WELCOME MESSAGE OF SECRETARY RAMON M. LOPEZ
4th Philippine Construction Industry Congress
08 January 2020, Dusit Thani Hotel, Makati City
As delivered
Acknowledgments
Magandang Umaga po sa inyong lahat!
Frankly speaking, the rate the construction industry is really growing in the past three years, you can say that this is really the target sector of the economy right now. I was complaining nga, we were supposed to be pushing for manufacturing under that agri, industry and services.
Under Industry is really manufacturing and construction. What usually would happen before is that manufacturing would always have a higher growth rate than construction ngayon it’s the reverse. The construction is leading double digit as presented.
It was just challenged last year because of that delayed budget went back to single-digit at one point at negative especially on the government side but after that the budget was approved last year, bounce back na double-digit. And I think on the third quarter we hit again 16.3%. It was really amazing double-digit grow. The only double-digit growing sector in the economy. And that really makes construction really sexy, really the talk of the town, really a lot of opportunities not only in businesses kundi pati sa labor absorption.
On one hand, we hear a lot of complaints just the same because ang reklamo ninyo wala ng makuhang workers or in a way, skilled workers. Then you have to pay up more. We heard stories of adding more than 1,000 per day on Monday para talagang pumasok sa construction site ‘yung worker. Totoo pa ba ‘yun? Nawawala pa ba ang mga construction worker?
In fact, every time we’re on abroad we’re talking to the Filipino community we invite them to come back home. Sabi namin nandito na ang mga opportunities. That’s the reason why we are hitting one of the lowest unemployment rate now down to 5.1 what used to be over 6% unemployment rate and kasama sa lowering of unemployment rate of course would be improvement in the poverty incidence.
So, we can say that a lot of good things are happening because of the overall economic growth which is now being pushed up by the Construction Industry. So once again, let me start with the positive note on the construction industry growth.
Last year, the Department of Trade and Industry (DTI) and the Construction Industry Authority of the Philippines (CIAP) worked with the Philippine Constructors Association (PCA) to launch the Philippine Construction Industry Roadmap 2020-2030.
This roadmap envisions a modern, efficient, future-oriented, and globally competitive Philippine construction industry that contributes a large share in nation-building. It also realizes the vision for the industry that upholds transparency, honesty and excellence through the values of “Tatag at Tapat” with “Integrity.”
Today, we are launching concrete, step-by-step action plans that will help us realize and support this Roadmap, called the 7+1 Action Plans. We will also be affirming our commitment to this agenda and the culture of integrity that is part of this industry roadmap.
Current State of PH Construction Industry
As one of the fastest growing economies in the region and in the world, the Philippines has had an average annual growth rate above 6% since 2010. This robust growth momentum was more pronounced during the first 13 quarters of the Duterte administration with 6.4%.
On the production side of our economy, industry’s sharp growth during the Duterte administration was reinforced by solid performances of construction. This was thanks to the fiscal stimulus via the government’s “Build, Build, Build” aggressive infrastructure program, which was instrumental in propelling economic growth. It raised infrastructure spending to record-levels, leveling off at 5% of the GDP in 2018 after recording only 2.5% in 2000.
With our infrastructure spending booming thanks to our “Build, Build, Build” program, we aim to reach 7% of our GDP by 2022. We are confident of achieving this goal with our revised list of 100 flagship infrastructure projects amounting to Php 4.23T.
Construction real Gross Value Added (GVA) share has also been rising. As a share to real GDP, the construction sector’s GVA has been climbing over time from only 4.4% in 2005 to a high of 6.7% in 2018 and in Q1-Q3 2019. This illustrates the growing importance of the construction sector in the domestic economy.
It’s likewise important to note that our construction real GVA growth has also been accelerating. While construction’s GVA growth averaged 9.7% YOY in the first 13 quarters of the Duterte administration, it also jumped to 16.3% YOY in the third quarter of 2019. This is a sharp improvement compared to previous yearly performance of -0.1% in 2005 and -9.6% in 2011.
