CIC - Construction Intelligence Center

Infrastructure spending in the Philippines is set to grow at a relatively fast pace

31 Oct 2016

According to the new report from Timetric’s Infrastructure Intelligence Center (ICC), infrastructure construction spending in the Philippines will reach PHP1.1 trillion (US$23.9 billion) in 2020, up from PHP563.8 billion (US$12.4 billion) in 2015.

This fast growth in spending is based on the assumption that a number of the large-scale infrastructure projects move ahead as planned, including the Manila Bay Integrated Flood Control, Coastal Defense and Expressway, and the New Sangley Point International Airport.


The new administration of President Rodrigo Duterte has expressed its commitment to deliver better infrastructure to support the economy’s growth and improve opportunities for citizens. In August 2016, the Department for Budget and Management (DBM) earmarked a total of PHP860.7 billion (US$17.8 billion) for infrastructure projects in 2017 – 11.6% higher than the budget for 2016 – and the equivalent of 5.4% of gross domestic product (GDP). Road networks, railways, and seaport and airport systems will have a combined PHP355.7 billion (US$7.4 billion), while a total of PHP31.5 billion (US$650 million) will be invested in the Mindanao Logistics Infrastructure Network in an attempt to decongest Metro Manila and improve connectivity and reduce logistics costs.


The government also plans to roll out 17 PPP projects by the end of 2017, to complement efforts to ramp up infrastructure investment. As of 30 September 2016, contracts for 14 PPP projects worth a combined PHP361.6 billion (US$7.4 billion) have been awarded since the infrastructure flagship was launched in 2010 under President Benigno Aquino. Mr Aquino launched the Public-Private Partnership (PPP) scheme in a bid to accelerate infrastructure development in the country. Although this was a contributing factor in the upturn in public investment on infrastructure, his administration struggled to push ahead rapidly with major projects.


Despite this progress, there are still major challenges ahead in terms of getting the projects to the construction phase. In order to address the Philippines’ poor infrastructure and fill the existing infrastructure gap, the government needs to deliver on its reform plans to allow for greater financial involvement both from the private sector and institutions such as the Asian Development Bank and the new Asian Infrastructure Investment Bank.


The IIC is currently tracking 269 large-scale infrastructure construction projects in the Philippines, at all stages of development from announcement to execution. “These projects have a total investment value of US$3.2 billion,” according to Timetric’s infrastructure economist, Dariana Tani. The electricity and power sector accounts for the largest share of the project pipeline, with a total project value of PHP73.3 billion. This is followed by railways, with a pipeline value of PHP21.8 billion. The pipeline for roads amounts to PHP21.2 billion, and for airports and other infrastructure projects it stands at PHP19.9 billion. For water and sewerage construction projects, the total pipeline of work is estimated at PHP2.8 billion. The public sector will solely fund 19.3% of the overall infrastructure construction project pipeline, according to the IIC, with a further 45.1% being a mix of public and private funding mechanisms. The private sector will solely fund the remaining 35.6% of the pipeline, with much of this being related to projects in electricity and power. 



About this report

This information is taken from the Timetric report: ‘Infrastructure Insight: The Philippines’


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Source: Company Press Release