The prospect of high borrowing costs in the Philippines, which could dampen construction spending, does not worry the industry right now, an official of a major cement manufacturer said yesterday. Instead of worrying about a possible rate hike, the cement executive said they are more concerned on government spending less on construction.
"If it’s a modest rate increase, we are not that worried," he said yesterday after the company’s annual stock meeting. When pressed to quantify the hike acceptable to the industry, Mr. Sunico declined, saying it would be difficult to give estimates. "As long as interest rates are down... more homeowners can afford to get bank loans," he said.
Despite this scenario, the cement firm said it can withstand the higher cost of borrowings. In its letter to the stockholders, the company said it expects the private commercial and residential sectors to contribute heavily on its 2006 income.
What they are more concerned, Mr. Sunico said, is the delay in the approval of the government’s 2006 budget. Overall, cement sales is expected to slow down this year because of low government spending, he said.
The company said it expects a five per cent decrease against last year’s income due to the delay in the approval of the government’s budget, which hampers the construction of major infrastructure projects.