Construction industry’s modernization to boost resilience amid trade uncertainties

The Philippine construction industry can improve its resilience amid ongoing global trade uncertainties by modernizing its operations and strengthening domestic supply chains.

“The tariff shifts introduced by US President Donald J. Trump have triggered ripple effects across global supply chains, affecting everything from raw materials to technology imports,” Vitaly Berezka, regional spokesperson for APAC (Asia-Pacific) at Austrian construction technology firm PlanRadar, said in an e-mail. “For the Philippine construction and property sectors, the most immediate risk lies in rising costs and potential delays tied to sourcing construction inputs.”

“The imposition of reciprocal tariffs by President Trump has certainly brought headwinds to the local construction industry. These tariffs will disrupt the construction supply chain, and hence might impact availability, lead times and pricing of imported construction materials,” Jason C. Valderrama, president and chief executive officer at construction firm JCV & Associates, said.

According to Mr. Berezka, the Philippines has an opportunity to position itself as a regional innovation hub as global firms rethink supply chains.

“By accelerating investment in digital infrastructure and construction technology, the country can increase project efficiency, attract forward-thinking investors, and strengthen its long-term resilience,” he said.

Local construction firms should push for digitalization to let them adapt to evolving global conditions accordingly, Mr. Berezka said.

“Embracing construction technologies like AI-powered platforms, cloud-based documentation, and digital twins will provide the visibility and flexibility needed to adapt in real-time to supply chain or regulatory shocks.”

In particular, they can adopt property technology or “proptech” platforms and digital construction tools, he said.

Construction-related technologies could also help these companies optimize procurement, automate workflows, and reduce material waste, he added.

AI is becoming a “powerful equalizer” in the construction industry amid the global uncertainties, he said, adding that using AI for predictive analytics can help construction managers anticipate delays or cost overruns and automate risk detection.

AI can also streamline reporting and compliance, which is crucial amid shifting regulatory and trade landscapes, Mr. Berezka said.

“Diversifying supplier bases and investing in local supply chains can reduce vulnerability to external tariff policies and logistical constraints. The Philippines has an opportunity to grow its internal capacity while still attracting international partnerships,” he added.

Mr. Valderrama said that with muted US demand for construction materials likely to lead source markets to consider exporting to the Philippines to skirt the higher tariffs, the Philippines must ramp up the development and completion of key infrastructure projects, address the housing backlog, and elevate the country’s manufacturing sector.

The construction industry must also widen its in-country and offshore supply pool, pursue vertical integration, utilize technologies, and adopt modern construction methods and sustainability practices, he said.

Mr. Berezka likewise said that industry players must collaborate with the government on long-term infrastructure plans to incentivize innovation and create a stable regulatory framework that encourages digital adoption and sustainable development.

“Resilience in this era will depend not just on withstanding disruption, but on using it as a catalyst to modernize and evolve. The future belongs to construction ecosystems that are digitally enabled, operationally agile, and strategically diversified.”

Source: Business World

Longest road mountain tunnel nears completion.

The Department of Public Works and Highways (DPWH) has entered a significant stage in the construction of the 2.3-kilometer twin-tube tunnel—soon to be the longest road mountain tunnel in the Philippines—serving as a key feature of the 45.5 kilometer, four-lane Davao City Bypass Construction Project (DCBCP).

This flagship infrastructure is being undertaken in line with President Ferdinand R. Marcos Jr.’s Build Better More program, which aims to modernize the country’s transport network and support inclusive development, under the broader vision of Bagong Pilipinas - a new and better Philippines.

According to DPWH Senior Undersecretary Emil K. Sadain, the DCBCP has recently completed a major milestone, as the north and south portal ends of the northbound tunnel were finally connected.

Located at the challenging mountainous terrain, DCBCP will offer motorists a safer and more efficient alternative route, effectively decongesting traffic within Davao City and enhancing regional connectivity.

In his report to DPWH Secretary Manuel M. Bonoan, Undersecretary Sadain noted that the construction breakthrough of the northbound tunnel, along with the ongoing excavation works for the remaining 202 meters of the southbound tunnel—which is now 91 percent completed—marks significant progress in this strategic infrastructure project.

Financed through a combination of a loan agreement with the Japan International Cooperation Agency (JICA) and local government funds, the DCBCP spans from Barangay Sirawan in Toril, Davao City to Barangay J.P. Laurel in Panabo City. Once completed, it is expected to drive economic growth, improve logistics, and connect communities - key goals under Bagong Pilipinas.