We are confident that the double-digit growth in the succeeding quarters will be consistent and steady with the timely signing of the 2020 National Budget and the momentum built up by “Build, Build, Build.”
There has also rapid growth in construction’s labor. The construction sector has experienced a steady increase in its labor force, with the number of workers reaching 4.2M by 2019 compared to 1.5M in 2000.
Under the Duterte administration, there was a sharp expansion in the number of construction workers, recording a 1.5M increase during the 2016-2019 period. In 2019 alone, out of the 1.27M new jobs generated, 287 thousand were in the construction sector. In terms of the construction sector’s labor share to total employed in the country, this climbed to nearly 10% in 2019 from only a 5.3% share in 2000.
Importance of PH Construction Industry
That’s why even with construction’s large share to our GDP and double-digit growth helping to boost our economy, this industry is highly significant as a generator of jobs. By increasing local jobs, we can bring home some of our overseas Filipino workers.
Furthermore, one of the main strengths of Filipinos is the services sector, where we offer quality, excellence, and creativity. Creativity is a great value-add as it helps push continuous innovation and applying technological advances like digitization in preparation for the coming Fourth Industrial Revolution.
Thus, we need to push the digital transformation of the Philippine construction industry to make us competitive worldwide and promote our construction services overseas. Through our workers, we can offer the values of excellence, integrity, sustainability, and productivity through “Tatag at Tapat” to global partners.
This, in turn, will increase our job rate, lower our unemployment and underemployment rates, and alleviate poverty in the country.
PH Construction Industry Challenges
While the construction industry has been growing well and creating more jobs, there are still certain weaknesses and challenges that we need to address to sustain its development. This was documented in the Roadmap and includes, among others: the mounting supply side constraints in the form of high logistics and business transaction costs; the slow adoption of digital and modern technologies; and emerging shortage of skilled labor.
There is also the issue of limited number of licensed competent contractors, which is inadequate vis-à-vis the impending rise in construction demand from planned public infrastructure. Lastly, we must address the regulations of the construction sector affected by governance issues regarding the issuance of construction permits and the procurement of government projects. I must add also to ensure that we all be used standard compliance construction materials.
It is very important. It is really a package that you really have to audit. The standards, the structure, the actual adherence to the right needs of the cement and the density of the steel. ‘Yung pagsunod sa approved building code is really one aspect that has to be audited. It has to be implemented well. It really goes beyond the standard construction materials but nevertheless we have to start with those basic things.
And I remember on the DTI side we keep on adding more products for safety purposes, more products under the standard compliance. So, we’re through with cement, steel, we’re having glass although na-TRO po tayo, but we will continue to fight it. We’ll add roofing materials. We’ll add plywood. And also recently because of the recent series of earthquakes, si Presidente wanted to add hollow blocks also. So, it’s an industry dominated by SMEs but nevertheless we really have to put substandard compliance in those products.
To this end, we need to strengthen the regulatory and enforcement powers of CIAP to curtail unlicensed construction activities, improve compliance with building standards, and push for the superior quality of public and private construction projects. Further, there is the need to apply sustainability and resiliency principles and standards, given that the Philippines is one among the disaster-prone countries of the world.
Government Efforts to Address Challenges
Today’s Action Plans will address these challenges. However, I would like to point out that the government is also working to help the industry address these challenges. Aside from strengthening CIAP, DTI is working with the logistics sector to implement reforms to reduce logistics costs, make doing business easier, and address our human capital requirements.
DTI is also working with the Technical Education and Skills Development Authority (TESDA) to ensure continuous HRD training to level up labor skills. We likewise partnered with Skills Future Singapore (SSG) to implement programs to upgrade the skills of our labor force.
