BY 2023: Construction value to hit P3T

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    Megawide Construction Corp. expects the construction industry to be valued at $66.9 billion (about P3.3 trillion) by 2023, a 50 percent growth from $44.3 billion (P2.2 trillion in 2018.

    The company which is in the middle of a P5-billion fund raising exercise said the industry is expected to post a compounded growth of 8.6 percent between 2019 and 2023, as stated in its preferred shares sale prospectus.

    “Fitch Solutions expects a slower growth for the construction industry in the Philippines amid the pandemic. It has lowered the growth projection for the industry this year to 3.6 percent instead of 5.8 percent compared to last year’s growth of 4.1 percent. As reported, works on numerous projects across the country have been temporarily halted which will stretch the project timelines. The projects also face supply chain challenges, especially if sourced from foreign markets,” Megawide said.

    “However, the government is still set to ramp up its Build Build Build program even if the administration has diverted a portion of its funding in the Bayanihan cash assistance program,” it added.

    Megawide said the growth of the industry will be boosted by the Construction Industry Roadmap 2020 to 2030, crafted in 2019 by the Department of Trade and Industry through the Construction Industry Authority of the Philippines and the Philippine Contractors Association.

    “The construction industry is aiming to boost its contribution to the economy to P130 trillion from just P2.3 trillion in 2018,” it said.

    The roadmap includes the legislation of a long-term infrastructure development program that will ensure continuity of the programs beyond changing administration so the country can catch up on infrastructure deficiencies.

    “The proposed law will feature a 30-year Infrastructure Master Plan with emphasis on maintaining a budget of at least 5 percent of the GDP,” Megawide said.

    It added these prospects are supplemented by the “boom in real estate and construction” that have increased the demand for construction services.

    “Further expansion of major retail chains nationwide, especially outside Metro Manila will increase the demand for construction services,” Megawide also said.

    Te Ease of Doing Business Act (Republic Act 11032) will also “encourage greater investments and take office spaces (which could also increase the demand for construction services),” Megawide noted.

    Megawide said the second phase of the tax reform package , when passed, will also reduce corporate income taxes from 30 percent to 25 percent “which will increase companies’ income and spending as well as attract investors into the country; expansion of existing and new companies may need additional manpower which will create demand for residential spaces.”

    In August, Megawide said it looks to raise P5 billion through the issuance of preferred shares to use for future projects the proceeds of which will finance the development of a 4.5-hectare property within Mactan Cebu International Airport.