On April 11, 2025, Senior Undersecretary Sadain led an inspection of the road mountain tunnel under Contract Package (CP) I-1, covering 10.7 kilometers and now 58.7 percent completed by the Shimizu-Ulticon-Takenaka joint venture. He was joined by UPMO-Roads Management Cluster 1 Project Director Benjamin A. Bautista, UPMO-Bridges Management Cluster Project Director Rodrigo I. Delos Reyes, and Stakeholders Relations Service Director Randy R. Del Rosario.

The team also evaluated the progress of CP II-1, which includes several bridges being constructed by the CavDeal/WECI/Coastland Joint Venture, with support from UPMO Project Managers Joselito B. Reyes, Ricarte Mañalac and Emmanuel Regodon, Project Engineers Juan M. Diña Jr. and Oliver Angeles, and Engrs. Earl Nicholas F. Rada and Divina B. Bulan.

The locally funded portions of the bypass road under CP II-1 and CP II-2 are now 72.83 percent and 63.89 percent completed, respectively. CP II-1, spanning 2.54 kilometers and valued at P4.33 billion, features a 1.3-kilometer four-lane road and seven bridges, with completion targeted in the first quarter of 2026. Meanwhile, CP II-2—a 3.52-kilometer road section worth P4.60 billion—is slated for completion in the third quarter of 2026.

Other segments under CP I-2 and CP I-3 are also progressing steadily while Package II-3 will soon start its procurement activities.

Once completed, the Davao City Bypass will reduce travel time between Toril and Panabo City from 1 hour and 44 minutes to just 49 minutes, stimulating economic activity, expanding business opportunities, and boosting tourism across Davao Region and Mindanao—concrete steps toward building a Bagong Pilipinas.

Source: Philippine Resources

The Philippine Housing Roadmap, 2025 to 2040

Next to food security, the most serious challenge to the present Administration in the economic realm is to provide decent housing to the lowest income groups among our more than 22 million households.

The private research group, the Center for Research and Communication (CRC) has been one of the most active in helping the Philippine government and the private business sector to formulate housing roadmaps.

Led by one of the leading experts on the economics of housing in the Philippines, Dr. Winston Padojinog, the Philippine Housing Roadmap for 2025 to 2040 was recently completed, in partnership with the four housing and real estate associations, i.e., the Subdivision and Housing Developers Association (SHDA), the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP), the National Real Estate Association (NREA), and the Chamber of Real Estate and Builders’ Association (CREBA).

Since the last housing roadmaps formulated in 2012 and 2016, the housing sector has achieved significant milestones, including the establishment of the Department of Human Settlements and Urban Development (DHSUD) and the provision of incentives for socialized housing. Despites these achievements, however, the Philippines still suffers from serious shortages in housing for low-income households as housing production continues to fall short of the goals.

Of the one million units targeted by DHSUD to produce annually over the six-year period under the present Administration of Ferdinand Marcos, Jr., less than 100,000 units have been constructed annually. The increasing gap between housing demand and supply, compounded by increasing construction costs and the growing number of marginalized households, underscores the urgent need to adopt a more coordinated approach between the public and private sectors. The availability of housing, whether owned or rented, for the masses is one of the most stabilizing factors any society.

While recent adjustments to socialized housing price ceilings, VAT exemptions, and housing subsidies and incentives offer some relief, fiscal support, and collaboration among the key stakeholders, such as government agencies, developers, housing associations and financing associations continue to be grossly insufficient.

The Roadmap prepared by the team of Dr. Padojinog for the period 2025 to 2040 aims to coordinate the efforts of all housing sector stakeholders to address the serious backlogs effectively, which by 2023 was already estimated at 12.4 million and projected to balloon to 16.6 million by 2040 if present trends are not reversed.

The vision that guided the four participating real estate and housing associations is as follows:

“Every family has the right to equal access to a decent, affordable, safe, resilient and sustainable home and community regardless of economic status. The housing industry stakeholders, both public and private sectors, envision to collaborate in providing housing solutions to eliminate the backlog by the year 2040.”

To realize this vision, the four associations — in close cooperation with the Government — aim to achieve the following goals:

1.) Increase the production of decent, safe, affordable and sustainable housing according to targeted needs and market segment beneficiaries in each region;

2.) Mobilize funding for public and socialized housing and encourage investments in affordable housing;

3.) Bridge end-user financing and affordability gaps;

4.) Improve housing’s regulatory environment;

5.) Encourage the establishment of decent, safe, resilient, sustainable, and affordable housing units and housing communities.

Given these mission and vision statements for the entire Philippine housing industry, the Roadmap focused on addressing the current weaknesses of and threats to the industry.

