Philippines: Water Proofing Products (03/07)

By: Bebe Montesines

Commercial Specialist

U.S. Embassy, Manila, Philippines

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**Summary**

The Philippine market for waterproofing products is expected to grow
10-20% yearly through 2010. This growth is fueled by the on-going
construction boom. The market, however, is very competitive. Locally
produced waterproofing products, as well as, products from the U.S. and
Asia, Europe and the Middle East are readily available in the
Philippines. Best prospects include polyurethane waterproofing and
specialty waterproofing products, e.g., jet fuel resistant sealant for
airport runways, and products that have other functions aside from
waterproofing, e.g., thermal and sound insulation, dust proofing, or
anti-corrosion properties. Price, quality / performance and stock
availability/timely delivery are the major purchase considerations of
end users. Typically distributors maintain local inventories. It is best
for U.S. suppliers of waterproofing products who are interested in the
Philippine market to appoint a distributor, who may also have the
technical capabilities to install/apply the product. There are no major
market issues and obstacles in exporting waterproofing products to the
Philippines. Tariff duty ranges from 5-10%.

**Market Demand**

The Philippine climate is characterized by relatively high temperature,
high humidity and abundant rainfall. Rainfall distribution throughout
the country varies, but the mean annual rainfall of the Philippines
ranges from 965 to 4,064 millimeters. The rainy season is usually from
June through November. Due to water penetration as a result of storms,
monsoon rains, sudden downpours, or even the simple ingress of moisture,
there is a big demand for waterproofing products in the Philippines.
There are various types of waterproofing products used in Philippines
projects -- elastomeric, polyurethane, cementitious
"crystallization-type", liquid applied/sheet applied/PVC/torch
applied/cold applied membrane, surface applied, and in-between slab
systems, capillary, bitumen emulsion, self-adhesive, etc. \-- depending
on the surface that will be waterproofed and the budget of the end-user.
Presently, there is a marked increase in the demand for waterproofing
products due to a construction boom. Distributors of waterproofing
products/waterproofing contractors revealed that their sales of
waterproofing products has increased 10-20% in the first eight months of
2007 compared to the same period in 2006. Data on approved building
permits for the first quarter of 2007 show the total value of
construction amounted to Pesos47.7 billion (\$1=Pesos46.64), an increase
of 91.3 percent from 2006. Residential building construction was valued
at Pesos14.6 billion, up 12.1 percent from Pesos13.1 billion recorded in
the same period in 2006. Non-residential building construction soared by
187.7% to Pesos29.3 billion. This construction boom is mainly driven by
the business process outsourcing (BPO) industry and the strong housing
demand for real estate not only from people residing in the country, but
also from Filipinos working abroad or residing in foreign countries. In
addition, shopping mall/retail outlet development is continually growing
and there is strong public sector infrastructure spending.

**Philippines: Waterproofing Products**

Among the ongoing/upcoming projects are:

1\. Buildings for BPOs and call centers being constructed or to be built
by Ayala Land, Federal Land, Filinvest Land, Megaworld Corporation,
Robinsons Land, SM Investments Corporation, etc. According to industry
sources, the real estate sector will continue to be buoyed by hefty
demand for office spaces, particularly from BPOs. The BPO Association
forecasts that BPO requirements will grow to over 200,000 seats by 2010
and this translates to a real estate demand of over 1.4 million square
meters. Presently, the total gross floor area for \"grade A\" office
spaces stands at 1.36 million square meters.

2\. Residential projects of the developers mentioned above as well as
other developers. Construction of residential real estate is growing due
to demand from overseas Filipinos, a need for residences to house the
current influx of foreign expatriate employees in the BPOs and call
centers, and a good economy that is allowing more of the middle class to
enter the housing market.

3\. Shopping mall projects of Ayala Land, Robinsons Land and SM Prime
Holdings. These mall giants have projects in the provinces, spurred by
lower operating costs and the growing spending capacity of provincial
residents. Future supply of shopping malls nationwide is expected to
grow 400,000 square meters yearly until 2009.

4\. Airport, light rail transit, port, facilities for roll-on, roll-off,
etc. projects of the government. These projects may be self-funded or
utilizing funding assistance from multilateral and bilateral agencies.

**Market Data**

Philippine trade statistics do not have a separate entry for
waterproofing products. However, industry players project 10-20 percent
demand growth, with at least 80 percent of the Philippines' requirements
to be sourced from foreign suppliers.

**Best Prospects**

Best prospects include:

1\. Polyurethane waterproofing -- This is the product that is usually
specified in projects.

2\. Specialty waterproofing products, e.g., jet fuel resistant sealant
for airport runway waterproofing, and products that have other
properties, e.g. thermal and sound insulation, dust proofing, or
anti-corrosion properties.

