CONTRACTORS BUCK BILL: Opening up construction to kill small players

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    Local contractors are opposing a bill that would fully open the construction business to foreigners saying it will spell the demise of the industry which employs more than 4 million Filipinos.

    A statement of industry players yesterday quoted DMCI president and chief executive officer Jorge Consunji in a recent House Committee on Trade and Industry hearing as saying removing existing regulations favoring Filipino contractors will “open the floodgates to unregulated entry of foreign-owned construction companies.”

    House Bill (HB) 7337 authored by Valenzuela City Rep. Wes Gatchalian seeks to amend Republic Act (RA) 4566 or the Contractors’ License Law by allowing foreign firms to obtain a regular license that was originally exclusive to companies with at least 60 percent Filipino equity.

    “This will kill the local construction industry, and the entry of unqualified foreign contractors cause a danger to public safety,” said the statement quoting Consunji.

    The industry players said Consunji had pointed out the need to balance extending equal opportunities to foreign contractors and protecting local players, especially those in the micro, small and medium enterprises (MSMEs) which make up 97 percent of the local contractors.

    The statement said Philippine Constructors Association (PCA) president Will Decena in the same hearing echoed Consunji’s concerns for the MSME and encouraged the House panel to be mindful in safeguarding and ensuring the survival of local players and the more than 4 million workers in the industry.

    The group said DATEM Inc. chair and chief executive officer Levi Espiritu pushed for reciprocity, technological transfer, capacity-building and compliance with local rules and regulations to ensure a level playing field between foreign and local players.

    This also means implementing equal treatment in incentives and privileges and compliance by foreign players to regulatory requirements such as, but not limited to, payment of necessary taxes; putting up of equity and investments; and structural warranties for materials, manpower, and equipment, which also are required for local contractors.

    Under Section 3.1 of RA 4566, companies with at least 60 percent Filipino equity participation can be granted a regular license, which gives them continuing authority to engage in many contracting activities throughout the year. Foreign firms can only be granted special license, and they need to have a separate license for each contract activity.

    This provision in the implementing rules and regulations of the law was recently voided by the Supreme Court for being “a deterrent to the foreign players in the construction industry.”

    The Office of the Solicitor General, representing the Philippine Contractors Association Board has filed a motion asking the high tribunal to reverse its ruling.