These include:

1.) Unclear respective roles of the government and private sector in the provision of public and socialized housing that often result in overlaps and confusion;

2.) Price ceiling adjustments that often are not responsive to the ever-changing conditions of the housing sector;

3.) Lack of diversity and flexibility in the development approach to socialized housing; 4.) Lack of assurance on the provision of income tax holidays to providers of economic and low-cost housing units, which lack often inhibits long-term investment decisions related to housing;

5.) Absence of a regulatory framework and standards to promote “green” or sustainable housing, including the provision of tax breaks and incentives to developers that adopt them;

6.) Affordability gaps that limit the capacity of the marginalized and socialized housing segments to afford renting or owning a housing unit;

7.) Overdependence on domestic capital and traditional bank financing, exacerbated by the limited amount of available guaranty funds for housing development and the absence of asset securitization for affordable housing segments;

8.) Limited government budgetary allocations to the housing agency and to key shelter agencies targeting marginalized and low-wage earners; and,

9.) Bureaucratic delays in the approval process that increase costs and discourage the production of housing units.

In response to these industry gaps and limitations, certain strategic initiatives were recommended to reduce the backlog and to improve affordability. First on the list is to have a clear delineation of roles between the government and private developers. It is recommended that the government prioritize public and socialized housing for lower-income households and informal settlers, while private developers focus on mid- to upper-income market segments and explore alternative development approaches such as horizontal housing.

It is crucial to emphasize the need to allocate funds for socialized housing and to address affordability gaps. Additionally, expanding incentives for economic and low-cost housing developers, including tax holidays and aligning thresholds with updated regulations, can stimulate production.

To bridge affordability and access gaps, the government should enhance public housing options through long-term leases and interest expense subsidies. There is need to improve access to developmental funding for both socialized and economic housing by liberalizing interest rates, attracting foreign direct investments, and exploring housing and real estate investment trusts (REITS). Affordable end-user financing should likewise be supported through subsidized rates and extended payment terms.

On the other hand, regular and increased budget allocations for public and socialized housing, including real estate management, alongside regulatory improvements and sustainability measures, will be critical. Lastly, establishing a supportive regulatory environment and encouraging green building practices will further enhance housing development efforts.

Some more specific programs which can achieve the goals and implement the strategies were also recommended. For example, to increase housing production, a co-production model is being suggested in which the government focuses on public housing for informal settlers and the lower 30% of the socialized housing market, while the private sector focuses on the upper income socialized housing, economic housing, and low-cost housing segments.

Like in the 4PH model, the government can provide the land while the private sector constructs the housing units. Other housing development approaches besides vertical structures could also be adopted while focusing on areas with the largest housing needs and backlogs. Lastly, other modes of balanced housing compliances could be considered, and the housing escrow fund should be tapped for socialized housing production.

Finally, there is need to improve the regulatory environment, making it as investment friendly as possible for the private sector. Efforts to streamline the permitting and licensing process including the improvement of the housing one-stop processing centers; rationalizing professional accreditation of real estate practitioners; and reviewing land conversion processing initiatives will go a long way in lowering costs and accelerating housing production.

Lastly, to encourage sustainable housing, there should be an emphasis on developing a regulatory framework for green, resilient, and affordable housing, supported by incentives and partnerships for skill training and domestic industry growth. The roadmap to achieve the strategic vision by 2040, the year when the Philippine economy can reasonably aspire to be a First World Economy, concludes with a reinforcement of production targets, an estimate of public funding as well as private capital requirements, and the project economic impact of the housing sector on the national economy.

There are realistic expectations that if the Philippine’s GDP grows at an average of 6-8% in the next 20 years, our economy can attain High-Income status during the decade of 2040 to 2050, at least from the standpoint of average per capita income in US dollars. It is possible, though, that the income distribution will still be so skewed in favor of the rich that there could still be millions of households living below the poverty line and suffering from poor housing conditions.

That is why it is very important that the recently formulated Philippine Housing Roadmap, 2025 to 2040 by the Center for Research and Communication in tandem with the four leading housing and real estate associations, i.e., the Subdivision and Housing Developers Association (SHDA), the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP), the National Real Estate Association (NREA), and the Chamber of Real Estate and Builders’ Association (CREBA), address the very important issue of socialized and economic housing for lower-income households.

As mentioned earlier, it is important to mobilize funding and private investment to boost public and socialized housing. To achieve this, the government budget should be increased for projects targeting marginalized sectors.

At the same time, responsive price ceilings and income tax holidays should be implemented to support developers, along with improving provisions in the Pambansang Pabahay Para sa Pilipino, or 4PH, program to encourage active participation in affordable housing.

There should also be efforts to expand government guarantees and explore developmental funding through securitization and Real Estate Investment Trusts (REITs). Moreover, in order to bridge affordability gaps, direct subsidies are essential, with a focus on providing interest and loan subsidies for socialized, economic and low-cost housing.

