EMBASSY OF THE REPUBLIC OF TURKEY 02/03/2010OFFICE OF THE COMMERCIAL COUNSELLOR MANILA

REPUBLIC OF THE PHILIPPINES

COUNTRY PROFILE FOR CONSTRUCTION SERVICES

TABLE OF CONTENTS

I. General Economic Information…………………………………………………………………….

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a. 2009 Philippine Economic Figures….……………………………………………...………4

a.Country Identity of the Philippines…………………………………………………41

b. Economic Figures…………………………………………………………….…… 5

c. 2009 Summary of Philippine Economy….………………………………….……. 6

b. Bilateral Trade Relationships………………………………………………………….……7

C. Expectations and Forecasts in Philippine Economy for 2010………………………...…… 8

II. Construction Sector……………….………………………………………………………………..

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A. 2009 Construction Sector Information………………………………………………..…… 11

B. 2010 Forecasts……………………………………………………………………………... 14

C. Important Projects up for bidding, short and long terms……………………………...…… 14

D. Work Opportunities…………………….………………………………………………….. 14

E. Limitations, Advantages, Risks for Foreign Companies………………………………..…. 14

F. How do projects get financed? ……………………………………………………….…….15

G. Role of Public/Private sector cooperation and role of BOT Model in investment………… 16

H. Is there shortage of machine, equipment and skilled employees?......................................... 16

I. Which countries actively participate? …………………………………………………….. 17

J. Rank of Construction Sector in Philippine Economy…………………………………….. 17

K. Building Standards……………………………………………………………………….. 17

III. Technical Consultancy Sector………………………………………………………………………

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a. Information on Technical Consultancy Sector in the Philippines…………………………. 18

a. Alien Employment Permit by Nationality…………………………….………………. 18

b. Alien Employment Permit by Industry……………………………………………….. 19

c. Alien Employment Permit by Occupational Group…………………………………… 20

b. 2010 Forecasts……………………………………………………………………...……… 20

c. Work Opportunities………………………………………………………………..…….… 20

d. Philippines as a Target Country…………………………………………………………….20

IV. Logistic Sector………………………………………………………………………………….…..

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a. Summary of Logistics Sector……………………………………………………………….21

b. Importation of Building Materials ……………………………………………………….... 21

a. Construction Equipment………………………………………………….……………. 21

b. Construction Materials………………………………………………………...………..23

V. Construction, Technical Consultancy and Foreign Investment Regulations………………...……..

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a. Summary of Construction & Technical Consultancy Regulations………………………… 29

b. Summary of Foreign Investment Regulations………………………………………...…… 30

c. Summary of Foreign Employment in the Philippines…………………………………..…..

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a.Alien Employment Procedures……………………………………………..……… 30

b. Duties…………..……………………………………………………………..…. 31

c. Social Security……………………………………………………………...…… 31

VI. Bilateral Cooperation Opportunities…………………….………………………………………... 31

a. Projects supported by Financial Organizations………………………………………..……31

b. Projects in other countries, supported by financial organizations wherein Turkish and

Philippine companies entered into cooperation……………………………………….…… 31

c. Countries in which Philippine construction companies and technical consultants have

projects………………………………………………………………………………………31

VII. Opinion and Evaluation………………………………………………………..………...…….. 32

VIII. Related Addresses………………………………………………………………………………32

IX. References…………………………………………………………………………………………..

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I. General Economic InformationA. 2009 Philippine Economic Figures

a. Country Identity of the Philippines National Name :Republic of the PhilippinesCapital :ManilaForm of Government :DemocraticOfficial Language :Filipino, EnglishReligion :Predominantly Christian by 95%, 5% MuslimsCurrency :Philippine Peso (PhP)Peso-US$ Exchange Rate :PhP 47.6372 (1)Area :Total: 300,000 sq km (115,000 sq miles)Land :298,170 sq kmWater :1,830 sq kmPopulation :92.23million (2)

Female :46.750 million (2)Male :47.264 million (2)

Population Growth Rate :1.95% (2)Population Density :312 persons per sq km Working Days / Office Hours :Government and private offices are open either from

8:00 a.m. to 5:00 p.m. or from 9:00 a.m. to 6:00 p.m., Mondays to Fridays, with lunch break from noon to 1 p.m. Some private offices hold office on Saturdays from 9:00 a.m. to 12:00 noon. Generally, commercial banks transact business from 9 a.m. to 3 p.m. and savings banks from 9 a.m. to 5 p.m. Mondays to Fridays. Most shopping malls, department stores, and supermarkets are open from 10:00 a.m. to 8:00 p.m. daily.

Ports and Harbors :There are 25 major ports. Manila is the busiest Philippineport for international shipping, followed by Cebu and Iloilo. Other ports and harbors include Batangas, Cagayan de Oro, Davao, Guimaras Island, Iligan, Jolo, Legaspi, Masao, Puerto Princesa, San Fernando, Subic Bay, and Zamboanga.

Major Cities :The largest urban area in the country is Metro Manila, located in Luzon. The cities within Metro Manila include Manila, the capital city and the country's major commercial port, and Makati, the country's foremost business and commercial centre and the office location for most of the big national and multinational banks and corporations operating in the Philippines. Quezon City, also located in Metro Manila, is the largest city in the Philippines. Other large cities include Cebu City on Cebu Island and Davao City on Mindanao Island.

Time Difference with Turkey :5 hoursAverage working hours :Eight (8) hours per day or 48 hours per weekOfficial Statutory Holidays :January 1 (New Year's Day), April 1 (Maundy

Thursday), April 2 (Good Friday), April 9 (Day of Valor), May 1 (Labor Day), June 14 (Independence Day),

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August 30 (National Heroes' Day), November 29 (Bonifacio Day), December 25 (Christmas Day), December 27 (Rizal Day) (4)

International Dialing Code :+63

b. Economic Figures GNP :US$ 182.647 billion (1)

US$87.90 billion (1)GNP Growth Rate :3.0% (1)GNP per Capita :US$ 1,980.40 (1)

US$953.10 (1)GNP Annual Growth Rate per IndustryAgriculture, Fishery, & Forestry :0.1% (1)Industrial :-2.0% (1)

Manufacturing :-5.1% (1)Construction :5.8% (1)Services :3.2% (1)

Inflation Rate :3.2% (1)Wholesale Price Index :190.1 (Jan – Nov 2009, 1)Consumer Price Index :160.0 (3) Labor Force :35.3 million (3)Labor Force Participation Rate :63.3% (3)Employment Rate :92.3% (3)Unemployment Rate :7.5% (1)Overseas Workers :11 million Capital Formation :PhP 1,070,787 million (1)Fixed Capital :PhP 1,099,878 million (1)Changes in Stock :PhP -29,091 (1)Foreign Trade Volume :

Exports :US$ 35.024 billion (Jan – Nov. 2009, 2)Imports :US$ 39.472 billion (Jan – Nov 2009, 2)

Trade Balance(deficit) :US$ -4.448 billion (Jan – Nov 2009, 2)Foreign Trade with Turkey :US$ 183.303 million (6)

Exports to Turkey :US$ 98.684 million (6) Imports from Turkey :US$ 84.619 million (6)

Turkey Share in RP Foreign Trade :0.10% Turkey Ranking in RP Exports :68th (5) Turkey Ranking in RP Imports :108th (5)

Current Account Balance :US$ 6,206 million (Jan – Sept 2009, 1)Current Account Balance (as % of GDP) :5.4 (January – September 2009, 1)Current Account Balance (as % of GNP) :4.8 (January – September 2009, 1)Outstanding Debt :PhP 4,424.7 billion (Jan – Nov 2009, 1)

