Procurement laws inhibit local contractors

Rep. Arthur Yap (center), chairman of the House Committee on Economic Affairs.

Laws on procurement of public projects inhibit local contractors from accepting such projects and from taking advantage of the government’s infrastructure program.

Rep. Luis Raymund Villafuerte shared the observation during the deliberations on the possible anti-competitiveness of construction laws by the House committee on economic affairs on Thursday.

The committee chaired by Rep. Arthur Yap discussed the Build, Build, Build (BBB) program and foreign participation in the country’s construction industry. He also asked resource speakers if procurement laws are helpful or not.

Villafuerte stressed the need to recalibrate the computation of net financial contracting capacity (NFCC) to increase the capability of local contractors.

“Sa sobrang daming projects ngayon, ‘yong mga nagpe-perform na local contractors, nakikigamit ng lisensya sa [contractors na] malaki. Pero ang mga gumagawa naman talaga ay ‘yong maliliit na walang NFCC capability,” Villafuerte said.

The panel also deliberated on what constitutes as acceptable the extent of foreign participation in local projects.

Department of Trade and Industry (DTI) Undersecretary Ruth Castelo said the DTI supports the entry of foreign contractors if the P1 billion equity requirement is retained, protecting smaller local contractors.

“We have many small- and medium-sized contractors. We have around 8,500 of them. The bigger ones only comprise about 1,500 contractors,” said Castelo.

Villafuerte argued that the addition of a foreign component often drives up the cost of a project. Projects are sometimes awarded to foreign entities despite the presence of capable local firms.

Rep. Bayani Fernando, for his part, was bullish on the ability of local entities to carry out large-scale projects.

“Let the Filipino contractors look for the right [foreign] partners who may have the technology. Or let the Filipino contractors buy the technology, if it is for sale… Otherwise, we’ll be engulfed and in the end the Filipino contractors will have no more jobs to do,” Fernando said.

Alex Bote of the Department of Public Works and Highways presented to the committee the status of implementation of big-ticket infrastructure developments under the BBB program, with a target to spend P8 trillion by 2022. Projects include the Inter-Island Linkage Project connecting Luzon, Visayas, and Mindanao; Flood Control Program for the country and major urban areas; Tarlac-Pangasinan-La Union Expressway; and Metro Manila Logistics Improvement.

The committee’s deliberations were prompted by House Resolution 898, which mandates an inquiry into the desired economic policy direction of the Philippines regarding foreign participation in the ownership and operation of corporations and firms engaged in the construction business.

The panel voted to continue the discussion and further solicit the input of industry stakeholders in its next meeting. p: wjg