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Philippines construction sector to surge

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World Cement,

A shift away from public-private partnerships (PPPs) and towards direct government financing of infrastructure projects, supported by funds from China and Japan, will support surging construction industry growth in the Philippines.

According to analysis from BMI Research, the Philippines’ construction sector is expected to post average growth of 11.2% in real terms between 2017 and 2021, making the country one of the best global performers and increasing its demand for building materials.

Several cement companies have already announced capacity expansions to supply the growing demand in the country.

In early June, Cemex Holdings Philippines (CHP), a part of Mexican building materials giant, Cemex, said it would expand its cement production capacity with a new 1.5 million tpy integrated production at its subsidiary, Solid Cement.

Eagle Cement is also expanding capacity, adding a third production line at Bulacan, including a Loesche vertical roller mill, and a fourth in Cebu. In total, the company aims to almost double its capacity to 9.1 million tpy by 2020.

Meanwhile, Manila-based industrial conglomerate, DMCI, said it was considering investing US$340 million in a new cement plant on Semirara Island. The plant would utilise the area’s limestone and low-grade coal, which are already mined by DMCI subsidiary, Semirara Mining and Power Corp.

According to DMCI Chairman and President, Isidro Consunji, the new cement plant would take advantage of the region’s geology to produce 2.3 – 2.4 million tpy of cement.

“The development of infrastructure is a top government priority, given severe deficiencies in the country’s transport and power infrastructure networks,” said BMI Research. The move away from PPPs is part of a strategy to overcome bottlenecks in project implementation: only five of 56 PPP projects launched since 2010 have been completed.

The Duterte administration will find support from Chinese and Japanese funds, BMI Research continued, as both governments “continue to use infrastructure as a way of competing for political and economic influence in the region.”

China signed US$24 billion of investment agreements in the Philippines in 2016, while Japan pledged US$8.7 billion in January 2017.

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