BUILDING FOR A GROWING ECONOMY

Philippines

Opportunities in the Construction Industry

Basic Facts

on the

Philippines

Drivers of the

Construction

MarketOpportunities

Doing

Business

Basic Facts

on the

Philippines

The Philippines at a glance…

7,107 islands

298,170 km2

LAND AREA

POPULATION

LABOR FORCE

NATIONAL LANGUAGE

OFFICIAL LANGUAGE

CURRENCY*

35 million

99,385 million, with an

average age of 23 years old

Filipino

English

USD 1 : PHP 45.15

SGD 1 : PHP 33.59

*As of June 25, 2015 BSP rates

The Philippine economy on high trajectory growth

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

GDP in PHP billion,

1960 – 2014

At constant 2000 prices

Stable and resilient economic growth

6.7 4.78 5.24 6.62 4.15 1.15 7.63 3.64 6.82 7.1 6.1

4.8

6.5

5.5

2.9

8.3

4.13.8

4.6

3.23

4.2

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GDP CORE INFLATION (2006=100)

Source: PSA (2015)

HEADLINE INFLATION CORE INFLATION (2000=100)

6.1% GDP 2014

7.1% GDP 2013

4.2% headline inflation 2014

3.0% headline inflation 2013

Target inflation: 3-5%

Improving global competitiveness ranking

Ease of Doing BusinessWorld Bank 2015

Global Competitiveness IndexWorld Economic Forum 2014 - 2015

Economic Freedom of the WorldFraser Institute Annual Report 2014

Index of Economic FreedomHeritage Foundation 2015

95 /189 from #108

52 /144 from #59

51 /152 from #56

76 /178from #89

Strengthened governance and anti-corruption measures

Corruption Perceptions IndexTransparency International 2014

WGI Gov’t EffectivenessWorld Bank 2013

85 /175from #94

57 /215from #58

Removed from USTR Special 301 IPR Priority Watch List since 2014

BBB- with stable outlook

BBB with stable outlook

Baa2 with stable outlook

Drivers of the

Construction

Market

Industry-led accelerating growth

2013 2014 2015

FY Q1 Q2 Q3 Q4 FY Q1

GNP Growth (%) 8.1 6.6 6.9 3.9 5.7 5.8 4.7

Net Primary Income from the

Rest of the World13.1 11.1 7.9 -3.1 1.4 4.1 2.7

GDP Growth (%) 7.1 5.6 6.7 5.5 6.6 6.1 5.2

Agri, Fish and Forestry 1.1 0.6 3.4 -2.6 4.2 1.6 1.6

Industry 9.2 5.4 9.1 7.8 9.1 7.9 5.5

Services 7.0 6.8 5.9 5.6 5.6 5.9 5.6

Source: PSA (2015)

Manufacturing and construction drive industry growth

2013 2014 2015

FY Q1 Q2 Q3 Q4 FY Q1

GDP Growth (%) 7.1 5.6 6.7 5.5 6.6 6.1 5.2

Agri, Fish and Forestry 1.1 0.6 3.4 -2.6 4.2 1.6 1.6

Industry 9.2 5.4 9.1 7.8 9.1 7.9 5.5

Services 7.0 6.8 5.9 5.6 5.6 5.9 5.6

Mining and Quarrying 1.2 9.0 2.1 4.2 5.9 4.9 7.1

Manufacturing 10.3 7.0 11.1 7.5 7.7 8.3 5.9

Construction 10.3 1.0 7.2 13.1 17.9 9.9 4.5

Electricity, Gas and Water

Supply3.6 0.3 3.0 3.0 5.1 2.8 4.1

Source: PSA (2015)

Construction

Administrative support service

Others

Real estate

Electricity, gas, steam and air conditioning supply

Manufacturing

Steady investment flows

Source: DTI (2015)

BOI-PEZA Approved Investments

28.9

28.2

19.5

10.1

58.3

Share in %

299.54

506.49

657.27 672.3

742.16

634.24

2009 2010 2011 2012 2013 2014

In PHP billion

Approved investments by sector

Continuous growth in IT-BPO

1.03M jobs generating USD 18.4B in 2014 Projection for 2016: USD 25B

REVENUE EMPLOYMENT

18 10

66 80

17 14

20 20

CONTACT CENTERS

HEALTHCARE INFO

MANAGEMENT

SOFTWARE

DEVELOPMENT

CORPORATE SERVICES

Driving integrated mixed-use developments

% Growth , by sector , 2013

LOCAL TOURISTS

FOREIGN ARRIVALS

Increasing tourist arrivals

Projected room gap of 32,023 in

critical destination clusters by 2016

4.8Min 2014

10Mby 2016

24.32% 14.95% 9.59%

8.17%

4.65%

3.71%

44.1Min 2014

56.1Mby 2016

Source: DOT (2015)