Domestic Debt :PhP 2,452.4 billion (Jan – Sept 2009, 1)Foreign Debt :PhP 1,972.3 billion (Jan – Sept 2009, 1)

Outstanding Debt (as % of GDP) :57.5 (January – September 2009, 1)Domestic Debt (as % of GDP) :32.2 (January – September 2009, 1)Foreign Debt (as % of GDP) :25.4 (January – September 2009, 1)Net Foreign Direct Investments :US$ 1,410 million (Jan – Nov 2009, 1) Net Foreign Portfolio Investments :US$ 388 million (1)Selected Accounts

Exports (as % of Imports) :88.735

Exports (as % of GDP) :23.8 (1)Exports (as % of GNP) :34.8 (1)Imports (as % of GDP) :27.8 (January – September 2009, 1)Imports (as % of GNP) :37.1 (1)

(1) Central Bank of the Philippines (BSP)(2) National Statistics Office (NSO)(3) National Statistical Coordination Board (NSCB)(4) Office of the President (OP)(5) Bureau of Export Trade Promotions (BETP)(6) Undersecretariat for Foreign Trade (UFT)

c. 2009 Summary of Philippine Economy The recovery of the global economy from the crisis, notwithstanding the double whammies whacked by Typhoon “Ondoy” and Typhoon “ Pepeng”, paved the way for a GDP growth of 1.8 percent in the fourth quarter of 2009, bringing the full year GDP growth to 0.9 percent from 3.8 percent in 2008. Contributing to the tepid rejuvenation of the domestic economy in the fourth quarter are the double digit growth in retail trade, Banks & Non Banks, recreational Services and Mining & Quarrying as well as the recovery of the Manufacturing sector that offset the decline by 2.8 percent of AFF.  On the demand side, increased consumer and especially government spending for the whole year made up for the diminished investments in durable equipment and sustained decline in the exports demand from our recession-stricken major trading partners.

Meanwhile, on an annual basis, GNP grew at a slower rate of 3.0 percent from 6.2 percent last year in spite of the 20.1 percent growth in Net Factor Income from Abroad (NFIA) from 30.8 percent last year

For the fourth quarter, the continuing, though much decelerated demand for the services of our OFW’s caused NFIA to grow by 7.5 percent from 51.2 percent last year, pushing GNP growth to 2.4 percent from last year’s 6.7 percent.

The seasonally adjusted estimates of GDP and GNP confirm that the Philippine economy has recovered from the global financial crisis as GDP inched up to 0.9 percent from 0.8 percent in the previous quarter.

Meanwhile, the seasonally adjusted GNP sustained its 1.4 percent growth in the third quarter. For the 4th quarter of 2009, Services showed new signs of vigor, accelerating by 4.2 percent from 1.3 percent while Industry recovered from 3 consecutive quarters of decline, growing by 1.1 percent from 5.3 percent.  However, Typhoon “Ondoy” and Typhoon “Pepeng” caused AFF to decline by 2.8 percent from 2.9 percent growth last year.

The seasonally adjusted Agriculture, Fishery and Forestry sector declined by 3.3 percent from a 0.8 percent growth in the previous quarter largely due to the decline in Palay (unmilled rice) which of course suffered greatly from Typhoon “Ondoy” and Typhoon “Pepeng”.  On the other hand, Industry rebounded to a 3.7 percent growth from a 0.4 percent decline in the previous quarter due to the expansion of Manufacturing and Mining & Quarrying.  Services sector, however, decelerated to 0.7 percent from 1.5 percent.

The domestic economy could not keep pace with the population growth in 2009 as per capita GDP declined by 1.0 percent from a 1.8 percent growth in 2008. However, per

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capita GNP continues to grow by 1.0 percent from 4.1 percent, as well as per capita PCE, by 1.8 percent from 2.6 percent.

Compensation inflow of the country’s OFWs in 2009 was US$ 25.9 billion, averaging more than US$ 2B a month, a 15.6 percent increase over last year’s US$ 22.4 billion.

On the expenditure side, consumer spending accelerated slightly to 5.1 percent in the fourth quarter of 2009 from 5.0 percent the same period last year.  Government Consumption Expenditure (GCE) posted a double-digit growth of 12.1 percent from 2.6 percent last year due to the disbursement of funds for relief and rehabilitation of areas affected by tropical storms Ondoy and Pepeng as well as continued release of funds for the automated 2010 elections.

Investments in Fixed Capital Formation went down by 1.6 percent from last year’s meager growth of 0.1 percent as a result of poor investments in all of its sub sectors.  Investments in Construction declined by 2.9 percent from a growth of 8.2 percent while investments in Durable Equipment dropped by 0.1 percent from negative 7.9 percent in 2008. 

Total Exports went down by 10.0 percent from the negative 11.5 percent growth registered in the fourth quarter of the previous year as both Merchandise Exports and Non Merchandise Exports suffered reversals in growth.

Total imports went down by 2.5 percent from a growth of 5.0 percent in the previous year, as both Merchandise Imports and Non Merchandise imports continued to decline.

The terms of trade during the quarter posted a Trade Index of 135.8 percent from 121.5 percent in 2008.  Trading Gain for the quarter amounted to P43.7 billion pesos.

GNP Implicit Price Index (IPIN) stood at 551.9 percent from 530.0 percent in the previous year or 4.1 percent inflation.

B. Bilateral Trade Relationships

Type of Agreement Status

Trade AgreementSigning : 09 March 1995Official Gazette : 25 May 1995 / 22293Entry into force : 18 September 1996

Memorandum of Agreement between the Philippine Chamber of Commerce and industry (PCCI) and the Union of Chambers and Commodity Exchanges of Turkey (UCCET)

Signing : 09 March 1995 - Ankara

The Reciprocal Promotion and Protection of Investments Signing : 22 February 1999 - ManilaOfficial Gazette: 22 July 1999 / 22883

Economic and Technical Cooperation AgreementSigning : 22 February 1999 - ManilaOfficial Gazette : 08 July 1999 / 23749Entry into force : 29 November 1999

Summary Record of the Preparatory Meeting for the First Session of the Republic of the Turkey-the Philippines Joint Economic Commission

Signing : 28 July 2005 - Manila

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Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to taxes on Investment Signing: 19 March 2009 - Ankara

Source: Embassy of the Republic of Turkey - Manila and Philippines - Office of the Press Secretary

C. Expectations and Forecasts in Philippine Economy for 2010

In 2004, when President Gloria Macapagal –Arroyo assumed her duties, she laid out her 6 year plan or the Medium Term Philippine Development Plan 2004 - 2010. So for 2010, she and her cabinet will just continue to focus on this plan’s basic tasks, which are to fight poverty and build prosperity to a greater number of Filipinos. The plan is divided into five parts, described as follows:

i. Economic Growth and Job Creation In order to fight poverty, her government is focused on accelerating growth and job creation through Trade and Investment; Agri-business; Environmental and Natural Resources; Housing Construction; Tourism; Infrastructure; Fiscal Strength; The Financial Sector and Labor. There is special emphasis on vigorous support for micro, small and medium enterprises and agribusiness as they are the most efficient generators of jobs in terms of jobs to investment ratio.

The basic strategy for enhancing trade and investments entails improving the global competitiveness of Philippine enterprises through the following measures:

1. Making food plentiful at reasonable prices to make labor costs globally competitive 2. Reducing the cost of electricity through power sector reforms

3. Modernizing infrastructure and logistics to make transport and related costs efficient

4. Mobilizing and disseminating knowledge to make our workers and manufacturing processes more productive

5. Reducing red tape in all government agencies to reduce the cost of doing business

To further promote trade and investments, the Plan expects the conclusion of the JPEPA (Japan Philippines Economic Partnership Agreement), the ASEAN PIP (Priority Integrations Projects) and the ASEAN-China agreements. Export procedures will be streamlined through the AEDS (Automated Export Documentation System) and the One Stop Export Documentation Centers.

