Jose Leviste Jr, Chairman, Atlantic, Gulf & Pacific Company: Interview

Interview: Jose Leviste Jr.

How much progress has been made on the modernisation of transport infrastructure under the Build, Build, Build (BBB) programme?

JOSE LEVISTE JR: The implementation of the BBB programme shows the political vision of the president and the government. Its big-ticket projects will take time to accomplish, but it is important that initial steps have already been taken. The targeted end-date for BBB will extend beyond 2022, but as many projects as possible will be executed before that deadline.

The time was right for the government to introduce a serious programme like BBB. With annual GDP growth of 6-7%, the Philippines is among the world’s fastest-growing economies. To sustain momentum, it is critical that we accelerate infrastructure development. The programme’s railroad and airport projects hold the promise of diversifying the country’s growth drivers and stimulating growth in the provinces. Private players also have a chance to capitalise on this trend by investing in projects that support the BBB programme.

As the depletion of the Malampaya gas field continues, how will demand in energy projects evolve?

LEVISTE: Amid its economic growth, the Philippines requires new sources of power. It will be necessary to combine renewables with fossil fuel-fired power plants because the shift to green energies will take time. From a construction perspective, there are opportunities across the sector as the country seeks to stabilise and diversify its energy mix. There is still demand for coal-fired power plants, and given sufficient investor interest, even nuclear energy is a future consideration, although such an ambitious initiative would entail very complex installation conditions.

In the case of liquefied natural gas (LNG), considerable infrastructure investment is required for this to become a viable alternative to the Malampaya field. It would entail building both an LNG import terminal and supporting supply chains for consumer distribution.

Which segments are driving construction demand under the government’s diversification strategy?

LEVISTE: Infrastructure will lead demand in the coming years due to the focus on decongesting Metro Manila, which will cease being an attractive place to live and do business without intervention. Buildings, roads, ports and airports are the priority, and industrial development will follow. If we develop new geographical areas, more export-processing zones and ports will be created to solve logistical challenges. Therefore, the priority is expanding infrastructure across the different regions.

Where does the Philippines rank in ASEAN in the uptake of innovative construction technologies?

LEVISTE: It varies, but the Philippines is generally catching up in terms of technology adoption. Banks and business process outsourcing companies are moving in that direction, and the construction sector is expected to follow. We have to innovate, find new industries and adopt digitalisation to maintain competitiveness in the region, where countries like China are extremely influential due to their size. The degree of readiness among construction firms can also improve. Usually, small developers are more hesitant than larger firms to partner with foreign investors, which undermines the technology transfer and development. The size of a company changes the way it undertakes engineering and construction, so the partnership formation will be necessary to access the right technology. Construction companies must develop a more international mindset.

To what extent is the labour supply sufficient in meeting demand from projects in the pipeline?

LEVISTE: The labour supply is problematic, as there is currently a shortage of professionals in the construction sector. As projects become bigger and more complex, we must upgrade training at the national level. Specifically, we need more welders and engineers, and the supply of technical professionals has to be broader.