Philippines Infrastructure Report 2008

The real estate industry in Philippines has recorded the highest growth in revenues industry-wise in Q107.

The construction industry performance continues to remain strong due to increased focus on infrastructure even in President Gloria Macapagal-Arroyo's second term, as well as consistent demand for office space from the business process outsourcing industry. BMI forecasts the average construction growth rate in the nation to be 6.3% during the 2008-12 period. The construction industry in the Philippines is expected to grow to about US$7.8bn by 2008.

Gross domestic product (GDP) growth in 2006 was 5.4% year-on-year (y-o-y) and 7.5% y-o-y in Q207.

Major projects include the planned construction of a hotel, entertainment complex, mixed development buildings for office, residential and commercial use in the Bonifacio Global City by Shanghai-based Shimao Property Holdings, the US$1.2bn Metro Rail Transit 7 project, the light rail transit system in Cebu at an estimated US$1bn, the US$1bn shipbuilding facility in Subic, the US$879mn 300 megawatt (MW) power plants in Bataan, the US$400mn Subic-Clark-Tarlac highway and the US$300mn residential project in Cubao. The Department of Public Works and Highways (DPWH) is monitoring the construction of many national roads and bridges. It is also working with other government agencies such as the Department of Agriculture, Department of Agrarian Reform and the Department of Education for the construction of the farm-tomarket roads.

Major projects scheduled for completion in 2007 are the Subic Bay port development, upgrading and renovation of the existing back-up area of the port of Cagayan de Oro, construction of rock causeway pier and RoRo Ramp and passenger terminal building of the Limasawa port and the second phase of the Batangas port development project. An infrastructure monitoring task force (IMTF) has been supervising a total of 84 priority infrastructure projects aimed at spurring economic activities of the Super Regions.

The creation of super regions in the Philippines is a proposed plan by the President to group the selected regions/provinces by their economic strengths.

However, Philippines has been burdened with massive external debt; debt-servicing costs account for approximately one-third of the government expenditure. The nation struggles to maintain a balanced budget and keep the current account deficit under control. Inflow of foreign direct investment (FDI) is very low. Twenty-one big projects funded by foreign donor aid have incurred cost overruns totalling PHP36.8bn (US$805mn) as of July 2007. The infrastructure sector has a fairly good growth potential and the increased focus on completing pending projects and starting new infrastructre ventures will spur the growth of the economy and the construction sector.