The BOI will formulate a more focused incentives package along these priority areas:

1. 1. IT and IT-enabled services2. Automotive

3. Electronics

4. Mining

5. Healthcare

6. Tourism

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7. Shipbuilding

8. Fashion Garments

9. Jewelry

10. Agribusiness

The Plan notes that while the agriculture sector has exceeded production targets, the sector remains uncompetitive due to the high cost of inputs (fertilizer, chemicals and seeds), large post-harvest losses and the disruption of extension services due to devolution. And employment and incomes are low due to the low degree of farming intensity and diversification, and the lack of technological and enterprise skills of the farmers.

The first goal is to develop 2 million new agribusiness lands through multi-cropping, the cultivation of idle and marginal lands, the expansion of fishery production in unutilized offshore and inland waters, and expanding the product mix through high value crops and value-adding through innovative packaging and agro-processing. Mindanao is envisioned to be the center for Halal food production with the intention of tapping the emerging export markets for Halal food products.

The second objective is to making food (wage goods) plentiful for our people at reasonable prices. Institutional and regulatory reforms will reduce the price of inputs such as fertilizers, pesticides and seeds. Logistics support to raise distribution efficiency and shorten the supply chain will reduce transport costs and marketing margins.

The lack of infrastructure and large public sector deficit are the main impediments to investor confidence and economic growth and the Plan squarely addresses both problems.

The Plan identifies the priority transport infrastructure projects with particular emphasis on completing the Nautical Highway developing roads and rail systems that will decongest Metro Manila and support the development of new centers of government, facilitate access to tourist areas, and support the affirmative action for peace and development in Mindanao and other highly impoverished areas. The Nautical Highway with RORO vessels and ports has shown remarkable success in stimulating trade and tourism activities in coastal communities by significantly reducing the costs of transport and cargo handling. The Plan also identifies measures to make cheaper and more accessible the digital infrastructure across the country through lower connectivity costs, regulatory reforms, and development of the human resource skills to support the development of the ICT-related industries.

The public sector deficit will be made more manageable through a combination of legislative and administrative measures which should generate about P100 billion in terms of additional annual revenues, savings through austerity and efficiency measures and through more aggressive action against smugglers and tax evaders.

The relative underdevelopment of the Philippine financial sector has constrained savings and the ability to finance more investments through the capital markets. Various causative factors have been identified and the Plan describes the strategies to modernize the capital markets through adequate regulatory powers (at par with global standards) to protect creditor and investor rights and the mobilization of long term savings through measures such as establishing the fixed income

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exchange and the securitization of housing loan portfolios of government agencies. Reducing long-term risks by managing inflation and fiscal risks is also critical to the development of the capital market.

To ensure the physical sustainability of the economic growth with job creation, measures to restore the environment have been identified, and they include the reforestation of 1 million hectares in 140 priority watersheds, the extensive replanting of mangroves, and the maintenance of fish sanctuaries in coastal and fishing communities. Water management covering drinking water, irrigation and flood control is also given emphasis in the Plan. Air quality improvement will be achieved beginning with the use of compressed natural gas for buses in Metro Manila and through urban greening of highly urbanized areas. The granting of environmental compliance certificates (ECCs) shall be liberalized and streamlined.

The plan also addresses the problems of the labor sector, particularly the high unemployment rate among the youth (48.7% unemployed) and in the urban areas (2/3 of the unemployed) and cites the jobs-skills mismatch as one of the major causes. To address these problems, the Labor and Employment Action Plan provides for the following:

1. Improving workers’ competency, productivity and work values, and in particular, providing opportunities for the youth to acquire skills and competencies required by the market

2. Enhancing worker-employer relationship and improving labor welfare both here and abroad

3. Facilitating access of Filipino workers to both the local and overseas labor markets

4. Advocating flexible work and employment arrangements in tune with the requirements of the globalizing labor market which now widely practice subcontracting and outsourcing

5. Quick action on labor cases and the promotion of alternative dispute settlement in the workplace

ii. Energy The Plan covers energy independence and power sector reforms. Greater energy independence will be achieved through increased oil and gas exploration, the development of renewable energy, the expanded use of natural gas, the forging of strategic alliances, and through energy efficiency and conservation. Power sector reforms, intended to reduce electricity rates, include resolving the problem of NPC losses, encouraging private sector participation in power generation, and total barangay electrification by 2008.

The Plan’s specific programs shall also be fleshed out in more detail with the publication of rolling medium-term public investment programs, beginning with the 2005-2007 MTPIP. The Plan shall also be complemented by Regional Development Plans/Investment Programs which will come out before the end of the year.

The successful implementation of the Plan rests on the support of all sectors of society - the Legislative, the Judiciary, the local government units, the business community, responsive civil organizations, the media, and all sectors of society. In the President’s words, everyone must share the responsibility of moving this country forward.

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Governor Amando M. Tetangco, Jr. of the Central Bank of the Philippines mentioned that they are projecting that inflation will be manageable and will fall within the target range of 3.5 to 5.5 percent. He further added that they do not see drastic changes in their policy rate settings. As for the peso, the BSP is expecting a surplus of around $3-4 billion from the Balance of Payment at the 2010 yearend, making a fundamental support for the local currency. Furthermore, they will also build up their international reserves to temper any volatilities in the exchange rates.

The World Bank also projected that for 2010 the Philippines will have a 3.1 percent economic growth revising their original projection of 2.4 percent because they witnessed the economic resiliency of the country for 2009 and they are expecting that remittances and the stimulus programs of the government would aid the country this 2010. As for the country’s Gross Domestic Product (GDP), they are putting it at 3.1 percent for 2010, compared to 1.4 percent last 2009.

The Asian Development Bank’s outlook for the Philippines this 2010 is 3.3 percent growth rate per year on their GDP and a projected 4.4% per year on Inflation, which falls on the same range as expected by the Central Bank of the Philippines.

Over all, they are giving the Philippines a positive outlook for 2010 due to expected increase in overseas remittances, together with increase in business brought about by the May elections. Both local and foreign analysts hope that the Philippines will sustain this expected growth when in fact the change of government will bear a greater impact.

II. Construction Sector

a. 2009 Construction Sector Information

The year 2009 seems to be a better year for the construction industry compared to 2008. The number of approved building permits nationwide reached to 26,992 during the third quarter of 2009. This was 18.3 percent higher compared with last year’s recorded figure of only 22,817 applications during the same period. Residential building construction rose also to 22.0 percent, with 20,734 approved building permits compared to 16,997 reported during the same quarter of 2008. Other construction posted also an increase of 9.2 percent, from 2660 approved building permits for 2008 to 2,905 approved permits for the same quarter of 2009.

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As per the National Statistics Office (NSO) 3rd Quarter of 2009 report, the aggregate value of construction is estimated at P34.58B (US$751.7M), with a growth rate of 12 percent as compared to P30.87B ($671.09M) 3rd Quarter of 2008. The National Capital Region has the highest value of construction, accounting for 38.5 percent share of total value, then followed by CALABARZON Region (Region 4A: Cavite, Laguna, Batangas, Rizal, Quezon) with 12.7 percent and at third place is Davao Region with 9.9 percent.

The total value of construction for residential buildings reached P17.61B (US$382.8M) covering a total floor area of 2.2 million square meters, translating to an average cost of P8,003 per square meter (US$174 per sqm). For non-residential building construction, the total value was estimated

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at P14.32B (US$311.3M) with a total floor area of 1.6 million square meters or an average cost of P8,797 (US$191 per sqm).

