Government spending boosts building industry

MANILA, Philippines - Government spending on infrastructure projects is the major reason why the construction industry is growing despite the global financial crisis, the Philippine Contractors Association (PCA) said yesterday.

In an interview, PCA president Anthony L. Fernandez said that the construction industry is doing good even if the global economy has gone into a recession. “We are not that affected. The effect of the crisis in the industry is not so bad.”

In fact, Fernandez said that they are optimistic that the industry will post a growth for the first three months of this year. “I don’t have the figures yet but we are hopeful that there will be a growth.”

In 2007, the industry went up by 20 percent. Last year was better with a 20.6- percent growth.

For this year, Fernandez said they do not know how the industry will fare but he said that public spending is boosting the construction industry.

Fernandez said the trend has shifted with regards to the distribution of construction spending. Five years ago, private construction outnumbered public construction. In fact 60 percent of the construction projects were private.

Now, Fernandez reported that there has been a shift with as much as 70 percent of the entire construction projects being funded by the government.

The government has allocated billions for infrastructure spending as part of the pump priming activities.

With regards to private construction, Fernandez said commercial construction is up. He said there are a number of malls and offices that are being built. Condominium construction is likewise rising.

However, he noted that there has been a slowdown in the construction of high-end condominiums. He said this has been replaced by middle to low-end condominium projects.

A reason why the industry is growing, he said, is the prices of construction materials. In the past year, prices of most of the materials have gone down. He said steel prices and other inputs are already low.

Unfortunately, one input has remained high. The price of cement is still high. “We are trying to get their prices down,” Fernandez said.

The government has already tried to influence the price of cement by allowing imported cement to come in the country at zero tariff. However, this has not pulled the prices down.

As such, the government said that they will try to study the industry and the reason why cement prices remain high.