction and rehabilitation efforts for Yolanda-struck areas have pulled down the performance of public construction in the second and third quarters of 2014.”.

It added that public construction further went down by 6.2 percent in the third quarter of 2014 mainly due to government underspending. The PCA said that “overall, public construction had not reached the positive mark for the full-year 2014 due to these delays. Nonetheless, given the better revenue collection by the government in the recent months, there will likely be a large fiscal space to increase infrastructure spending for the next coming quarters”.

Although there’s a slowdown in the implementation of government and PPP projects, the private sector was able to significantly boost the growth of the construction sector last year.

Data from PCA revealed that at current prices, the gross value of private sector construction projects grew by 16.3 percent to $25.613 billion (or P1.137 trillion) last year, bringing the total, including public sector activities, to $31.889 billion, or about P1.42 trillion.

The gross value in construction for both the public and private sectors grew by 10 percent to $14.455 billion at constant prices, which was equivalent to P641.8 billion.

Source: www.business.inquirer.net/188067/construction-industry-seen-to-sustain-growth

The report further stated that in the coming quarters or years it is expected there will be a sustained increase in residential construction projects in a bid to revive the country’s housing market and meet the demand from the growing population. The PCA added that the Housing and Land Use Regulatory Board (HLURB) has set a target to construct 1 million housing units by 2016 to support this goal and they also announced the construction of over 300 condominium projects in Metro Manila, most of which will be allocated to the mid-market segment. Until then, residential sales will become stronger among the high-end market and foreigners will consequently be more prone to leasing and renting property.

The Philippine construction industry also contributed 5.8 percent (at constant prices) to the economy last year and also accounted for 6.6 percent of total employment as of end October 2014.