As for the Department of Public Works and Highways, under the directive of President Gloria Macapagal – Arroyo, it has concentrated on improving the country’s transport system to provide easier access to markets at home and abroad to alleviate poverty in the countryside and isolated regions; to enhance peace and order in conflict-affected areas through efficient transport and trade; to strengthen national unity, family bonds and tourism by making the movement of people faster, cheaper and safer; to facilitate the decongestion of Metro Manila via a transport logistics system that would ensure efficient linkages between its business centers and nearby provinces; and to generate more transport infrastructure with minimal budget cover or contingent liabilities with private sector infrastructure initiatives.

Under the DPWH 2009 Regular Infrastructure Program, the Department has constructed, improved, rehabilitated 6,186.473 kilometers of national roads and 54,945 lineal meters of national bridges with a total value of P65.719 Billion.

The following projects were the priority projects of the Department in support of President Arroyo’s 2009 programs:

1. President’s Bridge Program – This has always been a continuing effort for the DPWH, they have finished 19 bridges for CY 2009, 64 bridges still undergoing construction and 62 bridges undergoing pre-engineering works.

2. Flood Control and Drainage Program – the department has completed 1,287 flood control and drainage projects nationwide amounting to P5.628B (approximately US$122M).

3. Farm to Market Roads – Under the Republic Act 6657 or the Comprehensive Agrarian Reform Program (CARP), the DPWH shall provide farm to market roads to those lands identified to be under CARP and other projects funded by Department of Agrarian Reform and Department of Agriculture. As for 2009, the DPWH has completed 70 farm to market road projects, with a total of 76.694 kilometers with P90.911M (US$1.9M) funds from the Department of Agrarian Reform. As for projects funded by the Department of Agriculture, they were able to fund the construction of 692 kilometers from the target of 1,313 kilometers and a budget of P3.630B (US$78.9M).

4. School Building Program – Every year the government is allocating P2.0B (US$43.5M) for the construction, repairs and refurbishments of school buildings of the Department of Education, under the Republic Act 7880 or the Roxas Law which gives fair and equitable access to education. The DPWH has an on-going 2,193 school building projects with a value of P1.8B ($39.1M), which has a 74.25% completion rate as of November 2009.

5. Water Supply Program – Apart from road construction, the water supply program is also a priority project since there are still communities that are waterless. So for the year 2009, they were able to construct and rehabilitate 127 Level I, 414 Level II, 9 Level III water supply facilities and 636 water system projects.

6. Health and Sanitation – 73 hospitals and other health facilities, amounting to P75M (US$1.6M) were completed and 5,149 other public building projects were constructed at a cost of P4.063B (US$88.3M).

7. Disaster Response Program – this covers the repairs and maintenance work that has to be done in calamity-stricken areas. One instance was after the typhoon “Milenyo”, the DPWH has to clear road blocks, repair road and bridges and other public construction.

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8. Comprehensive Livelihood Emergency Employment Program – with all the existing government infrastructure projects, it generated 653,496 jobs, assisting the Department of Labor and Employment in their goal to alleviate the unemployment rate of the country.

9. Super Regions – this is the program of the President were in some provinces were given necessary attention and became the priority for 2009. These were North Luzon Agribusiness Quadrangle (road widening projects in Baguio, Benguet, Ifugao, Tuguegarao), Luzon Urban Beltway (highway improvement in Tarlac, Nueva Ecija and Aurora; road from Marikina to Quezon; CALABARZON projects; Tarlac Pangasinan La Union Projects; etc.), Central Philippines (concentrating on Palawan, Western Visayas) and Agribusiness Mindanao.

List of ProjectsProposed Allocation for Medium Term Infrastructure Program (in Billion

Pesos)2005 2006 2007 2008 2009 2010

1. HIGHWAYS 30.944 32.787 37.011 38.152 40.096 43.604 A. Foreign Assisted Projects 17.269 22.376 24.342 23.230 17.789 20.694 a. On-going 16.893 18.839 16.551 8.742 1.065 0.000 b. New/Proposed 0.376 3.537 7.971 14.488 16.724 20.694 B. Locally Funded Projects 13.674 10.411 12.669 14.922 22.307 22.9102. FLOOD CONTROL 6.725 7.399 5.855 7.569 9.065 8.969 A. Foreign Assisted Projects 5.535 6.209 4.665 6.379 7.875 7.779 a. On-going 5.450 5.897 2.803 1.557 1.340 0.050 b. New/Proposed 0.085 0.312 1.862 4.821 6.536 7.729 B. Locally Funded Projects 1.190 1.190 1.190 1.190 1.190 1.1903. OTHER DPWH PROJECTS 1.052 1.052 1.052 1.052 1.052 1.052GRAND TOTAL 38.720 41.237 43.918 46.772 50.213 53.625

Source: Philippines’ Department of Public Works and Highways (http://www.dpwh.gov.ph/infrastructure/medium_term_plan/index.htm )

B. 2010 Forecasts

The above table shows the multi-year framework that the DPWH used to guide them in their selection of key projects that will support the medium term infrastructure program 2005-2010 of the Arroyo Administration. As for the year 2010, it shows that the Philippine government, from its own national budget allocated P25.152B (roughly US$547M) to facilitate highways, flood control construction and other improvements. Flood Control construction became a priority for the year 2010 due to several typhoon that hit the Philippines last 2009. The flood that resulted from several typhoons has damaged the country severely so for 2010 flood control construction, repairs and improvements became a priority.

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C. Important Projects up for bidding, both short and medium terms (houses, malls, work centers, irrigation, dams, power plants, roads, railways, bridges, highways, seaports, airports)i. BOT Investment Opportunities ii. ADB - 2009 Projects iii. Business Opportunities with the World Bank

D. Work OpportunitiesWork Opportunities in the Construction Industry depend on the Project Proponents, whether local or foreign entity. Usually, hiring of foreign nationals or companies depend on whoever wins the project. For instance, if a foreign entity has an existing BOT contract with the Philippine government, they are entitled to hire foreign nationals for their projects. So it is up to the project handler to decide who to hire. They do it directly, just in accordance with the Philippine law. Same goes if a local company that has an existing project needs of a foreign company as a partner or a consultant, it is up to them to process and go through the employment procedures of a foreign national.

E. Limitations, Advantages, Risks for Foreign CompaniesGenerally, foreign companies planning to put up a company in the Philippines are only limited to 40 percent ownership. However, if they chose to invest within the Investment Priorities Plan of the Government, then they are allowed to full ownership. 2009 Investment and Priorities Plan and Guidelines

Foreign companies or nationals that have contracts with the Philippine government or any registered Filipino company of course have to follow the laws of the Philippines. They are bound by their contract and their stay is limited only to the duration approved by the Department of Labor and Employment.

Foreign firms have the advantage on technical data because mostly these foreign firms have extensive knowledge in advance technologies, modern equipment and machineries; and have done remarkable projects in other parts of the world. Meanwhile, Filipino contractors were limited in terms of machineries and equipment to deliver projects on time and of course they have to work on a limited budget, which sometimes result to poor quality of materials, either intentional or not. Having the best and most advanced equipment and technologies make the foreign companies required especially on projects of valuable importance to the country such as power plants, railways, bio tech facilities and many others.

Investing in the Philippines or in any other country guarantees risks, it is normal in any business. It is so happen that investment in the Philippines is more complicated despite the fact that rules and regulations are laid out. Foreign companies are exposed to corruption. There will surely be instances where in the foreign companies are vulnerable to extortion in order for permits to be processed or papers be signed, whether they are dealing with private or government agencies.