The passage of Republic Act (RA) No. 11032—or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, or EODB Law—as well as the establishment of the Anti-Red Tape Authority (ARTA) will address the matter of corruption—the black box. Through the EODB Law, local government units have been streamlining their processes and setting up Business One-Stop Shops (BOSS), which include securing construction permits. Like in Quezon City there is already Business One-Stop Shops (BOSS) in dealing with getting construction permits that is been replicated around the country in all LGUs. And that will be the standard to facilitate all these permit acquisition.
In fact, in the World Bank Doing Business 2020 Report, the Philippines was cited for its improvement in the indicator for dealing with construction permits. Cited in perfect situation not all in LGUs but certainly that is the way forward. As you must have heard the Philippines’ EODB score and our rank from 124th to 95th. And now we’re talking of more streamlining, more automation so that we can move beyond the 95th towards to 70’s and eventually towards the 50’s rank.
Future Vision of the PH Construction Industry
We are confident that with the Roadmap and the Action Plans, we will attain our goal of a more modern and globally competitive Philippine construction industry.
Without the Roadmap, industry growth is predicted to go only as high as 86% in the next 11 years, or an average of 8% per year. Cumulative total value of Php 43T. With the Roadmap implementation and all the action plans, the cumulative value can go up to Php 130T.
The Roadmap will also bolster our future job market as it raises the quantity and quality of jobs for our construction managers, professionals, and skilled workers. For quantity, we expect to increase available jobs by more than 80%, from 3.9M to 7.1M. For quality, we expect to develop new and improved sets of skills and professional competencies that incorporate modern technology, innovation, and digitization to greatly improve worker productivity.
We further predict that the average construction worker in 2030 will produce 500% more work versus the work produced in 2018. The total maximum annual value of work in 2030 will amount to Php 21.3T by 2030, or ten times larger than the Php2.3T-worth of construction work done in 2018.
Conclusion
Before I conclude, I would like to point out that we’ve generated an additional 1.27M jobs last year even as our annual unemployment rate went down to a record-level of 5.1%. Our underemployment which is to be 18-19% which is now down to 14.0%. It shows the quality of jobs that they have.
Meanwhile, the latest outcome in our country’s poverty incidence went down from 23.3% in 2015 is now down to 16.6%. And the ratings are going and continue to generate more jobs, generate more businesses that can even below the targeted rate of 14% poverty incidence. Hopefully looking at the vicinity of 10 to 12% by 2022. So that would mean improving the quality of lives of many more Filipinos under the Duterte Administration.
If we can uplift the lives of 5.9M Filipinos by giving them decent jobs and employment in 2018, imagine how much more of our countrymen we can help through a stronger Philippine construction industry by 2030? Hopefully by that time full employment na. Wala nang mahirap. Wala ng nasa poverty incidence kung lahat ay may trabaho.
That’s why I am calling on all stakeholders to remain resolved in achieving the Roadmap’s vision to power up our economy. More importantly, our country’s “Golden Age of Infrastructure” will be further realized even as we continue to strengthen the “Build, Build, Build” program through the Roadmap’s implementation. We will also provide future generations of Filipinos a strong infrastructure program crucial to economic growth while giving them a chance to a better life.
Of course, I must credit all agencies behind the “Build, Build, Build” program. Pinangungunahan ng ating DPWH, DOTR, BCDA backed up by DBM, DOF, NEDA, many more infrastructure related agencies that are really part the “Build, Build, Build” and definitely that is giving a big boost to economic growth. And hopefully, you remember under the Construction Roadmap there is what you call the local content hopefully that is where more manufacturing be accelerated as we increase the demand for global construction material and other machines that would be helping the construction center. So yun naman ang multiplier effect sa manufacturing.
Thus, we thank our partners in the private sector for collaborating with us in making these aspirations into realities. Together, we will realize President Rodrigo Roa Duterte’s promise of “Tapang at Malasakit” that will help Filipinos attain a life that is “Matatag, Maginhawa at Panatag”.
Magandang umaga po sa inyong lahat.