Asianet Pakistan Private Limited

THE Department of Budget and Management (DBM) and the House Committee on Appropriations have agreed to remove ?35 billion worth of infrastructure projects from the 2026 unprogrammed appropriations to ensure transparency and prevent the misuse of lump-sum funds, according to House Committee on Appropriations Chairperson Rep. Mikaela Suansing.

‘So everyone was asking what we were going to do about the unprogrammed appropriations. The main point of contention was the release of infrastructure projects from these funds,’ Suansing said at the meeting of House Budget Amendments Review Subcommittee (BARC).

The formal removal of the ?35-billion infrastructure fund from the unprogrammed appropriations is expected to be approved on Friday during the period of amendments in the plenary.

She explained that the DBM concurred in the House panel’s proposal to exclude infrastructure projects from the Strengthening Assistance for Government Infrastructure and Social Programs (SAGIP) as a safeguard against potential misuse.

‘In the past, funds from SAGIP came to fund infrastructure projects, some of which were flood control projects. For 2026 and the coming years, there is no such thing anymore,’ Suansing said. ‘It means that infrastructure projects from SAGIP will no longer be funded.’

Under the 2026 National Expenditure Program (NEP), SAGIP was initially allotted ?80.86 billion. With the removal of infrastructure projects, the amount will be reduced to ?45 billion, focusing solely on social programs.

‘We removed ?35 billion under SAGIP,’ Suansing said. ‘This is the suggestion of the DBM and the Committee on Appropriations-to remove infrastructure from the strengthening assistance for government infrastructure and social programs.’

She clarified that unprogrammed appropriations are divided into two categories: SAGIP and support to foreign-assisted projects (FAPs). While infrastructure funding under SAGIP will be removed, projects under FAPs will remain to honor the Philippines’ commitments to foreign and multilateral partners such as the World Bank, Asian Development Bank (ADB), and Japan International Cooperation Agency (JICA).

‘The position of the DBM and the Committee on Appropriations is we would really have to retain the infrastructure projects under unprogrammed appropriations support to foreign-assisted projects, because we cannot renege on our commitments to our multilateral and bilateral partners,’ Suansing emphasized.

She added that members of the minority bloc welcomed the move, noting that it addressed their longstanding concern over the release of infrastructure projects under unprogrammed appropriations.

‘We have also relayed this to our colleagues in the minority and they are very happy with this special provision because that is what they have been raising again and again during the plenary deliberations-how to safeguard against the release of infrastructure projects from unprogrammed appropriations,’ she said.

To ensure balance, Suansing said the DBM requested an additional provision to cover the government’s counterpart funding for foreign-assisted projects.

‘If we are to remove infrastructure from SAGIP, it may be prudent to include an additional purpose for the government’s counterpart in foreign-assisted projects to cover the ?35 billion previously charged against SAGIP,’ she said.

Suansing said the removal of the ?35-billion infrastructure fund under SAGIP strengthens fiscal safeguards and ensures that unprogrammed appropriations are used strictly for social and development programs.

President Donald Trump’s recent social media post calling for mortgage giants Fannie Mae and Freddie Mac to boost homebuilding is sowing confusion in an industry already grappling with a stalled market and higher construction costs.

Trump asked the two government-controlled firms, which together back more than half the residential mortgage market, to ‘get big homebuilders going’ in a Truth Social post on Sunday, but did not elaborate on what he had in mind. Federal Housing Finance Agency Director Bill Pulte, Fannie and Freddie’s regulator and conservator, shared the post on X and vowed that he was ‘on it.’

The entreaty shows how keen the White House is to demonstrate it is doing something about the housing affordability crunch and marked a rare shot across the bow at big homebuilders-an industry the former real estate magnate president calls his ‘friends.’

Yet the mechanics of how Fannie and Freddie would goose homebuilding are murky.

‘It’s a little bit of a mystery,’ said Bose George, an analyst at Keefe, Bruyette and Woods, adding, ‘It’s not clear what they can do incrementally on affordability that’s not already being provided’ by the Federal Housing Administration, which insures mortgages for low- to moderate-income borrowers.

