President Rodrigo Duterte with China Amb. Zhao Jianhua leads the groundbreaking ceremony of the Two China Aid and Bridge Project in Intramuros, Manila, July 17, 2018. — PHILSTAR/KRIZ JOHN ROSALES
THE Philippines has become a preferred destination for Chinese investors, according to the new report released by real estate advisory firm Santos Knight Frank.
The report, “New Frontiers: Prospects for Real Estate Along the Belt and Road Initiative” by the firm’s partner Knight Frank, aims to evaluate opportunities provided by the Belt & Road Initiative (BRI), specifically in Southeast Asia’s industrial and logistics sectors.
“The Philippines is increasingly becoming a much-sought after destination for Chinese capital, helping push the country’s infrastructure development and expand industrial, logistics, manufacturing, residential and tourism sectors. Improvements in accessibility and infrastructure are key to driving growth in the provincial areas and sustain the economic growth of the Philippines,” Rick M. Santos, chairman and chief executive officer of Santos Knight Frank said in a statement.
The report noted that since the start of the current administration, there has been a pivot towards Chinese-funded infrastructure projects and investments made in the country, which is in line with the government’s goal to boost infrastructure spending, thus fueling the economy. Some of the Chinese-funded projects noted by Santos Knight Frank are the Manila-Bicol railway project worth $270 million with China Railway Engineering and the Davao land reclamation project worth $200 million with China Communications Construction.
“However, things have been slow to get off the ground with only $6.7 billion of Belt and Road Initiative-related investments completed since the change in government, out of the roughly $25 to 30 billion in pledges secured,” Knight Frank said in the report.
One reason for this could be the Philippine rules restricting foreign ownership. The House of Representatives has approved House Bill No. 8764, which proposed to relax restrictions contained in Republic Act No. 7042, or the Foreign Investments Act of 1991 (FIA), on final reading on Jan. 14; while its counterpart measure, Senate Bill No. 2102 remains pending at the committee level.
Both Senate President Vicente C. Sotto III and Senator Sherwin T. Gatchalian, chair of that chamber’s economic affairs committee, committed to prioritize passage of the bill in the remaining days of the 17th Congress.
“Nonetheless, with the rapid infrastructure push, developers are once again warming up to the industrial sector,” it said. Developers have been moving out of the capital and are establishing their presence in emerging cities across the country due to rising fuel prices, and the shift of demand for such spaces to fringes of Manila.
Major e-commerce firms have entered the Philippine market. Alibaba’s Lazada brand set up its largest warehouse in Southeast Asia in Cabuyao, Laguna in late 2017, with plans of putting up five more facilities in over three to five years.
“Going forward, with the government forecasting the economy to expand between 6.5 to 6.9% in 2019 mainly via the strong and consistent delivery of its infrastructure investment agenda, the outlook for the industrial sector does look bright and expectations are for 2019 to at least maintain the growth momentum from last year,” it noted. — Vincent Mariel P. Galang