Manila most expensive market in Asean for private construction

MANILA, Philippines - Manila is now the most expensive site for private construction activities across major cities in Southeast Asia, the Philippine Competition Commission (PCC) said in its first policy note.

Citing a 2016 report from Langdon & Seah Construction Cost Handbook, PCC said the Philippines is already suffering from inflated construction costs in comparison with other Association of Southeast Asian Nation-member countries.

This comes even as the Philippines lags behind many countries in terms of quality of infrastructure, the antitrust body said.

For standard high-rise apartments in Manila, estimated construction cost is at $900 per square meter, higher than the rates in Bangkok, Jakarta, Vietnam and Kuala Lumpur which are at $773.5, $707, $665 and $465 per square meter, respectively.

Costs for standard high-rise offices and prestige high-rise offices in Manila are pegged at $870 and $1,320 per square meter, respectively. This was followed by Kuala Lumpur at $757.5 and $1,190 per square meter, respectively.

Building a prestige as well as standard shopping center in Manila is also the most expensive in the region at $870 and $1,115 per square meter, respectively.

Jakarta is the cheapest market for prestige shopping centers at $649 per square meter and also for standard shopping centers at $594 per square meter.

Meanwhile, Manila recorded the cheapest construction cost only for business hotels at $1,330 per square meter, far lower than Kuala Lumpur’s $2192.5 per square meter, the highest in the region for this category.

The cost of construction in the country is among the reasons why the PCC is lobbying to level the playing field in the local construction industry by nullifying the Philippine Contractors Accreditation Board’s nationality requirement in its current licensing scheme for contractors.

“It is a well-recognized principle that restricted competition in markets results in goods and services that are of inferior quality and higher cost, to the detriment of consumers – both households and businesses,” the PCC said.

“Nationality-based distinction hinders competition in the construction industry, creating an uneven playing field between local and foreign contractors. Foreign firms possess capacity to construct vital projects and share technical expertise with local firms,” it added.

According to the PCC, competition results in better quality products and competitive prices which redound to the benefit of the public.

The PCC came out with its first amicus curiae brief filed before the Supreme Court last month wherein it highlighted the importance of relaxing existing restrictions in the construction industry.

“The government must ensure a level playing field where no market participant, whether from the public or private sector, is given undue advantage that would allow it to gain market share over otherwise more effective and efficient competitor,” it said.