‘It seems like if the goal is to get the builders to be more active, the FHA has products there from an affordability standpoint that could be used,’ George added. Builders can obtain an FHA-insured construction loan, for example.

A White House spokesperson declined to elaborate on what the administration is planning.

‘President Trump received a resounding mandate to address America’s housing affordability crisis, and the administration is committed to delivering with deregulation and by taming Joe Biden’s inflation crisis to pave the way for interest rate cuts,’ White House spokesperson Kush Desai said.

Asked for more detail on the agency’s plans, an FHFA spokesperson said, ‘Fannie and Freddie provide enormous liquidity to the big builders. Big builders need to get building again.’

‘Empty lots’

Trump in his social media post accused the nation’s ‘big homebuilders’ of ‘sitting on 2 million empty lots’ and inflating the price of housing.

Most of the lots owned or optioned by the largest homebuilders are on raw land-sometimes lacking sewers or water access, for instance-and not buildable today, according to industry experts. Many of them still need to go through various permitting and approval processes before they’re considered shovel-ready.

‘We don’t know the status of those lots, No. 1, but No. 2, what I would ask the president is-the large builders, they’re going to do their own thing-but what are the policies we can put in place to help the other thousands of builders out there who contribute 50 percent of the housing in the country and don’t have access to Wall Street capital?’ said Jim Tobin, president and chief executive of the National Association of Home Builders, which represents homebuilders of all sizes.

NAHB has long advocated for the government-sponsored enterprises to backstop construction loans, which would boost liquidity in the market. Builders reported tighter credit conditions for the 14th consecutive quarter in the most recent NAHB survey on financing.

While it’s not clear whether the administration’s push will include that step, doing so could have ripple effects that could complicate another initiative: The push to take Fannie and Freddie public.

‘The more policymakers come to see the GSEs as an important toolbox to help them address policy challenges, the harder it will be for them to simply hand that toolbox back to private shareholders,’ said Jim Parrott, nonresident fellow at the Urban Institute and former housing adviser to President Barack Obama.

What’s more, analysts say that backing construction loans would complicate how investors value the companies.

‘On the construction loans side, it would increase credit risk because it’s a higher-risk loan,’ George said.

After Trump’s social media missive, Pulte said Monday on X that ‘we are meeting individually with each of the home builders.’ He announced the next day that Tri Pointe Homes vice president Brandon Hamara, who Pulte appointed to Freddie’s board in March, would be ‘joining Fannie Mae full-time, and as a board member, to further effectuate homebuilding in our great country.’

Higher costs

AT the same time, builders are grappling with fresh uncertainties stemming from Trump’s policies.

While the president pushes for cheaper housing and more building, his flagship international economic policy-tariffs-has raised the cost of the raw materials needed to build those new homes.

The administration is imposing new or higher tariffs on lumber, steel, kitchen cabinets and gypsum, the main ingredient in drywall. Together, the tariffs will add some $30 billion to the costs of investment in residential structures, according to a new analysis by the Brookings Institution.

The White House’s immigration policies, meanwhile, threaten to exacerbate an existing labor shortage in the immigrant-heavy construction sector, further increasing costs.

Those moves come amid a historic supply shortage caused by years of underbuilding in the wake of the subprime crisis. The crunch has pushed up home prices, driving higher inflation and helping to sour voters on the state of the US economy.

The combination of high home prices and high mortgage rates has kept both buyers and sellers on the sidelines, stalling sales and leading builders to take a more cautious approach.

‘There’s no question that encouraging more homebuilding is a foundation of any solution,’ said David Dworkin, president and chief executive of the National Housing Conference. ‘How we do it is the hard part.’

There’s a meaningful Tagalog saying: ‘Ang paalala ay gamot sa taong nakalimot,’ which translates to ‘a good reminder is the remedy for those who have forgotten.’

