MEGAWIDE Construction Corp. is banking on its foray into affordable and socialized housing under the government’s expanded Pambansang Pabahay para sa Pilipino Program (4PH) to drive its next phase of growth, its top executive said.
Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said the company sees significant opportunities in these segments as it helps address the Philippines’ persistent housing backlog.
“Because of the demand, the opportunity is huge, hopefully, this can be one transformation in the next two to three years. We’ll see,” he said in an episode of BusinessWorld One-on-One with Editor-in-Chief Cathy Rose A. Garcia.
The listed infrastructure company’s strategic shift capitalizes on the current market imbalance, where mid- to high-end housing sales have slowed while demand for affordable homes continues to outstrip supply.
“We all know that there’s a mismatch in the current real estate market. We know that there is an oversupply in the P5 million and up condominium houses. But in the P2 million and P3 million (units) and below, there’s really a shortage,” he added.
The Marcos administration has tapped property developers and contractors, like Megawide, to build affordable housing units at scale under the 4PH program.
Megawide last year partnered with the Home Development Mutual Fund (Pag-IBIG Fund) for the 4PH program. Under the deal, Pag-IBIG invested P10 billion in Megawide to support the development of over 7,000 housing units.
The company is targeting to deliver 5,000 to 7,000 units in the coming year, before scaling capacity to deliver 10,000 to 20,000 units annually.
“We committed 100,000 units. But I told the President (Ferdinand R. Marcos, Jr), we may not be able to deliver the whole 100,000 in three years, but definitely it will be launched,” Mr. Saavedra said.
Megawide is prioritizing housing sites in urban fringe locations such as Taytay in Rizal, Cavite, and San Jose del Monte, Bulacan.
“The problem before in socialized housing… (The location is) too far. The residents need to travel, like two hours, three hours (to get to work). So, this program is really to address the backlog in Metro Manila, where people can just reside in the fringes,” he said.
INFRASTRUCTURE PUSH
Mr. Saavedra likened Megawide’s pivot to affordable housing to its foray into public private partnerships (PPP) more than a decade ago. Its first PPP project involved delivering 10,000 classrooms in 27 provinces for the Education department.
“We put up 10,000 classrooms that we finished in 3 years… then we also did the Mactan-Cebu Airport, and then the PITX (Parañaque Integrated Terminal Exchange), and Clark (airport) construction. Somehow, the PPP was an enabler for Megawide to become an infrastructure player,” he said.
Mr. Saavedra said the Philippines needs to continue investing in infrastructure, as it has been left behind by its Asian neighbors. However, investor interest in PPP projects is being dampened by corruption, long wait times, and court challenges.
“(Appetite for PPPs) is disappearing. I asked the foreign players and the investors have the same comment that if (the other bidders) lose, they will file a TRO (temporary restraining order), they will be questioned, and it will take a long time.”
Based on his experience participating in a PPP bidding in Singapore, he noted the Philippines has a more stringent and extensive PPP framework.
“But the difference is they are fast. When they say the date, they stick to the date,” Mr. Saavedra said.
Infrastructure spending has been a key pillar of the government’s growth strategy, but there has been a marked slowdown after last year’s corruption scandal involving flood control projects.
“I think what the government needs to do is to have a real partnership with the private sector… Private sector (firms) that are capable, the real contractors. Because the problem with our infrastructure, we know because of the scandal, most of the infrastructure that have been built were not properly done… and the builders were not capable,” Mr. Saavedra said, adding that the procurement process should be more transparent.
Looking ahead for Megawide, Mr. Saavedra said he expects the company to continue focusing on construction and engineering, as well as housing.
“In the next 10 years for Megawide, we’ll be focusing on where we’re good at. Probably, housing, construction-related, energy, but still related to engineering and construction because that’s our core… Hopefully, we can also help address the problems the government is struggling to solve,” he said.
“In the Philippines, whatever crisis there is, I always try to look at the opportunity. There will always be plenty of opportunities.” — Juliana Chloe A. Gonzales with Cathy Rose A. Garcia
Watch the full BusinessWorld One-on-One interview with Megawide Construction Corp. Chairman and Chief Executive Officer Edgar B. Saavedra at 11 a.m., Oct. 12 on Facebook via BusinessWorld (@BWorldPH) and The Philippine Star (@PhilippineStar) and on YouTube (@BusinessWorldTV).