The Philippine Competition Commission has asked the Supreme Court to nullify the nationality requirement of the Philippine Contractors Accreditation Board in granting licenses to level the playing field in the construction industry.
The PCC sent an experts’ opinion on the legal battle between Manila Water Company Inc. and the PCAB, after it was elevated to the high court just weeks before the Philippine Competition Act was passed in July 2015.
The commission is the state agency mandated to resolve competition issues and at the same time promote free and fair trade in all commercial and economic activities.
It stressed the construction industry plays an important role in economic development, especially in infrastructure building that includes housing, transport, water and sanitation, and power.
The PACB issues regular and special licenses to contractors. Local firms can be granted a regular license that allows them to engage in many contracting activities throughout a one-year period, while foreign companies only receive a special license for each contract.
Thus, a foreign contractor would have to spend twelve times more for license applications compared with a domestic contractor in a typical year in order to engage in the same level of activity.
“These conditions are not very encouraging for foreign contractors intending to participate in the construction industry. The nationality requirement puts a substantial barrier to the entry of foreign contractors in the construction industry. Ease of entry into an industry is a positive sign of competitiveness,” the commission said.
The agency said the low participation rate of foreign contractors in the Philippines, ranging from 10 percent to 15 percent, indicated that the construction industry remained structurally unchanged.
In 2015, only 20 special licenses were issued to foreign construction firms and four were granted to joint ventures out of 1,600 special licenses”•or 0.23 percent of the total for that year.