Today’s FPI Summit, attended by our newly elected officers, offers a valuable opportunity to reflect on the Federation’s 35-year history. I would like to take this opportunity to reflect on the founding of the Federation of Philippine Industries three and a half decades ago, and to share some recollections from that period.

In 1991, the late President Corazon Aquino issued Executive Order No. 470, which lowered tariffs across the board while Congress was not in session. Several manufacturers impacted by this order, including members of the PCCI, united to contest the EO. We argued that the President could only make selective adjustments to tariff rates. Fortunately, because of our significant opposition to the EO, President Cory decided to withdraw the EO and submit it to Congress for further discussion.

Building on this success and recognizing the inherent conflicts between importers and manufacturers within the PCCI, we established a small group of manufacturers. We began meeting regularly at the Prince of Wales restaurant in Makati to plan our next steps.

This resulted in the establishment of the Federation of Philippine Industries. Herminigildo Zayco, a former governor of the BOI, was elected as the founding president, and I was voted as the vice president.

FPI’s incorporators include Zayco (representing TMAP), Arranza (CORA), Francisco Mongue (PULPAPEL), Rogelio Guadana (PABMA), Feliz Maramba Jr. (PAFMIL), Jeremias Menico (PCOPA), Maria Clara Lobregat (PCPF), Ernesto Cayetano (PEWMA), David Bonney (PAPM), Linda Chai (PSPA), Donald Dee (CGEPI), Greg Saguinsin (CONFED), Manuel Serrano (PAHRI), Hector Quesada (PPOGA), and Rustico Ignacio (FPFI).

During our battle against the Cory EO, certain members and officers of PCCI were unable to take a clear position due to the diverse composition of its members, which includes both importers and manufacturers. This is evidenced by documents showing their signatures under the FPI umbrella. This is the rationale why the FPI membership is composed of manufacturers only. But non-manufacturers can join as associate members.

One of FPI’s main priorities is to combat and eliminate smuggling, and I was appointed as the leader of our anti-smuggling committee. Our campaign instilled fear in smugglers, particularly after government officials and private sector leaders began to support and promote our efforts.

Today, FPI is regarded as a straightforward organization because we practice what we preach. We take the concerns of individual companies seriously and actively engage with policymakers and government agencies to advocate for legislative and governance reforms that benefit domestic manufacturers. This includes efforts to reduce red tape and combat corruption.

Putting modesty aside, one notable instance was the petition I submitted challenging a section of the late President Fidel V. Ramos’ executive order regarding the $200 limit for spending at duty-free shops, which means any Tom, Dick or Harry who is18 years old and above can spend such amount at duty-free shops. I won that battle in the Supreme Court, which ruled that allowing anyone to spend this amount tax-free at duty-free shops was unconstitutional. My argument was clear: only Congress has the authority to grant or revoke tax benefits.

During the tenure of former President Gloria Macapagal Arroyo, I considered it as a significant honor when she acknowledged and praised my decades-long efforts in anti-smuggling campaigns in front of business leaders and cabinet officials.

We will not waver. For decades, we at FPI have been actively fighting against smuggling and illicit trade because of their harmful effects on our nation. I call it the ‘triple whammy’: smuggling robs the government of essential revenue, harms local businesses, resulting in downsizing and closures, and can devastate entire industries. Moreover, it disrupts jobs, pushing more Filipinos into poverty.

In my columns for BusinessMirror, I have long emphasized that smuggling severely harms Philippine industries. For example, the tire industry has dwindled from six manufacturers to just one because of smuggling. The textile sector, which once had 1.5 million spindles, now has only 100,000. Each spindle supports 35 jobs around the clock, highlighting the significant number of Filipinos who have lost their livelihoods in this industry alone.

Another major concern in the country is the proliferation of substandard products. Over my 83 years, I have devoted much of my life to fighting against smuggling and various forms of illegal trade, particularly the smuggling of low-quality steel and other construction materials. These inferior materials threaten the structural integrity of our buildings, endangering the lives of Filipinos.

