The Philippine construction industry registered a sharp growth of 9% in 2023, supported by the government’s continued focus on infrastructure spending.
According to the data unveiled by the country’s Department of Budget and Management (DBM) in mid-February 2024, the national government spending on infrastructure and other capital outlays grew by 18.5% year-on-year (YoY) in the first 11 months of last year, increasing from 861.8bn pesos ($15.6bn) in January-November 2022 to 1tn pesos in January-November 2023.
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This sharp increase is due to the disbursements made by the Department of Public Works and Highways (DPWH) to implement various priority infrastructure projects; this includes the construction, renovation, rehabilitation, repair and improvement of roads, bridges, and flood control structures, among others.
Further contributing to this growth was the implementation of various rail transport projects by the Department of Transportation.
To continue infrastructure development through the Build Better More (BBM) Program, the government increased its allocation for infrastructure outlays by 13.5% in its 2024 Budget, from 1.3tn pesos in the 2023 Budget to 1.5tn pesos; this infrastructure allocation is equivalent to 5.5% of the country’s projected gross domestic product (GDP) for 2024, and is also within the government’s 5-6% target range.
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The 5.8tn budget for 2024, which was signed into law by Philippine President Ferdinand Marcos Jr in December 2023, includes an allocation of 982bn pesos for the DPWH.
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By GlobalDataThe overall 2024 Budget is 9.5% higher than the 5.3tn pesos 2023 Budget, and corresponds to 21.7% of the country’s GDP.
Approximately 37.9% of the total 2024 budget has been allocated to social services while 29.6% has been committed to economic services.
The government is accelerating budget disbursement, in line with its efforts to implement various infrastructure programmes.
According to the DBM, 79.3% of the 2024 Budget – equivalent to 4.6tn pesos – had been released by the government as of late February 2024.
This compares to a rate of 77.9% at the end of January 2024, and a rate of just 61.4% at the end of February 2023.
The majority of the total budget disbursements were for the national government’s operations under the General Appropriations Act (GAA) and automatic appropriations.
Of the total 4tn pesos allocated to the GAA, 87.6%, or 3.5tn pesos, had been released as of late February 2024.
The government is ramping up the release of its cash allocation to fund various projects.
According to the DBM, the notices of cash allocation (NCAs) – which are disbursement orders by the DBM to state banks servicing the release of funds to agencies, rose by 15.6% YoY as of end-February 2024, increasing from 527.5bn pesos as of end-February 2023 to 610bn pesos.
Similarly, the utilisation rate also improved from 86% to 88% over the same period, representing the greater capacity of agencies to implement their programmes and projects.
Overall, in 2023, the DBM released a record 4.5tn pesos of NCAs, in line with the government’s focus on expediting programmes and projects.
GlobalData, a leading data and analytics company, expects the Philippine construction industry to expand by 7% in 2024 and register an average annual growth of 7.1% from 2025 to 2028, supported by investment as part of the BBM Program, which aims to expand the country’s infrastructure by developing road, rail, mass transport, and flood control infrastructure projects.
In late February 2024, the National Economic and Economic Development Authority (NEDA) approved 23 new Infrastructure Flagship Projects (IFPs) under the BBM Program; this brings the total IFPs under the programme to 185, and the total cost of the programme to 9.1tn pesos.
As of the fourth quarter of 2023, 74 IFPs were already being implemented, with 19 of them scheduled to be completed in 2024.
The industry’s growth over the forecast period will also be supported by the newly enacted Public-Private Partnership (PPP) Code, which was signed into law by President Marcos Jr in December 2023; the code will enhance public-private collaboration and help in the realisation of high-quality infrastructure projects in the country.
According to the government’s PPP Center, the country had 117 PPP projects in the pipeline, worth 2.4 trillion pesos, as of late February 2024.
This includes 55 airports, rails and port terminal projects, 21 property development projects, and 14 road projects.
According to the PPP Center, 15 PPP projects are expected to be submitted to the NEDA Board for approval this year.