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Funding is another issue, if it is foreign funded then there wouldn’t be any difficulty getting paid but somehow if it is purely government funding, there might be some issues in terms of payment so it is better to go over the project contract carefully and make sure that the terms and conditions are clearly mapped out. For instance, the International Airport 3 has been done years ago but the foreign company that has gotten the contract has an existing lawsuit against the Philippine government since there were discrepancies with their contract and remains unsettled plus case pending.

F. How do projects get financed?a. Philippine Government: the funds for the projects that they do came from the

National Budget, which is distributed through the Department of Public Works and Highways. They identify the priority projects aligned to the platforms laid out by the Arroyo government. Congressmen are also awarded budget through the Public Development Assistance Fund (PDAF) that they get to choose which areas of development has to be given appropriations such as health, education and infrastructure. They have the funds to build farm to market roads for their district and allot budget for other forms of construction.

b. ADB/World Bank: they fund projects on member countries to aid these countries of any difficulty, in any field as per their proposal. They have funds for loans, grants and technical assistance depending on the project proposal submitted to them by member countries.

G. Public/Private Sector Cooperation and Role of BOT model in the investment

The roles of both public and private sector in the BOT program are essential to attain success in delivering projects. Normally, projects are financed and operated by the public sector but the government realizes the necessity to entertain private entities in fulfilling more comprehensive goals especially in infrastructure projects. Now, projects are open to private sector either wholly or partly to both local and foreign companies.

The BOT Program of the Philippines opens up to private sector projects including but not limited to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and railways, transport systems, land reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, dredging, and other infrastructure and development projects as long as authorized by the appropriate agency or Local Government Unit, pursuant to this and in accordance to the BOT law. Now, projects shall be undertaken through contractual arrangements as defined under the law or as may be approved by the President of the Philippines.

a. BOT Models (Philippine BOT Law)i. Build, Operate and Transfer

ii. Build and Transfer16

iii. Build, Own and Operateiv. Build, Lease and Transferv. Build, Transfer and Operate

vi. Contract, Add and Operatevii. Develop, Operate and Transfer

viii. Rehabilitate, Own and Operate

b. Completed, Operational and Awarded BOT Projects (BOT Projects)

H. Is there shortage of machine, equipment and skilled employees?There is no record whether there is a shortage of equipment or machineries because once a contractor (a company) has been awarded of the project, the responsibility of providing all the machineries and equipment in order to finish the construction project on the date agreed upon by both parties relied heavily on the contractor themselves. So it is the sole responsibility of the contractor to acquire the necessary equipment and machineries for the project. The main concern of the project giving office is for the contractor to deliver the said project on the agreed date.

As for skilled employees, the Philippines have enough supply. Services is one part that the Philippines can bank on, they even have excess supply to send overseas. As for consultants, there are projects that do hire foreign consultants especially on projects that is foreign funded, or under the BOT system which requires foreign participation.

I. Which countries actively participate in this sector?For the BOT projects, the countries that actively participate are Singapore, Malaysia, China, Japan, USA, Switzerland, Denmark and South Korea. As for other foreign funded projects, see the complete list of foreign institutions/countries in this link, Foreign Funding Agencies with projects in the Philippines.

J. Rank of Construction Sector in Philippine Economy

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As per Gross Domestic Product, it is only 30% of the total GDP of the Philippines that come from industries where the construction sector belongs, giving it a share of 16.55% from that 30% share of the industries, approximately 4.96% of the total GDP.

K. Building Standards National Building Code of the Philippines R.A.6541

III. Technical Consultancy Sector

Before we breakdown the status of technical consultancy in the Philippines, it is best to look at the full scenario of foreign employment in the country. As you go over the tables below, you will notice that for 2007 the highest number of foreign employees came from Korea followed by Japan, then China. This could be attributed to various manufacturing companies in the Philippines, which has 4,992 foreign employees as of 2007. The bulk of foreign employment came from this sector. This of course is related to foreign investments in the Philippines that give them access to bring in foreign nationals

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to run the local operations. These officers are of course given the higher management level, as managers, technical consultants and other important and key positions in the company.

As of 2007, the construction sector has a total of 850 foreign employments, which are all considered technical consultants, given that foreign assisted projects allow foreign national employment. This is surely on high management positions or technical consultancy posts.

A. Information on Technical Consultancy Sector in the Philippines a. Alien Employment Permits Issued by Nationality from 2003 – 2007

NATIONALITY 2003 2004 2005 2006 2007

TOTAL 9,168 9,408 10,823 12,335 13,592

American 498 618 562 665 605

Australian 216 225 249 211 230

Austrian 14 10 18 15 14

Belgian 32 24 25 30 32

Brazilian 16 13 4 6 10

British 320 451 403 391 384

Canadian 94 75 70 100 95

Chinese 928 984 1,370 1,592 1,754

Columbian 10 2 2 2 3

Danish 25 23 20 20 29

Dutch 67 70 58 71 78

Egyptian 11 7 5 14 19

Finnish 31 27 28 16 25

French 128 98 94 107 109

German 139 128 163 147 118

Hungarian 2 2 9 6 3

Indian 370 438 384 438 598

Indonesian 54 65 74 145 272

Iranian 10 6 7 12 1619

Irish 21 19 24 22 21

Israeli 8 14 10 15 40

Italian 47 28 38 29 30

Japanese 2,969 2,975 3,367 3,469 3,414

Jordanian 17 7 10 4 10

Korean 1,855 1,847 2,499 3,296 3,713

Lebanese 8 9 11 17 18

Malaysian 211 216 215 332 596

Mexican 11 9 10 8 14

New Zealander 58 46 47 45 56

Nigerian 7 8 9 8 9

Norwegian 7 6 17 16 16

Pakistani 20 18 14 11 15

Portuguese 6 3 3 3 1

Russian 2 4 5 5 9

Singaporean 118 121 127 163 184

Spanish 25 18 27 17 28

Sri Lankan 26 20 34 34 26

Sudanese 15 8 4 6 10

Swedish 20 23 30 21 27

Swiss 21 40 44 35 33

Taiwanese 412 389 434 486 456

Thai 105 89 76 92 121

Other Nationalities 214 225 223 213 351

                 Source of data: Bureau of Local Employment, Monitoring and Evaluation Division, Employment Program Supervision.

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b. Alien Employment Permits Issued by Major Industry Group for 2007

MAJOR INDUSTRY GROUP PHILIPPINES

2007 13,592Agriculture, Hunting and Forestry 57Fishing 14Mining and Quarrying 155Manufacturing 4,992Electricity, Gas and Water Supply 69Construction 850Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods 1,064Hotels and Restaurants 502Transport, Storage and Communications 2,906Financial Intermediation 95Real Estate, Renting and Business Activities 1,540Public Administration and Defense, Compulsory Social Security -Education 756Health and Social Work 107Other Community, Social and Personal Service Activities 474Extra-Territorial Organizations and Bodies 11

c.Alien Employment Permits by Occupational Group for 2007

SELECTED OCCUPATION GROUP 2003 2004 2005 2006 2007

ALL SELECTED OCCUPATIONS 9,168 9,408 10,823 12,335 13,592Officials of Government and Special          

Interest-Organizations, Corporate          Executives, Managers, Managing          Proprietors and Supervisors 6,066 6,572 8,228 8,469 8,162

Professionals 1,327 857 807 836 968Technicians and Associate Professionals 1,430 1,801 1,557 2,792 4,237Clerks - - - - -Service Workers and Shop and Market          

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Sales Workers 250 174 199 211 225Farmers, Forestry Workers and Fishermen - - 7 16 -Trades and Related Workers 16 - 20 - -Plant and Machine Operators and Assemblers 79 4 5 11 -Special Occupations - - - - -           

B. 2010 ForecastsAs you can see, foreign employment has continuously increased since 2003, though it was just 2.6% increase for 2004, surprisingly for 2005 there was a 15.04% increase on that year, which may be linked to the aggressive promotions of foreign investment in the country. For 2006, there was 13.97% increase and 10.19% increase for 2007. It is evident that every year there was an increment trending on foreign employment, tolerable at the rate it is going, maximum of 15% per annum.

