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Investment-AAC Manufacturing Project in the Philippines

Investment-AAC Manufacturing Project in the Philippines

  • Categories:Investment
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  • Time of issue:2020-07-16 18:15
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Summary description:Introduction to AAC project investment in the Philippines

Investment-AAC Manufacturing Project in the Philippines

Summary description:Introduction to AAC project investment in the Philippines

  • Categories:Investment
  • Author:
  • Origin:
  • Time of issue:2020-07-16 18:15
  • Views:


1. Introduction to the Philippines

    As a country with a population of over 100 million in Southeast Asia, the Philippines has achieved a  GDP growth rate of more than 6% for seven consecutive years since 2012, and its duration is longer than that of other Southeast Asian countries. Its capital - Metro Manila, consists of 17 municipalities with a total area of 633 square kilometers and a population of approximately 20 million, and its second largest city, Cebu, has an urban population of approximately 5 million; the current President Duterte’s government took office in 2016, and his presidency has further posted efforts to promote the development of agriculture and manufacturing industries, and proposed the "Philippines Ambition in 2040" Philippine Ambition 2040 Plan. The plan mainly includes the gradual reorganization of the tax system; improving business convenience and increasing international competitiveness; increasing investment in infrastructure development And encourage the development of PPP; guarantee the land ownership system and encourage development; encourage large-scale development plans such as technological innovation to take infrastructure construction as a key development area, put forward the statement of infrastructure construction "Golden Age", and plan to increase the proportion of infrastructure construction to GDP to the goal of 7.4%.


Preident Durterte and the National "build, build, build" prospect.

2. Introduction to China-Philippine Relations

        China and the Philippines face each other across the South China Sea, and the two countries have been making frequent economic and trade exchanges. In 2016, the total trade volume between China and the Philippines was 47.21 billion yuan, an increase of 3.4% year-on-year; in 2016, China’s direct investment flow to the Philippines was 32.21 million US dollars, mainly in the mining, manufacturing, and power sectors, and Chinese companies signed 280 contracts new contracting projects in the Philippines, with a total newly signed contract value of USD 2.983 billion; in 2017, China’s direct investment to the Philippines was 2.339 billion pesos (approximately USD 47million).

On March 17, 2017, in order to promote the rapid, stable and orderly development of bilateral economic and trade cooperation, the two countries signed the "Six-Year Development Plan for China-Philippines Economic and Trade Cooperation", in which basic design and enterprise processing and manufacturing are to focus on China-Philippine economic and trade cooperation Development area. Foreign investors enjoy a series of preferential investment policies in the Philippines. Foreign investors can enjoy income tax relief (6-8 years), business tax relief, and convenient customs visa processing after registering with the Philippines Investment Authority. Meanwhile, the ASEAN Free Trade Agreement sets zero tariffs on imports and exports of most products between China and the Philippines.

3. Introduction to market in the Philippines 

        In order to boost economic growth, the Philippine National Government has promulgated the "Foreign Investment Law" and "Comprehensive Investment Law". The promulgation and implementation of the bill has greatly relaxed restrictions on foreign investment access and provided foreign investors with legal protection. At the same time, thanks to the superior local policy support, high-quality labor resources and superior island scenery, the Philippines has attracted more and more investors including international financial institutions, gaming industry operators and tourism resort development companies. The arrival of enterprises has driven the development of high-end office buildings in the Philippines, and has frequently updated the fastest rate of building in Southeast Asia. The central business districts in Makati, Pasig and other places in the Philippines all present the sight of tall buildings and large-scale construction. At the same time, Clark New City, which is 70 kilometers from the capital and covers an area of 36 square miles, is the largest new special zone in Manila. The area is expected to invest $140 and will meet the work and life of 2 million people. The new city plans to build a comprehensive special economic zone integrating politics, economy, education, agriculture and entertainment. The development of Clark New Town will bring a large number of AAC aerated concrete panel and AAC block markets.

On the other hand, the population of the Philippines continues to grow and is expected to reach 126 billion people by 2030, resulting in huge housing demand. According to data from the Statistics Bureau of Philippines and related housing agencies, the construction area of the Philippines has increased year by year, and there is still a large amount of house backlog. It is expected that by 2030, the national housing supply gap will reach 12 million units. The government has been focusing on the development of affordable housing, and striving to develop new types of high-quality building materials, thereby reducing the production cycle, increasing the housing output rate, and protecting the living rights of Filipinos.


A glance view of BGC Commercial Zone in Manila


4. Introduction to AAC products in the Philippines

        The AAC Lightweight Block Corporation, being the only AAC filling block manufacturer in the Philippine, was established in Cebu in 2016. The annual output is about 100,000 cubic meters, and the price is about 128-157 USD/cubic meter. The factory is far from the capital Luzon Island, which is the economic development center of the Philippines, however, there have not been any other AAC manufacturing enterprise registered in the Luzon region. The locally used aerated AAC products are heavily relied on importation, and the seasonal sea freight fluctuations posed great pressure to local importers, making the Construction costs unchained.


House built with local AAC blocks


5. CBME's Advantages in the Philippines

After over two years of intensive work, we have obtained various resources and information of the Philippine AAC products, and has established a good relationship with the Philippine Embassy, Philippine Ministry of Trade and Industry(DTI), Philippine Construction Authority and other government agencies Partnership. As a public institution, we are recognized as an inter-governmental project cooperation promoter and communicate with the Philippine government agencies. In the year 2018, under the witness of Philippine President Duterte,, we signed the business cooperation development plan with the Philippines DTI (Philippines Ministry of Trade and Industry) at the Hainan Boao Forum on the Asian Summit.


Singing ceremoney of CBME with Philippines Ministry of Trade and Industry


6. Proposed Investment Plan for of Philippines AAC Plant Project 

After comprehensively investigating on the local market selling price, product demand, tax policy and raw material cost, we finalized the investment for the AAC processing plant project, which includes:

1. Truth and facts of the proposed project: The high-speed development of commercial real estate projects in the Philippines and the huge demand for living housing have placed high expectation on the construction  and delivery period, and the use of AAC blocks and plates as paneling materials can reduce the foundation construction of local high-rise buildings by more than 25%, and the construction can be increased by 40%. For houses built with AAC products, the energy consumption for cooling and heating system can be reduced by more than 30%, which will reduce the general dwelling energy consumption cost, making the realty project with more competitiveness.

2. Proposed plan: to invest and set up an AAC aerated concrete product processing project with an annual output of 300,000 cubic meters;

3. Proposed project location: Pampanga region, Luzon Land, the Philippines;

4. Proposed investment amount: appr. USD17mln (including land);

5. The construction period of the project will be 12 months, and the commissioning period is set as one whole year, with a production coefficient of 80%, and a total 100% production coefficient is expected within the third year and in the subsequent years.

6. Consumable raw materials of the project: The Pampanga area is close to the origin of volcanic mud and sand, and the silicon content is considerably high enough for production, which can be used as the main material, and account for 70% of the raw materials. The location of Pampanga is close to the container terminal, making the transportation to other parts of the country with convenient accessibility.


Geographical veiw of porposed project




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