INTRODUCTION

The Association of South East Asian Nation (ASEAN) was established on August 8, 1967

in Bangkok Thailand amongst member countries: Indonesia, Malaysia, Philippines, Singapore,

Thailand, Brunei Darussalam, Vietnam, Lao PDR, Myanmar, Cambodia and Timor-Leste. In 2007,

the 10 Asean Leaders signed the Declaration accelerating the establishment of an ASEAN

Economic Community (AEC) by 2015.

Here are some areas of cooperation of AEC: Human Resources Development and

Capacity Building; Recognition of Professional Qualifications; Closer Consultation on

Macroeconomic and Financial Policies; Trade Financing Measures; Enhanced Infrastructure and

Communications Connectivity; Development of Electronic Transactions through e-ASEAN;

Integrating Industries across the Region to Promote Regional sourcing; and Enhancing Private

Sector Involvement for the Building of AEC.

What does it mean for the Philippines?

It means a lot of new opportunities and threats for the Philippines, a nation rich human and

natural resources. Also, the nation needs to improve its competitiveness as it would have to

cope with the requirements of the cooperation and complementarities that the ASEAN

envisions for it through the AEC. It may open up more opportunities for the Philippines to

improve its communications and transportation facilities.

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HOW WILL ASEAN INTEGRATION AFFECT THE CONSTRUCTION INDUSTRY?

Many experts believe that this regional collaboration of ASEAN countries will spur

demand for Philippine real estate properties, which translates to more jobs and business

opportunities for Filipinos.

For professionals and businesses that are in the local real estate sector, the integration would

require more commercial and residential infrastructures for highly-urbanized cities within the

region, including key cities of the Philippines.

In an interview with Rappler, Noel Cario, president of Chamber of Real Estate and

Builders Association (CREBA) said that The demand for residential spaces adjacent to malls,

retail complexes, and other recreational spaces would go up and will likely increase the already

healthy real estate market.

However, to maximize this opportunity, and for the real estate sector to achieve immense

growth upon the implementation of developments brought about by The AEC, there will be

requirements that the Philippines needs to fulfill.

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 OPPORTUNITIES AND CHALLENGES

Below are the 5 key changes to expect from the ASEAN integration:

STRONGER DEMAND FOR REAL ESTATE PROPERTIES

Following AECs vision to build a single market that will give way to a freer flow of

capital across borders and faster movement of goods, services, and skilled labor, businesses

based abroad are anticipated to set up headquarters in the country for expansion, thus the

need for more office, industrial, and residential space to accommodate these businesses.

ELIMINATION OF TARIFFS

A wealthier Southeast Asia also means that there will be an elimination of tariffs on

goods and services. In relation to this, a higher disposable income is foreseen and this will equip

consumers with more money to spend. So, the need for more commercial spaces such as malls,

retail complexes, and shopping establishments is expected to grow.

THE RISE OF NEW BUSINESS SITES

To accommodate future demands in operations facilities, new growth areas in Metro

Manila and Cebu would be maximized, as well as the need to speed up developments of

potential growth areas that include Iloilo, Cagayan de Oro, General Santos City, and Angeles

City and San Fernando that are both located in Pampanga.

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THE GROWING DEMAND FOR MORE AND BETTER INFRASTRUCTURES

The apparent need for more business spaces will bolster the construction industry.

Construction companies will race to deliver better offices, retail complexes, and residential

areas to support the booming economy.

LIFTING THE PROHIBITION ON FOREIGNERS FROM OWNING REAL ESTATE

Due to the expected influx of foreign investment, there will be a need for the

government to amend the Constitutions prohibition on non-Filipinos with regards to land

ownership. By eliminating the prohibition, the real estate sector will reach new heights.

Once dubbed as Asias sick man, the Philippines efforts to improve good governance have

brought economic benefits, and as the country continues to gain momentum, bright

opportunities are certainly ahead of us.

EFFECTS OF ASEAN INTEGRATION ON CONSTRUCTION INDUSTRY

(1) Contractors from ASEAN countries, provided that they are licensed in their ASEAN

country of origin, will be allowed to engage in construction contracting in the Philippines. (2)

Licensed Filipino contractors will be able to engage in projects in other ASEAN countries. (3)

Possible brain drain as there will be more opportunities for professional and skilled workers

abroad. (4) Tariff reduction for construction-related goods and materials will fall between 0-5%.