C. Work Opportunities a. ASIAN DEVELOPMENT BANK ADB – Consultancy Opportunitiesb. WORLD BANK – Business Opportunities with the World Bank

D. Philippines as a Target CountryIn the Philippines, construction comprises 4.96 percent of the country’s GDP and with the growth in the construction sector by 12 percent as of Third Quarter data of 2009, it is useful to consider the Philippines as a target country within the context of 2004/5 “Communique on Subsidy for Overseas Activities of Technical Consultancy Companies”.

IV. Logistic SectorA. Summary of Logistic Sector

Logistics being the management of flow of goods is essential in any business and in relation to the construction sector, the movement of construction and building materials in the Philippines is not easy though it is also not heavily difficult.

Philippines is composed of several islands and certainly the flow of goods from one island to another will never be an easy job. Transporting construction materials, equipment and machineries will cost the shipper money, as shipping fees either local shipping line or international vessel cost a lot. For instance, a 1x40 FCL dry from Brazil to Manila costs from $1650 - $2000 freight fees alone and if by local vessel like from Manila to Cebu a 1x20 FCL dry will cost the shipper around $1000 apart from other fees that has to be paid. And if one analyzes the cost, it shows that there’s very little difference if you ship from abroad than you ship locally. It has been a long time issue that local shipments tend to be more expensive that international cargoes probably because there has been limited cargo vessels servicing the Philippine islands. Of course lack of service and having high demands results to higher fees which in turn add up to the cost of goods.

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Apart from money spent, time is also a factor in moving goods inter-island. The fastest transit time from the Manila to a major city like Cebu would be, 24 – 36 hours and another 12 hours going to another major city like Davao.

Though this sector remains very viable for business opportunities it still remains untapped. There is a vast potential but due to economic unrest globally many have withheld their expansion and investment plans.

B. Importation of Building Materialsa.Construction E quipment

List of supplying markets for a product imported by Philippines

Product : 843050 Construction equipment, self-propelled nes

   

Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in 2005

Imported value in 2006

Imported value in 2007

Imported value in

2008

'World 1 916 1966 1082 1784

'Finland 0 0 0 0 674'United States Minor Outlying Islands 0 0 0 0 642

'Japan 1 861 0 35 326

'Hong Kong (SARC) 0 8 0 0 104

'Chinese Taipei 0 0 0 0 26

'United Arab Emirates 0 0 0 0 12

'Republic of Korea 0 8 0 60 0

'Papua New Guinea 0 0 1325 0 0

'Canada 0 0 97 0 0

'China 0 0 0 698 0

'Germany 0 0 0 96 0'Iran (Islamic 0 0 0 0 0

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Republic of)

'Italy 0 23 0 0 0

'Malaysia 0 0 357 0 0

'Saudi Arabia 0 0 0 0 0

'Singapore 0 0 107 16 0

'Thailand 0 0 79 0 0'United States of America 0 16 0 176 0

Others 0 0 1 1 0

List of supplying markets for a product imported by Philippines Product : 843069 Construction equipment, not self-propelled nes

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

Exporters Imported value in 2004

Imported value in 2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 1461 2613 1465 4302 2835'China 136 33 176 519 1093'Australia 137 392 32 0 431'Japan 598 504 245 837 429'Italy 67 0 41 0 271'Republic of Korea 12 19 258 167 244'Sweden 0 0 0 87 109'Brazil 0 162 0 0 100'United States of America 10 329 80 243 42'Denmark 0 0 0 0 41'Singapore 166 92 412 1309 27'Finland 0 0 0 0 16'Germany 5 66 5 123 9'Chinese Taipei 0 343 0 37 7'Switzerland 0 31 0 0 6'Canada 0 0 0 361 5'Thailand 201 357 168 14 5Others 129 285 48 605 0

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List of supplying markets for a product imported by Philippines Product : 843149 Parts of cranes,work-trucks,shovels,and other construction machinery

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 10995 23887 29835 21996 30479'Japan 748 4663 8344 3657 15197'Singapore 3741 6839 8822 8631 6393'Germany 1058 2166 1711 1153 1627'China 239 512 600 622 1562'United States of America 1230 5435 3229 2372 1396'Hong Kong (SARC) 92 136 370 459 846'Republic of Korea 91 338 521 1666 683'Chinese Taipei 411 137 181 151 429'Australia 942 547 2121 350 344'Canada 827 300 573 193 342'United Kingdom 184 660 719 599 324'Malaysia 21 29 34 4 260'Italy 180 579 389 890 185'Sweden 439 295 535 279 176'France 36 95 228 200 156'Ireland 41 6 38 49 115'Netherlands 52 479 312 132 104'Finland 33 362 203 168 77'Indonesia 156 20 194 87 51'Chile 3 3 103 11 40Others 471 286 608 323 168'Turkey 0 0 0 0 4

b.Construction Materials

List of supplying markets for a product imported by Philippines Product : 72 Iron and steel

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 1248219 1388803 1181377 1163539 1588531'Japan 236829 274858 262574 249661 453538'China 133093 196150 289769 297706 342429

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'Chinese Taipei 107612 136727 117291 198045 227770'Republic of Korea 128572 140250 112641 113436 127085'Brazil 860 777 180 32403 74508'Viet Nam 200 228 321 2871 68612'Russian Federation 355206 356051 203247 97655 53471'India 33197 70549 65227 32912 44802'Ukraine 94153 50690 3250 12469 36668'Indonesia 13512 8482 25706 9667 30878'Turkey 39 58 31 183 18143'Thailand 38815 15272 17418 21761 16220'Malaysia 17537 25845 5094 21446 16036'Australia 22272 29660 11125 12711 15086'United States of America 3719 7344 5939 9958 14894'Singapore 12353 10756 17773 15397 13825'Hong Kong (SARC) 11599 12533 19735 4350 8009'South Africa 11017 12250 7391 8035 6809'Germany 2557 4057 3252 1945 2863'France 137 35 316 174 2664Others 24940 36231 13097 20754 14221

List of supplying markets for a product imported by Philippines Product : 2523 Cements, portland, aluminous, slag, supersulfate & similar hydraulic c

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 2106 7240 9588 6930 4121'Japan 517 6119 7530 2895 2508'Malaysia 806 561 656 647 710'China 275 220 1010 1302 332'Singapore 101 52 58 40 247'Thailand 64 61 65 147 172'Australia 15 5 21 6 54'Indonesia 172 39 173 47 49'Republic of Korea 28 89 54 25 26'Chinese Taipei 34 2 6 1817 11'Sweden 0 0 0 0 6'Belgium 5 0 0 2 4'Spain 0 0 0 0 4Others 89 92 15 2 0

List of supplying markets for a product imported by Philippines Product : 4407 Wood sawn/chipped lengthwise, sliced/peeled

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   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 88401 117778 95709 90101 52019'United States of America 12736 24613 22683 25243 20559'Canada 44528 45306 39620 37909 14282'Malaysia 15462 28355 15088 5749 5362'Germany 5212 7653 9546 10899 5121'New Zealand 5146 4596 1950 2310 2224'Japan 855 80 69 948 1032'Singapore 2107 993 624 1385 860'Solomon Islands 12 96 197 267 614'Australia 591 1790 2211 2404 474'Brazil 0 687 72 114 230'Denmark 0 91 183 60 213'Peru 89 24 49 24 182'China 494 2029 1914 2002 165'Indonesia 25 133 646 92 139'Papua New Guinea 7 24 7 26 126'Finland 0 0 10 30 97'United Kingdom 0 1 0 0 83'Chinese Taipei 88 223 451 418 76'Italy 32 50 32 0 58'Hong Kong (SARC) 102 686 73 82 51Others 915 348 284 139 71

