The world’s largest commercial real estate services company has urged the Philippine government to continue with its infrastructure spending as an investment for the future.
CB Richard Ellis Philippines general manager Trent Frankum noted that while the deficit spending for critical infrastructure project will put a burden on the coffers of the government in the short term, the wise investment currently being undertaken by the Arroyo administration will ensure continuous economic growth for the country until far into the future.
The company is part of the global CB Richard Ellis Group, a Fortune 500 company.
“At a time when many countries are focusing their spending on salvaging various financial institutions, the Arroyo administration is pushing for government expenditures as a pump-priming activity to spur lasting gains for the economy in general and the property sector in particular,” Frankum said.
Based on recent reports of the Department of Finance, the government continues to increase spending for infrastructure and social services, resulting in a national budget deficit of P53.1 billion for the first nine months of the year.
As the Philippines shields itself from a looming US recession, the country adjusts its business model and gradually decouples from the US economy. “With its growing population, the Philippine economy must continue to expand,” Frankum stressed.
“The void to be created by the US slowdown must be compensated by growth in domestic demand and new markets in other parts of the globe (e.g. Middle East, Europe, Asia ),” he added.
He also pointed out that for the last three years, the local property sector benefited from the steady growth of the business process outsourcing (BPO) industry, overseas remittances and dollar revenues from the growing tourism industry of the country.
To sustain the momentum of the property sector’s growth, the government is spending on major road projects (such as SCTEX, SLEX, STAR Tollway) and new airport projects located in Bacolod-Silay, Iloilo, San Vicente (Palawan), Busuanga-Coron (Palawan), Puerto Princesa (Palawan) and the New Diosdado Macapagal Passenger Terminal in Clark, Frankum pointed out.
According to the CB Richard Ellis official, the P21-billion Subic-Clark-Tarlac Expressway (SCTEX), the longest tollway in the country, opened in the first half of 2008 and already prompted numerous property projects in Subic, Clark and Tarlac creating a new economic corridor that now rivals Calabarzon in Region 4.
Frankum likewise noted notable investments in the area, including the $1.7-billion project of Texas Instruments. The Dallas-based semiconductor firm is locating its newest plant in the Clark Freeport Zone in Pampanga, effectively expanding its operations in the country, which started in 1979 with a Baguio plant.
“The expansion will involve the establishment of a assembly and test operations facility with a 77,000-square meter covered complex on a 32-hectare site within Clark near the Centennial Expo Site. This is a strong catalyst that is already generating interest from complimentary businesses in logistics and warehousing, supplier manufacturing, and schools,” he said.
The SCTEX project complements the deep-sea port of Subic and the upcoming $100-million improvements to the Diosdado Macapagal International Airport (DMIA) in Clark, Pampanga. These projects are expected to generate labor employment, starting from construction to operations and will mitigate some effects of unemployment resulting from the global financial turmoil.
Meanwhile, to encourage more property development in Calabarzon, the rehabilitation of the South Luzon Expressway (SLEX), a P8.3-billion project, was undertaken by Malaysian builder MTD Capital. The project started in 2006 and is expected to be completed by the first half of 2009.
According to Frankum, “the completion of the SLEX rehabilitation will cut travel time from Laguna and Muntinlupa to the Makati Central Business District to less than an hour. This early, major developers such as Ayala Land, Eton Properties, Greenfield Development and Filinvest Land are now in various stages of planned unit developments, and will capture the benefits of the soon to be completed SLEX project.”
Frankum also pointed out that major airport projects are now being constructed across major tourist destinations of the country such as Palawan (Busuanga, Coron, San Vicente, Cuyo, and Puerto Princesa), Cebu, Panglao Island (Bohol), Iloilo City, Bacolod City, Davao City and Cagayan de Oro City. The new and improved airports will provide easier access to these sites, as well as the surrounding tourist destinations, to local and foreign visitors. This is encouraging hotel development that will accommodate the steady increase in foreign tourist arrivals across all classes of tourist, the CB Richard Ellis executive said.