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IS THE CONSTRUCTION INDUSTRY ASEAN INTEGRATION READY?

(1) There are only 6,000 licensed contractors in the Philippines. (2) If the industry cannot

cope up with the demands, an economic slowdown will ensue. (3) The Department of Trade

and Industry (DTI) has already made moves to allow 100% foreign equity for PCAB license

holders. (4) There are moves in the Congress for the relaxation of foreign equity restrictions.

EFFECTS OF PRESENCE OF ASEAN CONTRACTORS IN THE PHILIPPINES

(1) The current construction boom is bound to attract a great many foreign contractors

who were previously not allowed to carry out construction projects in the Philippines. (2)

Increased Competition for Local Contractors (3) Local construction companies that cannot

match the resources or technologies of foreign companies will opt to be the local counterpart

of these foreign companies and will enter into joint ventures with them. (4) Under such

arrangements, foreign companies merely put in the capital, claim the designing

andknowledge production part of the construction process and leave the rest to local

companies. This could mean that local companies will have to downsize their local staff,

including their professional staff, and instead hire general workers on a seasonal and project-

basis.

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 ANALYSIS

CONSTRUCTION INDUSTRY ECONOMIC INDICATORS

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 Construction Industry Outlook

The Philippine construction industry is expected to grow by 46 percent toP938 billion in

2014 from 2013s estimate of P643 billion. Of the P938 billion worth of construction projects

expected next year,P505 billion will be for building constructions, defined by BCI as non-

infrastructure projects including office, community, education, health, hotel, industrial,

recreation, residential and retail.

Civil constructions, meanwhile, are expected to account for P433 billion, which may

likely be spent for infrastructure (including transport and township, car park, landscape) and

utilities.

Utilities construction starts are forecasted to equate to 56 percent of total civil

construction starts for 2014, while infrastructure construction starts will comprise 44 percent.

Infrastructure (including transport) projects are expected to reach over P191 billion throughout

2014, signaling the governments goals to improve the countrys public structures, the report

stated.

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 RECOMMENDATIONS

The construction industry is vital to development efforts at the national and regional

levels. Despite the recent global financial crisis, this industry will remain a major contributor to

economic and social development in Southeast Asia. The construction industry is capital and

labor-intensive. It spans private investments, public initiatives and public-private partnerships.

Key investors include governments, multinational corporations, local contractors, joint ventures

between local contractors and multinational corporations, joint ventures between private

companies and governments, and partnerships between governments and international

financial institutions. It also involves huge infrastructure projects that require large numbers of

construction workers, both professional and general workers.

There is a demand for ASEAN to establish a mechanism to provide a clear, organized

voice to promote and sustain commitment to decent work. At the same time, ASEAN workers

need to be organized, for them to exercise their rights to freedom of association and collective

bargaining, to improve wages, health and safety, job security and other working conditions.

ASEAN leaders need to sustain efforts to achieve a collective political will to harmonize national

labor laws, to provide for equal opportunities for employment, fair procedures for dismissal of

workers, and settlement of labor disputes.

To be strong and durable, the new regional architecture cannot miss out this one key

pillar the workers and their voice, through the unions. The motivation for workers to work

hard to achieve economic integration is premised on a share in the prosperity, achieved

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through workers bargaining power to negotiate improvements in working and living

conditions. To be inclusive and progressive, ASEAN economic integration should advance not

only the interests of investors and business enterprises but also the core, fundamental rights of

workers. This should be achieved not only on paper, but also in real, measurable gains for the

regions workers

SOURCES

ASEAN Integration and the Construction Industry Hilmarcs Construction Corporation

(Legal and Compliance Department) Atty. Marijoy B. Bragado, via academia.edu

The ASEAN Integration and its Impact to the Philippine Real Estate Industry, Posted

by Joanne Almaden in Real Estate Investing, November 19, 2014 via

philpropertyexpert.com

Mind the Gap: ASEAN Integration, the Workers and Unions, Friedrich Ebert Stiftung

(FES) Regional Trade Union Program Asia & the Pacific via asetuc.org

http://philconstruct.com/docs/industryperf/firstSem2011_CountryReport.pdf

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