InterAksyon.com
The online news portal of TV5
MANILA - Construction industry players are bucking the government?s move to allow 100-percent foreign-led contractors in private projects.
According to a notice?on the Department of Trade and Industry (DTI) website, the Philippine Contractors Accreditation Board (PCAB) will hold public consultations on the proposed amendments to the implementing rules and regulations of Republic Act No. 4566 or the Contractors? License Law,?particularly on the 60-percent Filipino, 40-percent foreign equity requirement.
PCAB is the body that issues licenses to contractors. Under RA 4566, all contractors - including subcontractors and specialty contractors - must secure a license from PCAB.
Construction industry sources told InterAksyon.com that the DTI wants to lift the 60-40 equity rule so fully foreign-owned contractors may secure a regular PCAB license and do business in the private construction market.
Sources said the DTI believes that such a move would increase?foreign direct investment (FDI) in the construction industry as well as facilitate a faster rollout of the public-private partnership (PPP) program.
The DTI has been pushing for a relaxation of foreign ownership restrictions in construction as early as two years ago.?DTI officials sought by InterAksyon.com would not comment.
For local construction companies, however, increasing the participation of foreigners in the sector would not necessarily result in more FDI.
"Existing laws already allow the participation of 100-percent foreign-owned construction contractors in BOT [build-operate-transfer] as well as PPP projects. Yet, they have not come in," Philippine Constructors Association Inc executive director Manolito P. Madrasto told InterAksyon.com.
"Construction contractors are service providers and are not known to be involved as direct investors on the structures they build. Contractors are not developers. Lifting the 60-40 equity rule will not translate to an increase in foreign direct investments," he said.
Local construction firms fear that the government proposal "merely wants to give foreign contractors a new market to work in as the global financial crisis has slowed down if not closed"?construction markets in Asean, China, Europe, Japan, South Korea and the US, Madrasto said.
Such a move is unfortunate at a time when the Philippine economy is doing well and private construction is booming, hence more projects for local contractors, he said.?"The entry of hungry foreign contractors will crowd out the locals out of their own market."
"The government wants the local industry to go overseas but is pushing for changes in existing laws that would deter locals from competing overseas. How? To compete, one has to have experience of specific type and size of projects. But if the government wants the foreigners to have control of such types and sizes of projects, then locals can never qualify," he said.
Safety may also be compromised if 100-percent foreign contractors will be allowed to operate in the country, Madrasto said.
"Under the civil code, the contractor is responsible for the structural aspect of its project for 15 years. If the contractor is 100-percent foreign-owned, makakasiguro ka bang nandito pa "yan kapag nagkaproblema? Sino ang hahabulin ng gobyerno?" he said.
Madrasto said the PCA may be amenable to the government proposal to allow fully foreign-owned contractors to operate here if they are to comply with the following conditions:
- 100-percent foreign contractors have P1-billion paid-up capital;
- They can only participate in projects each worth P10-billion and above; and
- The authorized managing officer is a Filipino citizen.
"The small local contractors should be protected," Madrasto said.
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