Building and construction to the Philippines
Trends and opportunities
The Philippines building and construction industry is expected to post a
robust year-on-year growth of 9 per cent in 2017 and 8.5 per
cent in 2018 on the back of President Rodrigo Duterte’s “Build, Build,
Build” agenda (Source: BMI). Under this “golden age” of
infrastructure, PHP 8 to 9 trillion (A$ 208 to A$ 236 billion) have been
allocated for infrastructure projects for the period of 2016 to 2022, with
a primary focus on transport, railways, roads, airports, ports, energy and
utilities, oil and gas pipelines and water infrastructure.
The Bases Conversion and Development Authority (BCDA)’s flag ship project, New Clark City, is one of the centerpieces of the Duterte
administration infrastructure development agenda. This new urban frontier
aimed at decongesting Metro Manila will offer around 31,400 hectares of
special economic and industrial zones, integrated urban development and
transportation and new, smart and green cities.
Aggressive growth in the Business Process Outsourcing (BPO) to the
Philippines is driving the need for new office space and the creation of
Next Wave Cities (NWCs). This growth is expected to be sustained over the
next five years (Source: IT and Business Association of the Philippines).
The demand for residential housing is also being fueled by the BPO growth
but also by Overseas Filipino Workers (OFWs) and retirees purchasing
investment properties. It is estimated that more than 3 million homes
are currently needed across the mass-housing, middle income and high-end
markets. This demand is likely to rise to more than 6 million units by
2030 (Source: Subdivision and Housing Developers Association Inc.).
Property developers are building Megacities and Townships outside of Metro
Manila. Green building technologies that reduce energy consumption and
costs are gaining popularity. Moreover, the growing potential of the
tourism and gaming industries of the Philippines is also presenting
opportunities for Australian companies specialising in the design,
engineering consulting, fit-out and supply of technologies and solutions to
hotels and casinos.
Australia is recognised as a world leader in project development. Its
expertise is acknowledged not only in engineering work but also in
financial, legal and economic advisory services.
Australian firms can partner with local companies to provide specialised
services such as:
pre-feasibility and feasibility study preparation
legal, financial, and economic studies
preparation of tender documents.
The Philippines is heavily dependent on imported building and construction
materials, with high demand across the sector. Basic materials such as
cement, aggregates, reinforcing steel bars, galvanised iron sheeting and
lumber are imported in large quantities, primarily because of shortfalls in
local production and its comparatively high cost.
As local developers become more aware of green building practices, demand
is growing for sustainable construction products and energy saving
materials. Building companies are showing more interest in smart buildings,
future-proof homes and energy saving innovations, as well as the products
that support them like as pre-cast concrete and polyurethane foam
Opportunities exist for Australian companies able to supply:
- high-quality, value for money sustainable or ‘green’ building materials
new mass-housing technologies
- partnerships with local manufacturers of insulation products, steel
products, pre-fabricated panels, aluminium products
- contracting and consulting services, especially in areas related to
The Philippines has strict nationality requirements enshrined in the
constitution which affect the delivery of projects. For example, the
construction, operation and maintenance of public infrastructure is
restricted to companies that have at least 60 per cent Filipino ownership.
For project delivery, the most viable channel for Australian participation
is in partnership with a major Philippine conglomerate.
The Philippines currently sources the majority of its imported building
materials from near Asian markets, with China being the largest supplier.
The country’s close historical ties to the US means developers often rely
on American designers and architects, although local companies have carved
a prominent niche in the market.
Australia is seen as a potential source of green building products,
services and technologies, but faces strong competition from the US and
Tariffs, Regulations and Customs
The implementation of the ASEAN Australia New Zealand Free Trade Agreement
(AANZFTA) means that most building and construction projects now enjoy zero
AANZFTA Tariff Finder
for more information on applicable tariffs.
The Philippine Government imposes a Value Added Tax (VAT) of 12 per cent on
all products and services sourced locally.
Marketing your products and services
Australia’s proximity to the Philippines and its reputation as a supplier
of quality materials are important factors in penetrating the market. This
is complemented by the Philippine Government’s support of joint ventures
between local and foreign firms, especially in areas where local production
Several Australian manufacturers are already represented across the sector
and Australian exports to the Philippines include:
- interior fit-outs for hotels, offices and residential buildings
bathroom fixtures and fittings
security and safety products
Australian engineering consultants and contractors are also becoming more
prevalent across all sectors of the market, with a focus on infrastructure
projects. Australian architects are partnering with local firms, primarily
on sustainable design projects such as residential and mixed-use buildings.
Local agents and distributors are important conduits for the entry of
imported building materials into the country. These local agents and
distributors supply goods directly to project managers or to hardware
wholesalers and outlets. In some cases, major construction companies are
importing building materials directly to the building site.
Architects and project managers play a very important role in product
specification, so it is critical for suppliers to forge relationships with
those responsible for a project’s implementation.
The cost of materials is also a significant factor for project managers, as
building and construction in the Philippines is a very price sensitive
Sea freight to the Philippines from Australia takes approximately two weeks, with transhipment points in Singapore or Hong Kong. Manila is the main port, followed by Cebu (Visayas) and Davao (Mindanao). Sea freight is generally used by most exporters.
Links and industry contacts
Bureau of Customs
New Clark City
Bases Conversion and Development Authority
Build, Build Build
Department of Public Works and Highways
Department of Transportation and Communication
Philippine Constructors Association
Philippine Green Building Council
Philippine Institute of Civil Engineers
Philippine Institute of Interior Designers
Philippine Society of Ventilating, Air Conditioning & Refrigerating Engineers
United Architects of the Philippines
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