List of supplying markets for a product imported by Philippines Product : 6802 Workd monumental/building stone&art;mosaic cube,granules

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 7659 6423 8924 7719 8625'China 5880 3967 5009 5825 6340'India 756 731 810 675 879'Hong Kong (SARC) 206 237 226 386 269'Indonesia 111 25 40 53 259'Italy 112 77 144 45 244'Japan 114 751 1494 129 153'Republic of Korea 10 21 19 3 104

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'Singapore 5 14 181 76 71'Thailand 5 12 22 39 71'Turkey 133 76 27 7 50'Chinese Taipei 79 9 641 68 40'United States of America 31 196 119 68 37'Spain 80 146 36 137 21'Brazil 23 52 0 0 17'Iran (Islamic Republic of) 0 8 18 18 11'Australia 1 0 1 0 9'Malaysia 21 24 12 31 9'Pakistan 0 0 53 9 8'Egypt 14 32 10 7 7'Viet Nam 17 3 0 21 4Others 61 42 62 122 22

List of supplying markets for a product imported by Philippines Product : 6904 Ceramic building bricks, flooring blocks support/filler tiles

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 719 400 594 294 323'Japan 192 0 1 25 182'Hong Kong (SARC) 0 225 451 17 58'Malaysia 31 79 21 27 54'United States of America 0 0 1 1 16'China 225 30 69 66 13'French South Antarctic Territories 0 0 0 0 0'United States Minor Outlying Islands 0 0 0 0 0'Australia 203 55 37 86 0'Germany 53 0 0 2 0Others 15 11 14 70 0

List of supplying markets for a product imported by Philippines Product : 6905 Roofing tiles,chimney pots,cowl etc&other ceramic constructional good

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar  

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thousand

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 1302 1667 1900 1627 2569'Japan 413 398 680 576 832'China 114 404 399 353 527'Spain 276 241 280 170 301'New Zealand 30 10 34 116 297'Hong Kong (SARC) 27 69 35 25 268'Indonesia 29 32 50 39 122'Thailand 35 15 1 1 75'Malaysia 152 163 61 84 47'Italy 41 33 10 50 43'Republic of Korea 0 0 217 39 23Others 185 302 133 174 34

List of supplying markets for a product imported by Philippines Product : 6907 Unglazed ceram flags&paving,hearth/wall tiles; mosaic cube

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 1788 2649 1563 2342 3178'China 318 1664 1110 1906 2330'Malaysia 538 183 101 110 266'Hong Kong (SARC) 65 347 18 30 234'Spain 48 93 55 76 209'Italy 279 233 194 128 58'Thailand 0 5 21 7 35'Germany 72 6 0 4 16'Singapore 18 28 0 1 16'United States of America 0 4 0 0 15'Micronesia (Federated States of) 0 0 0 0 0Others 450 86 64 80 0

List of supplying markets for a product imported by Philippines Product : 6908 Glazed ceram flags&paving,hearth/wall tiles; mosaic cube

   Sources : ITC calculations based on COMTRADE statistics.  

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Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 19782 34189 40022 49425 60016'China 7201 18454 28711 37055 45018'Spain 3497 3939 2438 2905 4418'Indonesia 447 1068 1871 2048 2692'Thailand 741 1017 1227 2450 2411'Hong Kong (SARC) 1322 5042 2025 1605 1424'Italy 1753 1360 1185 962 1291'Japan 729 214 341 240 837'Malaysia 236 418 357 557 742'Republic of Korea 85 108 84 205 348'Singapore 34 238 242 115 307'India 38 0 3 0 234'Viet Nam 337 225 63 159 151'Turkey 5 5 5 14 44'Germany 33 433 7 46 39'Brazil 998 169 49 37 27'Chinese Taipei 1823 1046 1290 917 19'Belgium 0 0 0 0 9'United Arab Emirates 31 0 2 12 3'Switzerland 0 24 13 87 2'Angola 0 0 0 0 0Others 472 429 109 11 0

List of supplying markets for a product imported by Philippines Product : 7016 Glass paving block for building/const,glass cube, etc

   Sources : ITC calculations based on COMTRADE statistics.  Unit : US Dollar thousand  

ExportersImported value in

2004

Imported value in

2005

Imported value in 2006

Imported value in 2007

Imported value in

2008'World 3375 1729 1188 2173 1411'China 739 533 529 679 893'Italy 786 576 145 341 125'India 208 72 60 35 99'Indonesia 122 119 125 162 68'Hong Kong (SARC) 673 112 79 23 66'Japan 131 85 146 751 66'Thailand 89 55 0 0 36'Germany 1 4 32 11 23'Chinese Taipei 1 6 0 4 9'Czech Republic 0 0 6 36 8

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Others 625 167 66 131 18

V. Construction, Technical Consultancy and Foreign Investment Regulations

A. Summary of Construction and Technical Consultancy Regulations

Enterprises registered under the Omnibus Investments Code [Executive Order No.  226] are permitted to employ foreign nationals in supervisory, technical, or advisory positions during its first five years from registration. Those majority foreign-owned registered enterprises are allowed to employ foreign nationals as president, treasurer and general managers for an indefinite period of time.  In the case of Offshore Banking Units [OBUs], they are allowed to employ foreign nationals as executives in their respective units.  The same may be said for executives in area headquarters of multinational corporations.

For non-resident personnel of foreign firms, the entry visa requirements and description of the nature of the entry restriction must be a Pre-arranged Employment Visa. This is granted pursuant to Sec. 9(g) of the Philippine Immigration Law.  This is available for employment in any executive or managerial position.

Restrictions on Employment of Foreign Technical or Managerial Personnel and Accompanying Family Members:

A. Restrictions on positions: [1]  Registered foreign enterprises with the Board of Investments [BOI] may employ foreign nationals in supervisory, technical or advisory positions for a period not exceeding five [5] years from its registration, extendible for limited periods at the discretion of the BOI. [2] BOI-registered majority foreign-owned enterprises may employ foreign nationals in the positions of president, treasurer or general manager beyond the period of five [5] years. [3] Foreign nationals under the Corporation Code may be employed as members of the Board of Directors by way of election. [4] Foreign enterprises located at the Subic Bay Freeport may employ foreign nationals in any position upon prior approval of the Subic Bay Metropolitan Authority [SBMA] for a period of five [5] years which may be extended from year to year. [5] Foreign enterprises entering into government contracts and service for coal operations and exploration and development of oil and geothermal resources are allowed to employ foreign nationals in any position.

B. Restrictions on skills requirement:

Employment of foreign technicians in foreign enterprises in the Philippines is subject to the requirement that the skills they possess are not available in the Philippines.  If there is none available in the Philippines, a pre-arranged employment visa may be extended to the foreign technician.  Further, under the law, their employment should be accompanied by an understudy program wherein at least two [2] Filipino understudies should be trained on the skills for which they [foreign technicians] were engaged.

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B. Summary of Foreign Investment Regulations Philippine Foreign Investment Brief

C. Summary of Foreign Employment in the Philippines (residence permit, duties, social security expenses

a.Alien Employment Permit (AEP) Procedures 1. Philippine Employer submits to the Department of Labor and Employment

(nearest Regional Office relative to workplace) the AEP Application together with all the requirements such as:

a. Duly accomplished application form b. Photocopy of passport, with visa or Certificate of Recognition for

refugees c. Contract of Employment/Appointment or Board Secretary's

Certificate of Election d. Photocopy of Mayor's Permit to operate business e. Photocopy of current AEP (for renewal)

2. Employer pays the fee of Eight Thousand Pesos (approximately US$174) for each application for AEP with a validity of one (1) year, or a fraction of one year shall be paid to the DOLE-Regional Office upon filing of application. If employment is more than one (1) year, an additional Three Thousand Pesos (approximately US$66) shall be charged for every additional year of validity or a fraction thereof. In case of renewal, the applicant shall pay a fee of Three Thousand Pesos (approximately US$66) for each year of validity or a fraction thereof.

