Lewes, DE -- (SBWIRE) -- 03/10/2014 -- Although the Philippines construction sector appears to have reached the peak of its growth cycle, we believe this should not be inferred as a negative reflection of the sector's growth potential. The country's construction sector is still expected to be the fastest growing in Asia over the medium-term (after Myanmar) as conditions that are ideal for construction activity persist. Having said that, the lack of significant progress with the government's Private-Public Partnership Programme suggests project execution risks in the country remain considerable and this is a major threat to our long-term outlook for the sector. Additionally, while the devastation stemming from Typhoon Yolanda could result in a positive short-term boost to construction activity, we note its impact on the overall construction environment in the country will likely be negative.
Key Trends And Developments:
>> A consortium consisting of Philippines-based construction company, Megawide Construction and Indiabased infrastructure company GMR Infrastructure submitted the highest bid among six consortiums for the 25-year concession to expand and operate the Mactan-Cebu international airport under a publicprivate partnership (PPP) framework. If the GMR-Megawide consortium wins the concession for the PHP17.5bn (US$400mn) Mactan-Cebu project, it would be the company's fourth successful bid for a
project under the Philippines' PPP Programme. Nevertheless, second highest bidder Filinvest Development Corporation claimed the Megawide-GMR consortium did not follow bidding rules, and it is therefore confident it will win the project instead. The process to determine whether or not the Megawide-GMR consortium did break bidding rules is ongoing.
>> Philippine-based infrastructure company Metro Pacific Investments Corporation (MPIC) is reported to have signed a joint venture (JV) agreement on January 21 2014 with state-owned Philippine National Construction Corporation (PNCC) to develop a PHP23bn (US$509mn) toll road that connects the North Luzon expressway (NLEX) with the South Luzon expressway (SLEX).The 13.4km NLEX-SLEX connector was formerly part of the government's public-private partnership (PPP) programme, but was revised as a JV following MPIC's unsolicited bid for the four-lane elevated expressway project in Q313. The project is scheduled to be completed by June 2016. While commencement of the project suggests some progress is being made in terms of the PPP programme, we note delays elsewhere continue to be a major concern.
>> The Philippines' National Economic and Development Authority (NEDA) Board approved seven infrastructure projects worth a total of PHP184.2bn (US$4.14bn) in the country. These projects include the MRT 7 and LRT Line 1 extension. The 22.8km MRT 7 project will connect EDSA Quezon City to San Jose del Monte in Bulacan. Construction of the MRT 7 line is estimated to cost PHP62.7bn (US $1.41bn). The LRT Line 1 South extension project, which will extend the existing service line by
11.7km, is estimated to cost PHP64.9bn (US$1.45bn), while the LRT Line 1 North extension project will cost PHP1.4bn (US$31.5mn).
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