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Department of Trade and Industry CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES FIRST QUARTER 2011 CONSTRUCTION INDUSTRY PERFORMANCE HIGHLIGHTS IMPACT ON THE PHILIPPINE ECONOMY With the slowdown in global trade, the Philippine economy grew at a modest rate of 2.6% during the first semester of 2011. The Gross Domestic Product (GDP) posted a lower growth of 4.0% and was backed by the lackluster performance of the industry sector (3.1%), recovery of the agricultural sector (5.6%) and services sector (4.2%). Propelling the industry sector were the strong performances of manufacturing at 6.8%, and mining and quarrying at 9.2% growth. Construction also accounted for 46.4% of overall capital investments or Gross Capital Formation (GCF) in the country.

Corollary to the modest economic growth, domestic employment increased by 2.4% with a total of 36.29 million workers compared to the 36.56 million workforce in the same period in 2010. The average construction employment in the first semester of 2011 grew by 2.0%. Due to the political crisis in the Middle East and North Africa, Filipino workers were repatriated leading to the decline foreign exchange earnings from construction by 3.5% which amounted to US$ 27.899 million in the first six months of 2011.

SELECTED MACROECONOMIC INDICATORS In 2000 Billion Pesos (First Semester 2009, 2010 & 2011)

2009 Gross National Product (GNP) Gross Domestic Product (GDP) GVA or Peso Contribution of Construction to GDP % Share of Construction to GDP Total Investment or Gross Capital Formation (GCF) Investments (GV) in Construction % Share of Construction to total investment or GCF Total Domestic Employment (In thousand workers) Average Construction Employment (In thousand workers) % Share of Construction to Total Employment FOREX Earnings (US$M) in Current Values from Overseas Performance Report

2010

2011

GROWTH RATES (In Percent) 2009-10

2010-11

3,389.0 2,564.1 145.0 5.7% 397.2 211.0 53.1%

3,738.1 2,786.4 171.9 6.2% 536.8 251.7 46.9%

3,833.4 2,897.3 157.1 5.4% 643.1 238.7 37.1%

10.3 8.7 18.5 35.1 19.3 -

2.6 4.0 -8.6 19.8 -5.2 -

34,626

35,707

36,557

3.1

2.4

1,837

2,019

2,059

9.9

2.0

5.3%

5.7%

5.6%

-

-

40.59

28.91

27.90

-0.3

-0.03

Source: National Statistical Coordination Board (NSCB), Department of Labor and Employment and CIAP-POCB for FOREX earnings


CONSTRUCTION MARKET PERFORMANCE Construction investments, as measured by the Gross Value in Construction (GVC) during the first semester of 2011 reached P238.7 Billion in real terms (2000 as new base year), which is a 5.2% decline from the real value of P251.7 Billion during the first semester of 2010. On the other hand, Construction output, as measured by the Gross Value Added (GVA) amounted to P157.1 Billion in real terms, which is also on a downturn by 8.6% from the real value of P171.9 Billion during the first semester of 2010. The gloomy performance in construction was due to the decline in public construction activities despite the strong support by the private sector for infrastructure investment and development.

Government infrastructure investments (valued at P49.5 Billion in real terms) substantially declined by 47.8% due to the under spending by the government in public construction activities. Public sector construction activities are expected to improve as tax revenues increase and pipeline Public Private Partnership (PPP) projects are implemented. Meanwhile, private construction activities (valued at P189.2 Billion in real terms) accelerated by 20.5% due to the sustained growth of investments in both residential and non-residential construction.

Private 133.36

Public 62.93

77.59

94.7

157.05

189.2 2

2010

2011

49.47

200 Gross Value in Construction (2000 Bil Pesos)

100 80 Gross Value in Construction (2000 Bil Pesos)

133.4

60 40

150 100 50

20

0

0 2008

Growth Rate (In Percent)

2009

2010

2008

2011

2008-2009

2009-2010

2010-2011

23.3

22.1

-47.8

Growth Rate (In Percent)

2009

2008-2009

2009-2010

2010-2011

0.03

17.7

20.5

Contracting Sector Domestic: As of 30 September 2011, the Philippine Contractors Accreditation Board (PCAB) issued a total of 4,760 contractors’ licenses for CFY 2011-2012, 98.0% of which were renewing contractors and the remaining 2.0% were new entrants.

As to principal classification, General Engineering (GE) contractors accounted for 56.7% of the entire population. General Building (GB) contractors consisted of 33.5%. Specialty contractors constituted 5.9% while the remaining Trade contractors are 3.9%.

In terms of size, large contractors (AAA & AA) accounted for a measly 6.4% share of the total local contracting population. Medium-sized contractors (A&B) comprised 35.9%, while small contractors still remained a majority at 57.7%.

PCAB, likewise, issued special licenses to 32 foreign contractors and 136 Filipino contractors with Joint Venture arrangements. In terms of nationality, majority of which were Japanese (14), followed by Chinese (8), and Korean (8)


firms, while the remaining were Austrian (1) and Malaysian (1).

condition in some African countries, specifically, Libya, Kenya and Egypt.

Overseas. During the first semester of 2011, number of POCB-registered contractors and consultancy firms decreased by 20.7% from 28 to 23 firms. There are about 46 outstanding contracts: 3 of which are project contracts and 43 service contracts. About 932 deployed overseas Filipino construction workers were repatriated mainly due to the unstable political

About 4,165 construction workers are presently employed on-site by Filipino overseas contractors, representing a decline of 13.8% compared to the 4,831 manpower-on-site deployed in the same period in 2010. The decline can be attributed to the completion of six (6) manpower service contracts.


Construction Industry Performance by CIAP