Duterte’s ‘Build, Build, Build’ plans hit peso
manila — Philippine construction firm Teravera Corp is planning to raise a fourth dollar loan in a year, after borrowing around $2.5 million to buy dozens of excavators, road rollers and dump trucks from China, South Korea and Japan.
Teravera is one of hundreds of local builders contributing to a surge in capital goods imports that has turned the country’s current account surplus into a deficit and knocked the peso down to 11-year lows against the dollar last month.
While the peso’s dip is raising eyebrows in a region where the Thai baht and the Malaysian ringgit are flirting with multi-year highs, it’s come mainly because the Philippines, one of the world’s fastest growing economies, has been enjoying a construction boom.
Besides private construction, companies like Teravera are confident of more contracts coming from the government’s drive to upgrade its dilapidated roads, railways, ports and airports, which have been a drag on the economy.
“We have seen the government’s list of projects and they are bidding them out early, that is why we have been procuring equipment,” said Teravera vicepresident Aldrin Cabrera.
He said the company is confident of getting subcontracted to build a long-delayed four-lane toll road project on the southern part of Luzon island later this year, as it is one of bigger players in the area.
Foreign and local businesses have been frustrated with former President Benigno Aquino’s Public Private Partnership (PPP) projects, which often took a long time to kick off because of red tape.
The game changer is that President Rodrigo Duterte, who took office just over a year ago, has decided that all projects will be entirely funded by the government, which his economic managers say should simplify the process. The controversial leader says he plans a $180 billion “Build, Build, Build” infrastructure campaign in his six-year term.
Duterte has already approved the auction of 21 projects worth $16 billion, including the overhaul of Manila’s shabby airport and a railway line on Mindanao island in the south. Other projects include upgrading ports, roads, rail links and irrigation.
Despite security problems linked to the spread of militancy on Mindanao and Duterte’s bloody war on drugs, investors have welcomed the commitments, but say they need to see progress on the ground.
“We see a high degree of commitment and seriousness in the executive branch and probability of sufficient financing... not for every project to be completed on schedule but for very substantial and significant progress,” said John Forbes, senior adviser at the American Chamber of Commerce in the Philippines. —