8 November 2018, Conrad Hotel, Pasay City
To our distinguished speakers; guests from the construction industry, academe, and development partners; my fellow government colleagues, ladies and gentlemen:
Magandang umaga sa inyong lahat.
We invited a group that we met last night in Shanghai, the country Garden Group. I think the biggest property developer in the whole of China. And they’re here to look for partners. They’re here to look into serious investments in the country. Please feel free to talk to them later.
Let me begin by thanking everyone for coming and taking part in this event. I am especially overwhelmed by the turn out of our panelists, which we hope can discuss burning issues in this industry. Your help will be invaluable in fleshing out the issues of the industry, and we hope to include your inputs and proposed solutions in our industry blueprint.
I would also like to cite the Construction Industry Authority of the Philippines (CIAP) for organizing today’s event. I laud you for your continued commitment in helping to develop the country’s construction industry even as you celebrate your 38th anniversary.
PH Construction Industry
With the opening of the 3rd Philippine Construction Industry Congress, we acknowledge the role of the construction industry in nation-building. Your support is especially important right now, given that the Duterte administration is implementing its massive “Build, Build, Build” program.
The Philippines’ robust economic growth is fueled by the strong performance of the economy; the figures just came out today. Our GDP growth stood at 6.3% year-on-year (yoy) in the first semester of 2018. Among the three major economic sectors, Industry recorded the fastest growth at 7%. And among the four sub-sectors of Industry, Construction posted the highest growth rate at 11.5%, more than doubled its 2017 growth of 5.3%.
And this is just the beginning. We have been seeing double digit growth on many sectors. I was just discussing in Philconstruct, that just looking at two indicators, the cement and steel demand, they’ve been posting double digit growth in the past 5 years. Growth in these sectors has been flat in the past few decades. But we’re seeing double digit growth year on year, which means we are hitting an inflection point.
If you look at the graph, from a flat level to an upward sloping demand for these two industries, which suggests that we are on the path to an economic breakout. This is a sustainable growth which is just starting. Other countries have been saying that when they experienced this growth in the cement and steel sectors, they never looked back. The growth in the economy continued.
Construction output has accounted for nearly 6% of GDP on average over the 2010-2017 period. In the first semester of 2018, its share to GDP has climbed to 6.5%, coming from 6.2% in 2017. Private construction occupies the bulk of overall construction activity, with its share to total construction at 74% in 2017 while public construction was 26%. However, in the first semester of 2018, the share of public construction increased to 32%, consistent with the surge in government spending on infrastructure projects.The budget we are allotting for infrastructure is now 5-7% of the GDP, which used to be only at around 2-3%. We are really on a catch up mode.
The construction industry substantially contributed 32.8% to overall capital investments in the country during the first semester of 2018. Increase in construction investment is due to high consumer confidence, modest inflation and interest rates, and improving labor market conditions. The construction industry is in the limelight following the government’s aggressive commitment to approve and implement more big-ticket infrastructure programs.
Aside from the infrastructure, if you really look at the economy now, you’ve been hearing about the young demographic, growing middle class, lowering unemployment rate to 5.4% which used to be at the 6.6% level. You can imagine a young population, employed, with more income. You can imagine that this will continue for many years—building a wider consumer base and higher purchasing power. This growing middle class will be the market for all your projects.
That’s why I remember, it was sent to me again, but this was from last March and April. The Philippines is voted as the number 1 investment destination of Business Insider. I thought there was a new survey. But that was the survey last time. Maybe this is to remind me that the Philippines is still number one.
Our recent investment figures are also showing triple digit growth. In fact for manufacturing, I was just telling our friends at the back, that manufacturing grew 271% in terms of foreign direct investment out of all the registered investments under the Board of Investments (BOI) for the year to date 2018.
CIAP, has partnered with the Development Bank of the Philippines to provide training and financial assistance to contractors, which aims to promote, develop and cultivate sustainable and progressive construction industry. This is a big leap for our contractors to pursue and grow within the infrastructure/construction business. We are here to provide you with options and more opportunities to contribute to nation building.
We continue to address job employment opportunities brought about by the booming of the construction industry.
The share of the construction industry to total employment of the country is 9.3% in the first semester of 2018. It continues to provide job opportunities, employing a total of 3.826 million workers, up by 13.2% from the same period in 2017. The National Economic and Development Authority (NEDA) expects around 820,000 jobs to be generated with a number of infrastructure projects breaking ground for the year 2018. More jobs are expected to be generated in the construction sector under the Duterte administration’s infrastructure program, and Filipinos will be high on the priority list of employment opportunities
For any difficulty you are experiencing, please let us know how we can support the local construction industry. You will be our priority, in making sure that you are part of this massive infrastructure program.
To address the skills mismatch and the deficit in trained manpower, CIAP is doing all-out implementation of activities to capacitate our human resources in the construction industry.
CIAP, thru CMDF (Construction Manpower Development Foundation) currently spearheads the following regular programs: Trainors’ Training Certification Program, Managerial and Supervisory Program, Construction Safety and Health Training, and Trade Skills Program. CIAP partnered with TESDA, as you know has been placed under the DTI, to up skill and equip construction professionals and skilled-workers with the necessary competencies. Together, we offer training assistance for rehabilitated drug addicts, out of school youth, and unemployed citizen. While we give the needed training, TEDSA offers scholarship grants provided through the Barangays.
We are doing a lot of reforms, as I’ve mentioned, on Ease of Doing Business. So as you transact with government, please take note that they are supposed to give you a decision in 3 days for simple transactions, 7 days for complex transactions, and 20 days for highly technical transactions.
The law is harsh. It has a two-strike policy. The first strike, you get penalized. The second strike, you get fired with no benefits and you can even be imprisoned. So our worry is that we may run out of government employees, after implementing this.
Our Undersecretary Rowel Barba is also very much on top of the Ease of Doing Business functions of the Department and hopefully he can play a major role in the Anti Red Tape Authority.
To conclude, today’s event is a milestone for the construction industry as we instigate discussions critical to the industry. These will serve as inputs to the Philippine Construction Industry Roadmap, the blueprint of the construction industry’s progress into the future.
What I’ve been hearing in the for a I’ve attended is the liberalization of the construction industry. We have to address this. You have to tell us up to how far we can liberalize the industry. In many sectors, we have already liberalized.
You are part of the Foreign Investment Negative List. But the mindset right now is to liberalize as many sectors that can promote healthy competition for all industries. Please tell us how we can work together to liberalize this industry. Again, with the necessary protection for the small guys. But for the big guys, especially with possible technology enhancement and partnerships, these liberalization efforts will really take our country to the next level.
I would also like to point out that that we are set to launch today the Philippine Quality Awards criteria for construction. I will not bore you with any more details since the DTI- Competitiveness Bureau will be joining us later today to tell us about it.
However, I do hope that more constructor organizations will aspire to adapt exceptional management practices. We also want you to be confident enough to achieve the highest level of national recognition for exemplary organizational performance.
I am confident that the ongoing partnership of the public and private sectors will foster a collaborative environment that would support our construction industry. In fact, we saw this during this morning’s opening of Philippine Constructors Association’s (PCA) PHILCONSTRUCT 2018 at the World Trade Center.
Our goal—a nation where all Filipinos can enjoy the fruits of our country’s inclusive growth—is something that we can dream to achieve.
Thank you very much for your kind attention and mabuhay kayong lahat.