It is encouraging that in 2025, despite the global economic volatility resulting from the policies being implemented by the Trump Administration in the US, Philippine inflation is averaging less than 3%, making lower interest rates possible. There is a possibility that Philippine interest rate policy can partly decouple itself from that of the US Federal Reserve System.

The Philippine’s economic growth, while remaining steady over the last two or three decades, has yet to register the sustained double-digit growth rates achieved by countries like China, South Korea, and Thailand which allowed them to significantly bring down poverty incidence to single digit levels (Malaysia, for example, has had close to zero poverty incidence for some time now). Our own poverty incidence in 2023 was 22.4% for the whole population and 16.5% for households.

These high levels of poverty had adverse implications on the nation’s capacity to provide affordable housing for all, indicating that much of the economic growth benefited only a few and has not trickled down. Unlike in other countries where growth has been driven primarily by foreign direct investments, investments in infrastructure, early focus on agricultural and countryside development, and on an outward-looking economy, the Philippine economic growth has been largely driven by consumption expenditure on the demand side and services on the production side.

The Philippine economy has inordinately relied on its domestic market for a long time to insulate it from global market turmoil and sustain growth, albeit at single-digit levels. An economy’s capacity to sustain and support long-term growth, however, is usually preceded, among others, by significant and sustained capital formation or investment flows. The Philippines continues to miss wave after wave of major foreign direct investments (FDIs) flows into Southeast Asia.

The bulk of FDIs pouring into the ASEAN is captured by Vietnam, Indonesia, and not to mention Singapore. Only in 2021 did FDIs in the Philippines exceed the $10 billion level. Its major sources of dollar inflows are overseas Filipino workers’ remittances and business process outsourcing-information technology earnings.

Before 2040, double-digit growth rates for industry and services are feasible. Services will remain a primary driver of growth with retail trade, digitization, ICT, transport, logistics, banking and finance leading the way, accounting for 60-65% of the economy. The share of the industry sector is expected to significantly increase to about 30-35% over the years, given the emergence of major investments in construction activities, energy, road infrastructure, and info-infrastructure networks (i.e., smart cities), and agribusiness-related manufacturing (e.g., construction materials from bamboos).

Agriculture and fisheries’ share will continue to decline to 5% as is typical of economies moving up to high-income levels. Much of the agricultural and aquacultural outputs, however, will be focused on high-value crops and commodities such as bananas, pineapples, coffee, cacao, mangoes, avocado, and high-value coconut products such as coconut water, milk, and sugar.

As regards regional dispersal of income and employment, the National Capital Region (NCR) will be growing less rapidly than the other major regions like Calabarzon, Central Luzon, Western Visayas, and Davao. Other promising regions with at least a 7% growth rate in the last three years are the Cordillera Administrative Region (CAR), the Ilocos, and Cagayan Valley.

With industries more widely dispersed and in-migration growing, the emerging and future mega-regions will continue to grow and will be catching up with the NCR. Except for the NCR and the Bangsamoro Autonomous Region in Muslim Mindanao or BARMM, the regions that usually corner a substantial share of the GDP are those that attract in-migration, such as those mentioned above. Increased urbanization will characterize the higher-growth regions, especially Calabarzon, Central Luzon. Western Visayas, and Davao.

In terms of the number of households, the 2021 Family Income and Expenditure Survey (FIES) estimated a count of 26.3 million households in the entire country. This is 6.7% higher than the 2018 FIES count, indicating that there were 580,097 new households formed per annum during those three years. Based on the projection of Philippine Statistics Authority, the country will be looking at about 33 million households by 2050.

The average sizes of households range from a low of 3.8 members in the NCR to a high of 5.9 in BARMM with 4.1 as the most frequent. Household income sources have shifted more towards wages and salaries, rendering the labor force more vulnerable to inflation. Moreover, economic downturns that result in job losses or wage stagnation make it difficult to acquire housing, especially for those without alternative income sources or significant savings.

Among the key long-term trends that affect housing demand that have to be monitored closely is the direction of government spending. It is expected that the Government in the next few years until 2040 will focus on catching up to improve the physical infrastructure of the nation.

Since the previous Duterte Administration initiated the Build, Build, Build Program, more public resources have been allocated towards enhancing connectivity within and between islands. Fortunately, the Marcos Jr. Administration is determined to continue this, giving the highest priority to infrastructure development. Unfortunately, the government’s ability to spend big amounts on infrastructure is limited by the high debt-to-GDP ratio of 61% that resulted from the COVID-19 pandemic.

There will be much effort made to attract FDIs into infrastructure which will be the primary focus of government spending (together with education and health) until 2040. By 2030 onwards, upon completion of many key infrastructure projects, the Philippine economy is expected to grow faster and attain the double-digit growth rates that are needed to significantly reduce poverty.

Source: Manila Times