07 October 2020, As delivered
Ladies and gentlemen, good morning.
The Philippine construction industry welcomes the foreign industry players and stakeholders to this webinar to take advantage of valuable construction opportunities available in Philippines. More importantly, we hope you take this chance to build potential partnerships with your Filipino counterparts, given the trove of investment prospects in our country despite the COVID-19 pandemic.
The Department of Trade and Industry (DTI) is the main catalyst that enables innovative, competitive, job-generating, inclusive business for intensified private sector activities. These activities will help to accelerate and sustain our country’s economic growth, guided by DTI’s comprehensive industrial growth strategies.
The Philippine construction industry itself has contributed significantly to our GDP, which is considered as one of the key stimulus towards economic recovery and growth. In fact, the government’s aggressive infrastructure development program, “Build, Build, Build,” accelerated our economic output to over 6% in 2019. Thus, we can rely on this industry to conduct massive infrastructure activities via the upgraded and innovative capabilities of contractors and workers alike.
With the Philippine Construction Industry Roadmap 2020-2030 in place, the momentum on infrastructure development created by our “Build, Build, Build” program will be sustained and institutionalized. More importantly, these will be expanded to the provinces and community level.
Moreover, as we start to recover from the pandemic, the industry is still envisioned to grow in value to Php130T by 2030 with the labor sector reaching to as high as 7.1M largely highly skilled workers by 2030. This will reduce the country’s unemployment rate lower than the 5.2% pre-pandemic level.
The industry’s growth and impact on the Philippine economy goes beyond the direct contribution to building activities because of its extensive linkages with other industries. The construction industry is a client to over 60 industry sectors. These include: non-metallic mineral products; manufacturing of iron, steel, rubber, and plastics; and suppliers of intermediate inputs to over 20 key industries.
The unprecedented public health emergency brought by COVID-19 substantially slowed down the country’s economic growth this year. But in April 2020, the new Asian Development Bank (ADB) report anticipates our country’s bounce back in the second half of this year supported by the government’s stimulus spending and easier monetary policies. As such, we look forward to a strong recovery to 6.5% GDP growth in 2021 with expansionary fiscal and monetary policies.
Though our construction industry was one of the most heavily affected by the pandemic, it is still the best driver to economic recovery through business transformation and internationalization. Presently, the Philippine construction services exporters have started innovating and modernizing their business processes as well as upskilling their human resources.
What’s more, the Philippine construction industry is positioned to take on a host of opportunities in the global arena. These include partnerships, joint ventures, specialty works or subcontracting, as well as in outsourcing design, and engineering services.
On the part of the government, DTI—through the Construction Industry Authority of the Philippines (CIAP)—remains committed in our support for the industry’s continued growth through the enforcement of the Ease of Doing Business Law. Further, we are also pushing for more effective good governance through “predictable, participatory, accountable, efficient, transparent, and honest public service.”
We are also continuing to ease restrictions on foreign participation in the domestic construction industry. In 2015, we liberalized the industry allowing 100% foreign equity participation with a Quadruple “A” Category Regular License for a capitalization of only PHP1B (or about EUR17M). We are currently reviewing on how we can further rationalize this level to allow more participation in larger projects.
A 100% foreign equity under Special License is likewise allowed for projects under Public-Private Partnerships (PPP), Build-Operate-Transfer (BOT), and International Competitive Bidding (ICB) for foreign-funded projects. These will be allowed for those employing proprietary technology and equipment.
We continuously seek to remove uncertainties for investors by passing tax reform measures, such as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). This legislation aims to boost the Philippine business community with a 5% cut in corporate income tax from 30%, bringing it down to 25% immediately, and further down to 20% in 5 years. We are also ensuring stability in supply chain and ensuring the health of business-to-business market for goods and services.
Under the leadership of President Rodrigo Roa Duterte, the Philippines ranked as the second fastest growing economies in ASEAN and one of the fastest-growing markets in the world in 2019 up to early this year, prior to the pandemic. In May 2020, amidst the pandemic, our economy ranked the sixth best among emerging economies and the best among those ranked in Southeast Asia in terms of economic, fiscal, and financial management.
What’s more, the Philippines has the youngest workforce among the five (5) founding members of ASEAN, and among other Asian countries. Our population of 109M continues to grow and has a median age as young as 25.7 compared to EU, US, UAE, China, and Vietnam. Our country also has a demographic sweet spot, with our working population being relatively larger than the population of our dependents. The economic fundamentals of the country remain sound and strong. This momentum will surely provide exciting opportunities for our country’s economic growth in the decades to come.
Presently, our construction industry provides jobs to 4.0M people, which accounts for 9.5% of the country’s total workforce. With the resumption of infrastructure projects under the “Build, Build, Build” program and in the light of Industry 4.0, we also hope to learn from you on how we can ensure that skills and competencies match industry needs. DTI aims to address these needs in collaboration with the Technical Education and Skills Development Authority (TESDA) and the Construction Manpower Development Foundation (CMDF).
Further, as the industry recovers from the impact of the coronavirus, we recognize the need to modernize and digitize our construction processes with the help of your expertise. To this end, we aim to be equipped with digital technologies and modern methodologies in the field of railways, telecommunication, transport, and renewal energy.
In closing, it is the country’s pride that Filipino construction companies are sought and preferred worldwide since the 1970s. They have built and continue to build iconic landmarks and participated in various infrastructure projects such as the Jumeirah Dubai Monorail and the Brunei Istana Nurul Iman, among others.
DTI and CIAP highly encourage our friends from European companies to forge cooperative agreement and establish business partnerships with their Filipino counterparts. We hope for a more collaborative partnership with regard to our interests in the dual training system for our human resources in the industry, as well as innovative technologies in transport, railways, telecommunications, energy, and infrastructure.
Again, we appreciate your participation in today’s briefing and we look forward to more mutually beneficial endeavors with you to further the growth of the Philippine construction industry. Ultimately, we hope that you will support our efforts to build a more inclusive, prosperous, and vital nation in a post-COVID-19 future.
Thank you at mabuhay tayong lahat. ♦
Date of Release: 8 October 2020