The construction sector demands a level playing field – Manila Bulletin

Construction industry experts have warned against the unregulated entry of foreign contractors into the country, as this will create an undue disadvantage for a sector where 97 percent are micro, small and medium-sized enterprises (MSMEs) and which employ to about 4.2 million Filipinos.

The unregulated entry of foreign contractors was the main topic at the first panel of the 2020 Philippines Construction Arbitration Conference hosted by the Philippine Institute of Construction Arbitrators and Mediators (PICAM).

“This is the worst idea at the worst possible time,” said Divina Law Senior Partner Atty. Enrique dela Cruz Jr., who specialized in government contracts, particularly those involving public-private partnerships and build-operate-transfer projects.

The industry, which claimed to be the largest generator of jobs of 4.2 million in the last ten years, was also among the most affected by the lockdowns induced by the pandemic with public and private development projects completely paralyzed during the first two months. of community quarantine restrictions.

Dela Cruz noted that unrestricted market access for foreign contractors in the country will create undue competition against SMEs, which comprise the majority of licensed contractors.

Commissioner Emilio Lolito Tumbocon of the Construction Industry Arbitration Commission (CIAC) noted that foreign contractors have been doing business in the country since the 1970s through joint venture agreements.

“Strictly speaking, foreign contractors are here as we speak,” Comm noted. Tumbocon, adding that nearly 2,500 licenses on average are issued to foreign contractors each year since 2015.

However, he said these foreign contractors should have some “skin in the game” to really level the playing field, as construction projects have a 15-year warranty, but it would not be easy for proponents to go after the contractors. foreigners once they have finished the project even when something has gone wrong with the project.

Atty. Roberto Dio of the Philippines Dispute Resolution Center also noted that if these foreign contractors do not have assets here in the country, it would be difficult to enforce a judgment on them even in an arbitration case.

Dr. Ernesto de Castro, President and CEO of ESCA Inc., said that this is why an investment requirement is needed for foreign contractors to ensure that these foreigners have assets here.

Atty. Dio confirmed that there is no reciprocity agreement with the base of operations of these foreigners that guarantees the same treatment for Filipino contractors who will do business in their countries. In fact, Atty. Dela Cruz noted that “no other country in the world allows foreign contractors access to the unregulated market.”

Comm. Tumbocon stressed that the Philippines should look to neighboring countries such as Singapore, Malaysia, Indonesia and Thailand, which have a strong domestic construction industry, as they encouraged joint venture agreements between local players and foreign companies, rather than allowing unrestricted entry. from foreign contractors.

“They adopted the best practices and seem to show that they were successful. Let’s not reinvent the wheel as we are in catch-up mode. Your local construction industry has regulations to level the playing field. Let’s analyze the best practices and try to adopt them ”, he concluded.

The discussion about the rampant entry of foreign contractors stemmed from the Supreme Court’s decision to declare unconstitutional a regulation by the Philippine Contractors Accreditation Board (PCAB) governing the licensing of foreign contractors. The Attorney General’s Office has filed a motion to reconsider the superior court order.