We have witnessed the devastation caused by powerful earthquakes in Russia, Turkey, Thailand, and other nations. The recent earthquake in Cebu serves as a stark reminder of the necessity to reevaluate our quality standards, especially regarding construction materials. According to NDRRMC data, the earthquake impacted 366,360 individuals (80,595 families) and damaged 5,013 homes, with 658 completely destroyed and 4,355 partially affected. Additionally, over 335 public and private infrastructure units suffered varying degrees of damage, including schools, government buildings, churches, markets, and health centers.

We urgently need to implement strict quality standards to protect investments and lives. In our efforts to advocate for this, we appeal to the government to recognize us as partners who can collaborate with agencies to monitor compliance with quality standards. By fostering a culture of mutual respect, we believe the government and private sector can work together with a sense of urgency to address this critical issue.

That’s why I recommend including private sector representatives in these agencies, particularly for the implementation of product standards. Many qualified experts in the private sector can help concerned agencies fulfill their duties more effectively and transparently.

As the Philippines confronts the most severe corruption in its history, it’s imperative that we take decisive action to root out malfeasance. A thorough investigation into all government agencies is necessary to identify and address every source of corruption.

It’s important to note that the private sector is also implicated in the alleged corruption and irregularities surrounding ghost flood control projects. I believe now is the best time to strengthen private sector collaboration with government and civil society groups to advocate for stronger anti-corruption laws and policies, and to support initiatives aimed at increasing accountability.

I want to take this opportunity to express my strong confidence in the new FPI officers. I believe in their ability to lead the Federation of Philippine Industries and support our manufacturers, as well as the broader Philippine industry sector. They are our hope for reviving and strengthening a vital engine of the country’s economic growth.

Megumi Kiyozuka, president of Japanese private equity firm Sunrise Capital, began raising money for his latest fund last year with a goal of hitting $500 million. He’d yet to take his pitch on the road outside Japan before global investors told him they were willing to commit as much as $2 billion.

He decided to stick to $500 million-still plenty of money to put to work. It was a stark contrast to 12 years ago, when Kiyozuka traveled the world for an earlier fund, meeting 200 investors multiple times before finally cobbling together about $200 million from just two. ‘Years ago, people declined to invest in Japan because they said it was inefficient. Now everyone says they like Japan because it’s inefficient,’ Kiyozuka says. ‘It’s the same reason, but it can be used as a reason to decline or to invest.’

For big investors around the world, Japanese companies that once seemed flawed are now more like low-hanging fruit: If a fund can buy them up and make some obvious fixes, it should be able to sell them again in a few years at a profit, either to another owner or in an initial public offering. The model has worked well for funds in the US, though in recent years a mix of higher interest rates, a slower market for selling companies and higher acquisition prices have weighed on returns. In contrast, Japan seems like fresh territory to hunt for bargains, especially given the relatively weak yen.

There have been 192 private equity deals in Japan so far in 2025, after 292 deals in all of 2024, according to data from the consultants at Deloitte. ‘Japan is fundamentally a very attractive market from a return perspective,’ says Azusa Owa, a Japan-based partner at consulting firm Bain and Co. Between 2010 and 2024, Japanese private equity deals had the highest returns of any market globally, even after taking into account the fall of the yen. In dollar terms, deals in Japan returned 2.4 times the capital invested, edging out the 2.3 times return in the US.

The world’s fourth-largest economy provides ample deal targets, with almost 4,000 publicly traded companies. Many are cash-rich and conglomerate-like, with units that could be streamlined or sold off, or have avoided raising prices or negotiating costs for years as the country wrestled with deflation. And while financing conditions in other markets remain tight, banks in Japan are more than willing to lend. One key to private equity’s performance is that funds invest using debt, which ends up on the balance sheet of the companies the funds buy. Leveraged-buyout financing costs 3 percent to 4 percent in Japan, compared with 8 percent to 9 percent in the US. Japanese companies also have relatively low debt, making it easier for new owners to boost returns by borrowing now.