3. If DOLE accepts the application, they will then endorse the matter to the Philippine Bureau of Immigration for the entry to the Philippines of the foreign employee.

4. If approved, the Commissioner of the Immigration transmits his approval to the Department of Foreign Affairs (DFA).

5. DFA then authorizes the Consular Office (in the country of foreign employee) to issue the working visa.

6. The applicant must appear personally at the Consular Section of the Philippine Embassy and submit the following:

a. Passport valid for at least six (6) months;  b. Two completed application forms;  c. Four (4) identical pictures (passport size) of the applicant signed on

the front bottom of each;  d. Medical and physical examination report by an authorized physician.

It must also include the chest x-ray film, laboratory reports and a certificate that the applicant is free from AIDS. The medical examination report is acceptable only if submitted to the quarantine officer at the port of entry in the Philippines, together with the visa application, within six (6) months from the date the examination is conducted; 

e. Police Clearance, issued by the police authorities of the place where the applicant resides. (Police Certificate based on fingerprint check); and 

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f. Visa Application Fee  7. If the spouse is accompanying or joining the principal in the Philippines

within six (6) months from the date of the principal's admission, the spouse must submit their marriage certificate.  Unmarried children under twenty-one (21) years of age accompanying or joining their parent in the Philippines within six (6) months from the date of the parent's admission, must submit their birth certificates showing the names of their parents. 

b. Duties Once Alien Employee arrives in the Philippines, he/she has to report to the Bureau of Immigration to process his/her Alien Certificate of Registration (ACR) and pay US$50. An Alien employee is also obliged under the law to report every 6 months at the Bureau of Immigration for their permit renewal.

c.Social Security The Philippine Government imposes on all companies to pay all their employees’ social security under the Social Security Services (SSS). Both the Philippine Employer and Foreign Employee has to pay each of their share, highest fee per employee is P1,560 (US$34), sharing would be $10 from the employee and $24 from the employer. Though, it is highly recommended for Foreign Employees to acquire other modes of insurances from private and reputable companies.

VI. Bilateral Cooperation Opportunities

A. Projects Supported by Financial Organizationsa. ADB - 2009 Projects b. Foreign Funding Agencies with projects in the Philippines

B. Projects in other countries, supported by Financial Organizations wherein Philippine and Turkish companies entered into cooperation opportunities.There is an opportunity for tie-ups between Turkish and Philippine companies in other countries especially that foreign funded projects are open to foreign companies so the possibility of a Filipino company and a Turkish company working together is certainly feasible.

C. Countries in which Philippine construction companies and technical consultants have projects. There are currently 63 manpower service contracts and 4 engineering consultancies. These cover projects such as buildings, bridges, monorail, water treatment plants, ports, electrical and mechanical works. The projects are located in Africa, other parts of Asia, Middle East, Oceania and Russia. POCB Registered Contractors

VII. Opinion and EvaluationA. Opinion, Proposal and Evaluation on Philippine Construction Market

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It will continue to flourish because the government has taken strong initiatives to develop the country’s infrastructures. They have allotted substantial amount to boost the construction industry. Another reason of the sector growth was the prices of the building materials, steel prices were stable for 2009 and most of the building materials for the first semester were low and minimal increase on the latter part of 2009. This is despite the economic crisis being experienced worldwide. Somehow, the construction sector in the Philippines did not feel a hard impact, the effect if there were any were tolerable among the contractors.

However, according to a Research Analyst at RNCOS, “Private construction companies in the Philippines need to shift their focus from luxury condominium projects to middle and low-end condominium projects to face the aftereffects of recession. The shift in strategy is inevitable as the government spending on infrastructure projects will not be able to drive growth in the industry for a longer period of time. ”(Government Initiative Boosting Construction Sector in Philippines)

It is also important to consider the actuality of developing Philippines as a target market for construction, and this plan will only be possible if we can entice Turkish companies to take part in the Construction Industry in the Philippines, by including this in our subsidy program and by letting these contractors know that the government will be supporting them in these endeavors.

VIII. Related AddressesA. Government Offices

a.Department of Public Works and Highways Bonifacio Drive, Port Area, Manila, PhilippinesTel. No: (+63 2) 3043000 / 3043221 (Office of the Secretary)Email: asis.raul@dpwh.gov.ph (Assistant Secretary Raul Asis)

b. Department of Trade and Industry1. Build, Operate and Transfer Center

4th Floor, G.A. Yupangco Building 339 Sen. Gil Puyat Avenue 1200 Makati City,PhilippinesTel. Nos.: (+63 2) 8964697 / 8976826 / 8953893Fax No.: (+63 2) 8968452Email: info@botcenter.gov.phWebsite: www.botcenter.gov.ph

2. Philippine National Construction CorporationEDSA corner Reliance Street, Mandaluyong City Tel. Nos. (+63 2) 631-8431 / 631-5084Email : pnccnet@globelines.com.phWebsite: www.pncc.com.ph

3. Construction Industry Authority of the Philippines2/F & 5/F, Executive Center Bldg.369 Gil Puyat Ave., cor. Makati Ave., Makati CityTel. Nos.: (+632) 895.4424 / 895.6826

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Fax No.: (+632) 897.9336E-mail:  ciapdti@yahoo.com

1. Philippine Overseas Construction BoardTel. Nos: (+63 2) 8961831 / 33 Tel/Fax No: (+63 2) 8964569Email: pocb@skyinet.net Website: http://www.skyinet.net/~pocb/

2. Philippine Domestic Construction BoardTel. No: (+63 2)8961831

4. Construction Manpower Development FoundationGF Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati CityTel. No: (+63 2) 8901069 Fax No: (+63 2) 8901037Email: cmdf_dti@yahoo.com

B. AssociationsPhilippine Constructors Association (www.philconstruct.com) 3rd Floor, Padilla Bldg., Emerald Ave., Ortigas Center, Pasig City, Metro ManilaTel. No.: (+63 2) 6313135 / 6312778Fax No.: (+63 2) 6312788Contact Person: Mr. Anthony L. FernandezDesignation: PresidentEmail: email@philconstruct.com Website: www.philconstruct.com

C. Construction MagazinesBlu Print (Design and Architecture)Mega Magazine PublicationContact Person: Ms. Nikki BanzonTel. No.: (+63 2) 6312859 loc. 20 / 28 /42Fax No.: (+63 2) 6312862Website: http://www.bluprintmag.com/

D. Financial Institutions a. Asian Development Bank: www.adb.org b. World Bank (International Monetary Fund): www.worldbank.org c. United Nations in the Philippines: www.un.org.ph

E. Other Websites for Philippine Constructiona. Philippine Builders: http://www.philippine-builder.com/b. Construction Directory: http://www.constructiondir.com/philippines-country-190-

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IX. References1. (Virola, 2010)2. (Aide Memoire on Foreign Investment in the Philippines, 1998)3. (Philippine Peojects)4. (Government Initiative Boosting Construction Sector in Philippines)5. Central Bank of the Philippines6. National Statistics Office7. Bureau of Export Trade Promotions8. National Statistical Coordination Board 9. Office of the President of the Philippines 10. Undersecretariat for Foreign Trade11. Philippine Overseas Construction Board

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