Stakeholders in the construction industry underscored the need for the government to require foreign companies that will undertake construction projects to have a minimum investment in the country.
This was one of the ideas floated by construction experts and stakeholders during the first panel of the Philippine Construction Arbitration Conference 2020 organized by the Philippine Institute of Construction Arbitrators and Mediators (PICAM) held online recently.
Since these foreign contractors do not have assets in the Philippines, it would be hard to go after them if something goes wrong with their project, even in arbitration cases, said Roberto Dio of the Philippine Dispute Resolution Center.
For his part, Ernesto de Castro, president and CEO of ESCA Inc., said this is the main reason that an investment requirement for foreign contractors is needed.
The stakeholders also warned that the entry of foreign contractors in the country will be detrimental to local contractors comprising 97 percent micro, small and medium enterprises (MSMEs) which directly employs 4.2 million Filipinos.
Lawyer, Enrique dela Cruz Jr., senior partner at Divina Law specializing in government contracts, particularly those involving public-private partnerships and build-operate-transfer projects described the entry of foreign contractors as “the worst idea in the worst possible time saying the unhampered market access of foreign contractors in the country would create undue competition against SMEs which comprised bulk of licensed contractors.”
Commissioner Emilio Lolito Tumbocon of the Construction Industry Arbitration Commission, however, explained that foreign contractors have actually been doing business in the country since the 1970s through joint ventures.
He added that averages of 2,500 licenses are issued to foreign contractors every year since 2015.
Construction projects, according to Tumbocon carry a 15-year warranty but he admitted that it would be very difficult to go after foreign contractors once they finished the project.
Instead of fully opening the construction sector to foreign contractors, stakeholders are more inclined to adopting the joint venture between foreign and local contractors that is more beneficial to both parties.
Stakeholders also pushed for the government to give equal opportunities to local contractors by forging reciprocity agreements with countries whose contractors are allowed to undertake projects in the country.
The online discussion focuses on the recent Supreme Court ruling declaring as unconstitutional a regulation by the Philippine Contractors Accreditation Board (PCAB) that restricts the entry of foreign contractors.