Continuous inflow of foreign exchange

2014: USD 24.35B, increased by 5.93%

SG as 5th largest source with USD 1.18B, 10.75% higher

2013: nearly USD 23B, increased by 7.45%

Opportunities

Infrastructure / Public-Private Partnership (PPP) Projects

Architectural Engineering Services Outsourcing

Joint Venture for Third Markets

Tourism Facilities and Services

Mass Housing Projects and Hospitals

Sourcing of Construction Materials and Furnishings

Public-Private Partnerships (PPP) Projects

Geared towards inclusive growth

Private sector as a partner in development

PPP as one of the strategies to accelerate Infrastructure Development

2

education

LEGEND

transport

road network

Food terminal

justice/corrections

energy

property

development

hospital/healthcare

culture/recreation

REGION 1

1

REGION 2

1 1

1

CAR

1

REGION 3

2 1

1 3

2

REGION IVA

*No listed projects for IVB, VIII,

IX, XII and ARMM at the moment

Current PPP projects

REGION 5

1 2

1 1

5 1 1

NCR

2 5 1 3

14

REGION 6

2

1

REGION 7

2

REGION 10

REGION 11

2

1 1

REGION 13

1

Source: PPP projects database

PPP Projects Pipeline

No. of

Projects

Est. Project

Cost in PHP

Est. Project

Cost in USD

Awarded 10 284 B 6.31 B

Under procurement 17 538.28 B 11.92 B

For Approval/Ongoing

Studies/Procurement of

Consultants/Development27 275.27 B* 5.96 B

*No quote for 18 projects yet

3

5

2

Bulacan Bulk Water Supply Project

New Centennial Water Source-Kaliwa

Dam Project

Davao Sasa Port Modernization

Project

Operations, Maintenance &

Development Projects for:

New Bohol/Panglao, Laguindingan,

Davao, Bacolod, Iloilo

North-South Railway Project (South

Line)

Operation & Maintenance of LRT

Line-2

TOTAL 54 1,098.51 B 24.19 B

Transport servicesTourism-related facilities Retirement villages

Restoration/preservation and operation of historical shrines, landmarks and

structures

Horizontal and vertical mass housing Qualifications for registration

The selling price of each housing unit shall be more than

Php450,000.00 but not exceeding Php3.0 million

Expansion projects

Minimum of 20 livable dwelling units in a single site or building

Must be new or expanding economic/low-cost housing project

For vertical housing projects, at least 51% of the total floor area,

excluding common facilities and parking areas, must be devoted

to housing units

Construction of additional floors or annexes intended for housing

units, OR

If the project will locate adjacent or contiguous to an existing

housing project owned by the same entity and shall share

common facilities including access to the existing project

Establishment and operation of hospitals

General and specialty hospitals in

priority locations

Health facilities

Geriatric care facilities

Custodial care facilities

Diagnostic/therapeutic facilities

Specialized out-patient facilities

Clark Green City ProjectNew urban development project in Sacobia, Pampanga as

part of RA 7227 to transform former U.S. military bases into

productive civilian use

“Environmentally sustainable,

socially inclusive, economically

competitive, culturally relevant,

and technologically integrated”

Development into parcels covering between 200 and 300 hectares each

9,450-hectare property within the Clark Special Economic Zone

Open to both local and foreign firms with an estimated project cost of USD 14B

bcda.gov.ph clarkgreencityphils.com

Embedded software

Localization

Basic CAD encoding

Conceptual design

Design development

Construction document package

Presentation drawings

Rendering and animation

Architecture & Engineering Outsourcing

ARCHITECTURAL

SERVICES Upstream product engineering

Concept design

Simulation

Design engineering

Downstream product engineering

CAD/CAM/CAE

MANUFACTURING

ENGINEERING

Rich talent pool

Highly educated and English proficient

Highly trainable with fast learning curve

Adaptable to universal cultures

Strongly customer service-oriented

High level of commitment and loyalty

Robust pipeline of talent

106,309

61,786 65,092 68,178

110,280

142,061

Other disciplines Engineering andTechnology

Education andTeacher Training

InformationTechnology

Medical andAllied

BusinessAdministration

and relatedcourses

553,706 graduates from 2014 alone

Sourcing of construction materials and furnishings

TOP MARKETS

USD 3,209,634,919

USD 93,218,288 USD 21,678,236

USD 12,296,268 USD 12,041,234 USD 11,440,844

Source: DTI (2015)

