Local contractors expressed strong opposition to a bill that aims to fully open the construction business to foreigners, saying it will cause the demise of the local industry that employs over 4 million Filipinos.
House Bill No. 7337 seeks to amend Republic Act No. 4566, or the Contractors’ License Law, by allowing foreign companies to obtain a regular license originally exclusive to companies with at least 60-percent Filipino equity.
D.M. Consunji Inc. president and chief executive Jorge Consunji warned that removing regulations favoring Filipino contractors would “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 a recent virtual hearing on the bill.
Valenzuela City Rep. Wes Gatchalian, the committee’s chair and author of the bill, said 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.
Consunji, however, said it was important to balance the extension of opportunities to foreign contractors and the protection local players, especially those in the micro, small and medium enterprises.
“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.
The Philippine Constructors Association reminded the government that equal opportunities should be given the both local and foreign 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,” said PCA president Will Decena.
He said foreign contractors had the tendency to bring their own people even for jobs than could be performed by Filipinos.
The government should also hold foreign contractors to comply with regulatory requirements, such as 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, the PCA said.
Under Section 3.1 of RA 4566, companies with at least 60-percent Filipino equity participation can be granted a regular license, giving them 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.
The 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 the ruling.