**Key Suppliers**

There are Philippine companies, including backyard producers, which
manufacture waterproofing products using imported raw materials. They
mostly manufacture water-based elastomeric and cementitious products.
According to industry sources, many locally manufactured products do not
have consistent quality. Due to the limited types of waterproofing
products that are produced locally and the quality of some of these
products, the Philippines is dependent on foreign suppliers for its
requirements. The Philippines import waterproofing products from the
U.S., Australia, China, Greece, Hong Kong, Italy, Singapore and Saudi
Arabia. Most major foreign waterproofing suppliers are present in the
country. The Philippines sources products from the manufacturers' plants
or distribution centers around the world. Among the U.S.
companies/brands that are present in the Philippines are Dalco, Drylok,
Johns Manville, Master Builders, Sonoguard, Sonneborn, Tex-Cote,
Thoro/BASF and W.R. Grace. Other foreign suppliers of waterproofing
products in the Philippines include: Cementaid (Australia), Ekobit
(Italy), Nitoproof and Proofex/Fosroc (UK), Sealocrete/Bostik (UK),
Vandex (Switzerland) and Xypex (Canada).

**Prospective Buyers**

Buyers of waterproofing products are

1\. Do-It-Yourself Buyers -- These are mostly household consumers or
handymen.

2\. General Contractors -- These are companies that offer the
application of waterproofing products as part of their service.

3\. Specialty/Waterproofing Contractors -- These companies may or may
not be the importer/distributor of the waterproofing products that that
they apply.

4\. End-users such as owners of medium- to high-rise
residential/commercial buildings and industrial establishments. Price,
quality/performance and stock availability/timely delivery are the major
purchase considerations of end users. Aesthetics may also be taken into
consideration.

**Market Entry**

Special licenses or approvals are not needed in order to sell
waterproofing products in the Philippines. It is best for U.S. suppliers
of waterproofing products who are interested in the Philippine market to
appoint a distributor. The distributor may or may not install/apply the
product. The distributor develops relationships with architects and
consultants who specify waterproofing products that will be used in a
project as well as general contractors and building/project owners. The
distributor/waterproofing contractor analyzes project requirements and
technical support. The distributor/waterproofing contractor bids on
projects or enters into negotiated contracts. Many distributors handle a
wide range of waterproofing products so they can provide comprehensive

solutions as well as meet the budget of potential clients. A
waterproofing contract includes a guarantee period of 2 to15 years. This
means that that the applicator can be called to repair a waterproofed
area within this period.

U.S. firms seeking distributors in the Philippines are encouraged to use
the services of the U.S. Commercial Service, Manila, especially the
International Partner Search (IPS) and/or the Gold Key Service (GKS).
For more information about these services, visit
http://ww.buyusa.gov/philippines and click on \"Services for U.S.
Exporters\". Once an agent/distributor has been appointed, the U.S.
company should develop the relationship by providing product literature
and training. It should support the distributor's promotional
activities, including participation in exhibitions. Distributors promote
waterproofing products through advertisement in the yellow pages, sales
calls and exhibitions. Letters of credit and bank transfers are usually
used in trade transactions.

**Market Issues & Obstacles**

There are no major market issues and obstacles in exporting
waterproofing products to the Philippines. Tariff duty ranges from
5-10%.

**Trade Events**

Philconstruct 2007(17th Philippine International Construction Equipment
and Building Materials Exhibition), November 15-18, 2007, World Trade
Center Metro Manila, Roxas Blvd., Pasay City,

http://www.globallinkph.com; <jing.lagandaon@globallinkph.com>

Worldbex 2008 (The 13th Philippine World Building and Construction
Exposition); March 12-16, 2008; World Trade Center Metro Manila, Roxas
Blvd., Pasay City; http://www.worldbex.com; <info@worldbex.com>

**Resources & Contacts**

Chamber of Real Estate and Builders Association -
<http://www.crebaland.com.ph/> Philippine Contractors Association -
<http://www.philconstruct.com/> United Architects of the Philippines -
<http://www.united-architects.org/>

**For More Information**

The U.S. Commercial Service in Manila, Philippines can be contacted via
e-mail at:

Bebe.Montesines@mail.doc.gov; Phone: (632) 888-6077; Fax: (632)
888-6606; or visit our website:
[www.buyusa.gov/philippines](http://www.buyusa.gov/philippines)

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*Disclaimer: The information provided in this report is intended to be
of assistance to U.S. exporters. While we make every effort to ensure
its accuracy, neither the United States government nor any of its
employees make any representation as to the accuracy or completeness of
information in this or any other United States government document.
Readers are advised to independently verify any information prior to
reliance thereon. The information provided in this report does not
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