Local contractors have joined hands to strongly oppose a bill that would fully open the construction business to foreigners, saying will spell the demise of the local construction industry which employs more than 4 million Filipinos.
House Bill (HB) 7337 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.
DMCI president and CEO Jorge Consunji warned that removing existing regulations favoring Filipino contractors will “open the floodgates to unregulated entry of foreign-owned construction companies.”
“This will kill the local construction industry, and the entry of unqualified foreign contractors cause a danger to public safety,” Consunji told the House Committee on Trade and Industry during its recent virtual hearing on HB 7337.
The committee’s chair and author of the bill, Valenzuela City Rep. Wes Gatchalian, claimed the measure would level the playing field in the construction industry to encourage competition, transfer of technology and sharing of knowledge between Filipino and foreign contractors.
But Consunji said it is important to balance extending equal opportunities to foreign contractors and protecting local players, especially those in the micro, small and medium enterprises (MSMEs).
“While the proposed bill seeks to provide a level playing field, this must be balanced to protect the country’s vulnerable sectors and workforce, particularly the MSMEs that have been heavily impacted by the ongoing pandemic,” Consunji said.
Philippine Constructors Association President Will Decena shared the same concerns for the MSME sector, which makes up some 97 percent of local contractors.
“The unregulated entry of foreign contractors will adversely affect small and medium-sized Filipino contractors. We will even deprive Filipinos of job opportunities in our own country,” Decena pointed out.
He 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.
“We reiterate that foreign contractors have the tendency to bring their own people even for jobs than can be performed by Filipinos,” he said.
In order to afford foreign and local players a level playing field, DATEM Inc. chair and CEO Levi Espiritu said industry concerns, such as reciprocity, technological transfer, capacity-building and compliance with local rules and regulations, should be fully addressed.
Espiritu said the government must assure that whatever incentives and privileges extended to foreign contractors are likewise given to local contractors.
“Correspondingly, foreign contractors should comply with whatever 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,” Espiritu said.
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.
However, this IRR provision 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, already filed a motion asking the high tribunal to reverse its ruling.
The government’s top legal counsel argued that limitations on foreign participation in the contracting industry must be retained in order to protect the interests of Filipino contractors and workers.