Gov’t hikes budget for infrastructure program until 2022
NEWS
The Development Budget Coordination Committee (DBCC) is increasing its infrastructure allocationuntil 2022 as part of its goal to support the Philippines’ economic recovery. The infrastructure budget for this year is now at PHP824.9 billion (USD17.2 billion), up 5% from the PHP785.5 billion (USD16.4 billion) adopted in July 2020. This is still lower than the initial PHP989 billion (USD20.6 billion) target pre-pandemic. The share of the revised budget to the country’s GDP is now at 4.5% from 4.2% based on the July figure. In 2021 and 2022, the government aims to allot PHP1.17 trillion (USD24.4 billion) and PHP1.15 trillion (USD24 billion), respectively. The infrastructure budget for both years will be increasedto help the economy bounce back from recession . DBCC projects the Philippine GDP to contract by up to 9.5% in 2020 before posting a 6.5% to 7.5% growth in 2021 and 8.0% to 10% growth in 2022.
RESEARCH VIEW
In our view, the government’s increased infrastructure spending in the next 12 to 24 months should benefit the property sector. Data from the Department of Budget and Management (DBM) showed that the current administration’s infrastructure spending from 2017 to 2019 averaged 5.5% of GDP per annum, higher than previous’ administrations’ spending of 1% to 3% of GDP. Colliers believes that the implementation of infrastructure projects such as roads, railways, and airports has the potential to unlock land values and raise property prices and create business opportunities especially in urban areas outside the capital region. This massive infrastructure development program should also boost the attractiveness of integrated communities, resulting in an aggressive development of office towers, residential units, and other institutional/support facilities. From 2021 to 2022, Colliers sees the completion of other big-ticket infrastructure projects such as the BGC-Ortigas Link Bridge, NLEX-SLEX Connector, Skyway SLEX Extension, and the new Clark International Airport. Among the emerging locations likely to benefit from the completion of these projects are Cavite, Laguna, Batangas, Pampanga, and other established business hubs within Metro Manila.
LIMA Estate to be expanded
NEWS
Lima Land Inc, a subsidiary of the Aboitiz Group, plans to expand its 700-hectare (1,700 acres) Lima Estate in Batangas to bring in more industrial locators and create additional jobs. About 100 hectares (250 acres) will likely be developed for new locators while 30 hectares (75 acres) will be redeveloped for office towers and commercial lots. Lima Land also plans to construct support facilities such as schools, hospitals, hotels and dormitories. The expansion of the Lima Estate is scheduled to be completed in Q3 2022. Industrial locators TRC Incorporated and Japanese wire harness manufacturer Leading Co. Ltd are also planning to expand and start operations by 2021.
ADB sees PHL economy shrinking 8.5% in 2020
NEWS
The Asian Development Bank (ADB) now projects an 8.5% GDP contraction in 2020 for the Philippines, worse than the -7.3% forecast in September 2020. The gloomy outlook is consistent with the 8.5% to 9.5% contraction projected by the Development Budget Coordination Committee (DBCC). According to ADB, the negative outlook is due to the decline in household consumption and investments. Despite the pessimistic outlook for 2020, ADB sees the economy rebounding by 6.5% in 2021. ADB Chief Economist Yasuyuki Sawada believes that the timely delivery of an effective vaccine will likely be critical for the economic recovery of developing economies. Aside from the revised 2020 GDP projection, ADB also raised its 2020 Philippine inflation forecast to 2.5% from 2.4% in September.