‘Japan is still in the very early stage of its private equity history,’ says Eiji Yatagawa, a partner and head of private equity at KKR and Co.’s Japan office. ‘This industry evolution still has a long way to go.’ Japan is KKR’s top market for deploying capital outside the US; in one notable deal, in 2017, KKR acquired the company now known as Kokusai Electric Corp. from Hitachi for about ¥257 billion ($1.7 billion). It sold off noncore businesses to focus on semiconductor manufacturing and invested money in research and development and hiring before taking Kokusai public in 2023 at a valuation of around ¥424 billion.

KKR isn’t alone. Bain Capital has announced deals worth more than $10 billion in Japan so far this year. Within a two-week period in the summer, Blackstone Inc. and Swedish buyout firm EQT AB both announced deals worth about $3 billion to take public companies private. Firms such as the US’s Warburg Pincus and Singapore’s Hillhouse Investment Management have recently brought on executives for Japan and made plans to open physical offices.

The private equity business model has its critics around the world. Selling off assets or returning cash to reward new owners may leave companies weaker in the long run. ‘It does make sense that in an economy like Japan-where companies have historically not been focused on maximizing profits-private equity can sometimes help sharpen that focus,’ says Ludovic Phalippou, a professor of finance and economics at the University of Oxford’s Saïd Business School. Still, ‘the pressure to increase returns can lead to cost-cutting or strategies that don’t necessarily improve outcomes for customers or employees. In either case, however, PE fund managers do well, because they charge extraordinary fees.’

The biggest blemish on private equity in Japan in recent years is Marelli Holdings Co. Created in 2019 when KKR merged auto-parts companies it owned in Japan and Italy, Marelli saw its business suffer during the Covid-19 pandemic and the later upheaval in the car industry. It sought court-led rehabilitation in Japan and filed for Chapter 11 bankruptcy protection in the US. KKR took a $2 billion hit and later invested another $650 million to return the firm to profitability. ‘That was definitely a very challenging situation and a difficult outcome for us and for banks,’ Yatagawa says. ‘We believe we did everything we could.’

For years in Japan, private equity firms were often referred to as vultures, and they sometimes had difficulty even getting meetings with potential acquisition targets. But now they’re getting a warmer reception. Some smaller, family-run private businesses are facing succession issues and find it easier to sell. And a slew of corporate governance reforms have forced public companies to think more about deals that could reward their shareholders.

The Tokyo Stock Exchange is pushing its listed companies to get their share price above book value, while a new government guideline is asking public companies to seriously consider takeover offers. Activist hedge funds have descended on Japan, buying up shares in everything from small manufacturers to storied companies like Nissan Motor Co. and clamoring for change. In response, many companies are becoming receptive to selling off peripheral businesses to boost their share price, or they’re taking deals to just go private.

‘There are dramatic changes in corporate Japan,’ says Teppei Takanabe, co-head of investment banking at Goldman Sachs Group Inc. in Japan. ‘They have become sensitive to shareholder return, capital efficiency and reconstruction of their business portfolio.’

Some challenges loom as the Japanese private equity industry matures. Once the most obvious target companies are picked off, it may prove harder to squeeze the same returns from the next batch of investments. Private equity firms are also taking longer to get out of their investments in Japan: Only about 44 percent of deals done from 2018 to 2020 were exited with sales or IPOs within five years, down from 54 percent of deals during the 2015 to 2017 period, according to Bain and Co.

‘Deal opportunity and availability is evolving, however not as fast as money is raised,’ Bain’s Owa says. ‘Some funds who raised money struggle to use it.’ That could lead to inflated prices for acquisitions. Takanabe of Goldman Sachs says the bank is getting more client inquiries about mezzanine funding -a riskier debt tool used to bridge gaps in financing for deals. That suggests valuations are growing faster than expected.

Atsuhiko Sakamoto, Blackstone’s head of Japan private equity, says the dealmaking momentum is still building. ‘The boom is just expectations. Reality hasn’t caught up with the hype yet,’ he says. ‘I’m very excited about the next few years.’