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Real growth data for the Philippines construction industry value in 2009 has been revised down to 4.3% year-on-year (y-o-y) from a previous 5.8% y-o-y. While this represents a notable revision, it still indicates solid growth for the country against a difficult economic backdrop. On the plus side, nominal industry value has been revised upwards, from PHP378.67bn to PHP390.45bn (US$8.46bn), for 2009. Despite the slowdown in construction industry growth experienced in 2009, we are still optimistic for growth to rebound in 2010 to previous highs. In 2010, we are anticipating real growth of 7.16%, with this increasing into double digit growth later in the forecast period. Between 2010 and 2014 we are anticipating average growth of around 10% y-o-y.
Evidence that our optimism for 2010 and beyond is well founded is shown in the number of investment pledges recorded by the Philippine Board of Investments. In the first half of the year investment approvals increased by 318% to PHP124.42bn in the same period in 2009 and higher than those approved in the whole of 2009. Investment pledges have been received for 87 projects, of which, 70% were for power projects, including renewable energy and rehabilitation projects. This data presents further upside potential to our forecasts.
However, there are a number of threats to our outlook. Rising construction material prices will threaten the execution of projects. Prices for construction materials increased in April and May 2010, and in June Holcim Philippines announced it would increase its cement prices in the country, starting June 21 2010, further confirming the announcement made by the Board of Investments (BoI) that Philippine cement is one of the most expensive in Asia, second only to Indonesia. Rising prices for cement in the country have been blamed, in part, on the cost of electricity, one of the key inputs. The high cost of electricity, and the intermittent supply, could also pose a threat to construction industry value growth.
Another risk is to one of the largest areas of potential in the Philippines’ infrastructure sector – the renewable energy sector. Despite the passing of the renewable energy act in 2008, which set up a feed-in tariff for renewables, it has yet to define the levels for each individual technology under the renewable bracket, including - solar, geothermal, biomass, wind and small hydro. This is causing uncertainty in the market; indeed, in June 2010, Northwind Power Development put a new wind farm on hold for a year to be located in Aparri, Cagayan..
Despite this, the creation of the Wind Energy Development Association (WEDAP) of the Philippines by a number of power companies, in June 2010, does present potential for better regulations in the sector, and therefore facilitating investment. The association's main focus is to promote and support the development of wind power in the Philippines, as well as influence policy creation under the Renewable Energy Act. So far, WEDAP has called for a reasonable rate of compensation to counteract the high sunk costs of setting up a wind farm, and has suggested feed-in tariffs to make wind competitive with fossil fuels and has called for investment into transmission lines in order to hook up more remote areas to the national grid.
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Original Source : – Philippines Infrastructure Market
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Browse All Business Monitor International Market Research Reports
Real growth data for the Philippines construction industry value in 2009 has been revised down to 4.3% year-on-year (y-o-y) from a previous 5.8% y-o-y. While this represents a notable revision, it still indicates solid growth for the country against a difficult economic backdrop. On the plus side, nominal industry value has been revised upwards, from PHP378.67bn to PHP390.45bn (US$8.46bn), for 2009. Despite the slowdown in construction industry growth experienced in 2009, we are still optimistic for growth to rebound in 2010 to previous highs. In 2010, we are anticipating real growth of 7.16%, with this increasing into double digit growth later in the forecast period. Between 2010 and 2014 we are anticipating average growth of around 10% y-o-y.
Evidence that our optimism for 2010 and beyond is well founded is shown in the number of investment pledges recorded by the Philippine Board of Investments. In the first half of the year investment approvals increased by 318% to PHP124.42bn in the same period in 2009 and higher than those approved in the whole of 2009. Investment pledges have been received for 87 projects, of which, 70% were for power projects, including renewable energy and rehabilitation projects. This data presents further upside potential to our forecasts.
However, there are a number of threats to our outlook. Rising construction material prices will threaten the execution of projects. Prices for construction materials increased in April and May 2010, and in June Holcim Philippines announced it would increase its cement prices in the country, starting June 21 2010, further confirming the announcement made by the Board of Investments (BoI) that Philippine cement is one of the most expensive in Asia, second only to Indonesia. Rising prices for cement in the country have been blamed, in part, on the cost of electricity, one of the key inputs. The high cost of electricity, and the intermittent supply, could also pose a threat to construction industry value growth.
Another risk is to one of the largest areas of potential in the Philippines’ infrastructure sector – the renewable energy sector. Despite the passing of the renewable energy act in 2008, which set up a feed-in tariff for renewables, it has yet to define the levels for each individual technology under the renewable bracket, including - solar, geothermal, biomass, wind and small hydro. This is causing uncertainty in the market; indeed, in June 2010, Northwind Power Development put a new wind farm on hold for a year to be located in Aparri, Cagayan..
Despite this, the creation of the Wind Energy Development Association (WEDAP) of the Philippines by a number of power companies, in June 2010, does present potential for better regulations in the sector, and therefore facilitating investment. The association's main focus is to promote and support the development of wind power in the Philippines, as well as influence policy creation under the Renewable Energy Act. So far, WEDAP has called for a reasonable rate of compensation to counteract the high sunk costs of setting up a wind farm, and has suggested feed-in tariffs to make wind competitive with fossil fuels and has called for investment into transmission lines in order to hook up more remote areas to the national grid.
About Us
ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/
http://reportsandreports.proarticles.co.uk/
http://reportsnreports.wordpress.com/
Original Source : – Philippines Infrastructure Market
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