Chinese firm SIICGM Development Ltd. is investing $200 million in the Philippine steel industry, in partnership with local steel trader Mannage Resources Trading Corp. (MRTC), to capitalize on the Duterte administration’s plan to ramp up spending on vital infrastructure.
The planned investment comes amid an apparent thaw in the once frosty relations between the Philippines and China due to a territorial dispute over parts of the South China Sea.
The SIICGM-MRTC partnership aims to break into the lucrative reinforcing steel bars market just as the government announced its plan to raise infrastructure spending to the equivalent of 7 percent of the gross domestic product. The ramped up spending will be felt as early as next year with the Department of Budget and Management announcing a record P891-billion budget for the construction of airports, seaports, major roads and bridges, and farm-to-market roads.
SIICGM and MRTC recently signed a memorandum of understanding outlining the investment plan.
Aside from steel, the Chinese firm plans to engage in trading of construction materials like cement to meet growing demand for roads, houses and offices of an expanding middle class.
Plans are also underway to build a steel plant in line with SIICGM’s goal to become a major supplier of high quality but affordable steel products in the Philippines.
The iron and steel industry provides inputs needed for infrastructure, transportation facilities and vehicles, power generation and distribution, and manufacturing machinery which are all considered vital to achieving inclusive sustainable growth.
The planned investment reflects the Chinese firm’s bullishness on the Philippines’ infrastructure development program, and gives the steel industry a much needed boost, MRTC said in a statement, noting that the sector operates “far below its economic potential.”
SIICGM—a subsidiary of SIIC Shanghai International (Group) Co. Ltd.—wants to capitalize on the wave of public private partnerships promised by the Duterte administration.
The conglomerate is engaged in various businesses, from minerals to consumer goods, with an annual turnover of over $1.5 billion last year. Aside from steel, SIICGM is also considering other investment opportunities in the Philippines.