THE Philippines will continue to be one of the fastest-growing construction markets in Asia as a result of the government’s strong commitment to infrastructure development, according to think-tank BMI Research.
For 2018, the government allocated more than P1 trillion for infrastructure spending under the Duterte administration’s “Build Build Build” program, of which P643.3 billion will be coming from the budget of the Department of Public Works and Highways.
“Infrastructure development is one of the core components of Duterte’s policy agenda, and increased spending on infrastructure projects has contributed to our positive forecasts for the construction and infrastructure sector,” BMI said in an analysis on Tuesday.
“With Duterte promising to increase annual infrastructure spending from 5.4 percent in 2017 to 7.4 percent [of gross domestic product]by 2022, we highlight that there is significantly more room for budget allocations to grow in the upcoming years,” BMI added.
BMI noted that the budget for infrastructure would encourage greater private and foreign investment in the construction sector.
“Although our Country Risk team highlights that the government, similar to previous years, is likely to miss both revenue and expenditure targets, we note that realized investments will still provide a sizeable boost to the construction industry,” BMI said.
It noted that infrastructure spending would primarily benefit the transport sector as the Department of Transportation pushes for development, construction and expansion of high-value and high-profile railway, highway and airport projects.
“Increased government spending will also boost investment sentiment in the infrastructure sector, with private and foreign companies further contributing to the Philippines’ construction industry growth,” BMI said.
“Despite our belief that some of the government’s revenue and expenditure goals are too ambitious, public investment will support rapid growth in the construction industry averaging 9.8 percent annually between 2017 and 2026,” BMI said.