Overseas projects, outsourcing seen as future of PH construction

Overseas projects and engineering service outsourcing (ESO) can be the future drivers of the Philippine construction industry, said local industry experts from the government and private sector.

Construction industry players discussed the future of construction after the Covid-19 pandemic in the webinar “Seizing Construction Opportunities Under the New Normal” on 10 July 2020. The webinar was organized by the Department of Trade and Industry-Export Marketing Bureau (DTI-EMB) and the Construction Industry Authority of the Philippines’ (CIAP) and Philippine Overseas Construction Board (POCB).

“As we all know, Construction Services sector is one of the major revenue-generating sectors of the country whether in local or foreign business dealings. Despite a major decrease in the number of PH construction services exporters from over a hundred in the 1980s to 37 at present, the overseas construction industry still contributed its share to the economy: a total amount of US$116.08M,” said DTI Undersecretary for Trade Promotions Abdulgani M. Macatoman.

“Construction is set to rebound after the Covid-19 pandemic,” said Norman Macapagal, Executive Vice President, EEI Corporation, and President, EEI Limited, Inc. While waiting for this, he said that business owners should prepare by accelerating their business transformation and exploring opportunities to work on foreign projects.

“In our company, we have been talking about changing our procedures, because they are too long, with too many signatures involved. When the pandemic came in and we were on lockdown, the procedures that we were discussing for over a year were suddenly simplified. We were forced to look at new construction techniques and methods because of the need to survive,” said Macapagal.

EEI has been doing overseas construction projects since the ’70s. For those who want to try and bid for foreign projects, he suggests studying taxation and labor regulation of the foreign country as well as the regulations of the POCB. Firms, he said, can then either set up a temporary branch, a permanent branch or get a local partner to begin operations.

Meanwhile, Dr. Ernesto De Castro, President of Esca Inc. and Esca International Inc., sees engineering service outsourcing (ESO) as a high-value service that can be the Philippines’ next BPO. In 2016, ESO in the Philippines is valued at US$250 million or 1% of the country’s total outsourcing sector and 0.5% of all ESO in the world.

“We are already number 1 in voice services, but the challenge is to move from voice to non-voice, in particular, to go into the high-value-added activities under KPO [knowledge process outsourcing] and link these services embedded to manufacturing, such as finance, design, and engineering,” said De Castro.

To develop the industry, De Castro proposed training Filipino engineers on Building Information Modeling (BIM). BIM builds intelligent models to be used in construction and is replacing CAD in other countries. Singapore, Malaysia, and Thailand are among the countries that require BIM in their projects.

Macapagal and De Castro agreed that government support is needed for the construction industry to recover after the Covid-19 pandemic.

“It has to be a joint effort because chasing projects outside is not only time consuming, but expensive. We can short-circuit that with b2b sessions through DTI,” said Macapagal.

The DTI-EMB, POCB, Board of Investments, and DTI commercial counselors present in the event committed to working closely with the private sector to implement their suggestions.