Ladies and gentlemen, magandang hapon sa inyong lahat.
Congratulations to Chairman Sid Consunji and the Philippine Overseas Construction Board (POCB) in the holding of your week-long Virtual Construction Conference on your 44th Anniversary Week.
We live in a world of uncertainties in which we need to be agile to respond to any challenge, like the global health pandemic, rationalized incentives, less government subsidies, liberalization of economic activities, stiffer competition, and many others.
Before COVID-19, the Philippine Construction Industry was the only one that was posting double-digit growth due to President Rodrigo Roa Duterte’s massive “Build Build Build” Infrastructure Program and the complementing private sector development plans. Total construction spending in 2019 was at P3.2T, which was around 17% of the GDP. Yet even this industry was severely affected by the pandemic last year as there were fewer workers allowed on project sites due to the need for physical distancing. Thus, total construction spending went down in 2020 to P2.2T, or 13% of the GDP, but we see all these rebounding in 2021.
We’d like to point out that many of the businesses in the construction industry affected by the pandemic were also Micro, Small, and Medium Enterprises (MSMEs). These comprise 97% of the over 15,000 licensed contractors of the Philippine Contractors Accreditation Board (PCAB).
The pandemic has highlighted the need for the industry to raise its productivity, invest in capability-building programs, and push for greater innovation and the use of new technologies. All these points have been previously identified in our Philippine Construction Industry Roadmap, but the pandemic had shown we truly need to adapt at a faster pace —not only for the industry to survive, but to thrive in the post-pandemic future.
This future also features an evolving global economic landscape, including the domestic liberalization of economic activities and stiff international competition. That’s why while construction opportunities in the domestic market are abundant due to the “Build, Build, Build” Program, the industry needs to be versatile to take advantage of the opportunities in the global market.
In this regard, the Philippines’ participation in Free Trade Agreements (or FTAs) is providing an avenue to allow greater economic activity and job creation, especially with the construction industry. FTAs offer a more stable, predictable, and fair environment for Filipino businesses and investments, including those in the construction and related engineering sector.
For local construction services, the Philippines was able to secure liberal arrangements in foreign markets, including 100% foreign equity participation in activities like general construction work for buildings and civil engineering, among others. Philippine-based businesses are guaranteed this arrangement through its existing FTAs with ASEAN, Australia, China, the European Free Trade Association (EFTA), Hong Kong, India, Japan, Korea, and New Zealand. These presently provide Philippine construction-related companies the opportunity to do business in these markets and provide their services to these countries on a non-discriminatory basis.
The Philippines also has similar commitments through our FTAs. These need to be in line with domestic laws, domestic rules and regulations, that are under review with respect to foreign equity participation. These commitments will facilitate the entry of much-needed foreign direct investments (FDI) on capital-heavy industries such as construction.
We are also a signatory in the Regional Comprehensive Economic Partnership Agreement (or RCEP), a free trade area in the world covering about 30% of the world’s population and 30% of global GDP. Through RCEP, Filipino construction companies can now provide more services in RCEP-participating countries that would bring in more job opportunities for Filipinos.
Assistant Secretary Allan Gepty will discuss with you our country’s FTAs and how to actualize business opportunities from these in greater detail. But in the meantime, we want to assure you that the Department of Trade and Industry (DTI), through the POCB, is working to open doors for you and assist you as much as we can. The POCB is also the agency with the sole mandate of representing the Philippine construction industry in international trade negotiations.
To this end, we continue to implement programs that will help our domestic players sustain their operations so that they can have a fair share of the market. For one, we are continuing to explore and promote partnerships with foreign counterparts to reskill and upskill our workers, as well as harness construction mega trends. We are also helping Filipino construction companies increase their economies of scale and expand their scope of services by actively encouraging and supporting activities that lead to the export of technical and managerial expertise.
Of course, we have the Philippine Construction Industry Roadmap 2020-2030, which aims to achieve the twin objectives of domestic market liberalization and protection of rights of workers and domestic companies. Furthermore, there is legislation amending restrictive economic provisions of the Philippine Constitution and other initiatives that would relax foreign participation in economic activities. This would provide a more conducive investment climate, increase job opportunities, foster more competition, and further spur economic growth in our country.
To conclude, we hope everyone here will continue working with us in shaping a Philippine construction industry that embodies integrity—ma-TATAG at ma-TAPAT—to build a nation where all Filipinos can enjoy the fruits of our country’s inclusive growth.
Maraming salamat at mabuhay tayong lahat! ♦
Date of Release: 29 June 2021