Taiwan (USD 8,194,061); S. Korea (USD 7,309,352);

Singapore (USD 4,537,111); France (USD 4,394,192)

Metal

Builders’ Woodwork

Plastic

Prefab building

Sanitarywares &Bathroom fixtures

Cement

Aggregates

Bricks/Tiles

Marble tile & slab

Bi-annual expo on handcrafted products

Furniture

Furnishings

Holiday decor

201515-18Oct

Partnerships for 3rd Markets

73 industrial plants with 10 countries

39 buildings with 8 countries

23 roads with 5 countries

Doing

Business

Foreign participation in construction projects

100% foreign-owned (special license)

100% foreign equity (regular license)

25% foreign equity

Projects under international competitive bidding,

BOT or PPP projects

Private construction projects

Locally-funded government projects

New AAAA License Category

For more information on government projects, access the Philippine Government Electronic Procurement

System, the government’s tool for procurement reforms and transparency at

http://philgeps.gov.ph/

Investment Priorities Plan 2014 – 2016

preferred activities export activities ARMM list

manufacturing

shipbuilding and repair

aerospace parts and MRO

hospitalsagribusiness and fishery

iron and steel products

PPP projectscreative industries and

knowledge-based services

economic and

low-cost housingenergy

public infrastructure

and logisticsmotor vehicle

agriculture support

infrastructures

production and

manufacture of export

products

services exports

activities in support

of exporters

export activities

agriculture, agribusiness and

fishery

industrial service

facilitiesbasic industries

retirement villagesconsumer manufactures

infrastructure and

services

engineering industries

and facilitieslogistics

tourist accommodation

and transporthalal industry

health and education

facilities

BOI

(EO 226, as amended)

PEZA

(RA 7916, as amended)

CDC / SBMA

(RA 7227)

Income Tax Holiday (ITH) 4 – 6 years (max of 8 years)Exempted from all local and

national taxes - value-added

taxes, franchise taxes, excise and

ad valorem taxes)ITH Bonus 3 years provided the firm meets certain conditions

Special Tax Rate of 5% on

Gross IncomeSpecial Tax Rate of 5% on Gross Income

Importation of Capital

Equipment, Spare Parts and

Supplies

0% duty-free Tax and Duty-Free

Wharfage Dues and Export

Tax, Duty, Impost and FeesExempted

Simplification of Customs

ProceduresAvailable

Employment of Foreign

Nationals

Foreign nationals may be employed in supervisory, technical or advisory positions within 5 years

from a project’s registration, extendible for limited periods. The positions of president, general

manager, and treasurer or their equivalents, of foreign-owned registered firms may be retained by

foreign nationals for a longer period.

Foreign employees may bring their spouses and unmarried children under 21 years of age

Competitive business incentives

TRADING PARTNER IN ASEAN

Singapore is part of the Philippine growth story

SOURCE OF INVESTMENTS IN ASEAN

SOURCE OF INVESTMENTS WORLDWIDE

TOURISTS, GROWING 18%

Important partner in industrial estate development and in operation of hotels

IE Singapore - Manila

Expansions of Keppel & SIAEC

Recent

investments

5.6% stake at BPI

P3.4B loan, with option to exchange to shares in Century Canning

14.4% stake in MPIC Hospital Group

6.95% stake with Emperador Inc.

Arran investment to acquire 11% of Century Pacific Food Inc.

First-class lifestyle

Second home to expatriates who enjoy the company of the warmest people in the region, the country's openness

to varied cultures and a decidedly global outlook

Accessible and affordable luxuries

A growing favorite tourist destination, as evidenced by the steadily increasing tourist arrivals

value-for-money housing

modern recreational facilities

first-rate educational institutions adopting international standards

business centers

World class hospitals

PHILIPPINE TRADE & INVESTMENT CENTER

WHO Glenn G. Peñaranda Commercial Counsellor

WHERE

Your link to opportunities in the Philippines..

07-234 Faber House, 230 Orchard Road, Singapore 238854

(+65) 6887 3186

Singapore@dti.gov.phHOW

PhilTradeSG

PhilippineTradeSG philtradesg

www.philippine-embassy.org.sg

-> Doing Business