Unregistered contractors are being called to support the government’s massive infrastructure program.
The Construction Industry Authority of the Philippines, the government regulatory agency for the construction sector, issued the call even before the government unveiled its ambitious “Build, Build, Build” program.
“We have to assert authority over the industry. There is an even more compelling reason to cajole contractors to register with us. We want them to have a taste of the golden age of infrastructure by operating as a legal entity, However small they are, there is a space for them in the ongoing BBB program,” CIAP head and Trade Undersecretary Ruth Castelo.
The Philippine Contractors Accreditation Board as of July 24, 2017 issued 9,670 contractors’ licenses in 2016-2017, 80.8 percent of which were for renewal contractors and 9.2 percent as new entrants.
In terms of size, large contractors—AAAA, AAA & AA—accounted for 5.3 percent of the total contracting population. Medium-sized contractors—A & B—comprised 32.1 percent, while small contractors—C, D, Trade/E—still remained the majority of licensed contractors at 62.6 percent.
CIAP, an attached agency of the Trade Department, monitors downline agencies tasked with specific functions, comprising of PCAB, Philippine Overseas Construction Board, Philippine Domestic Construction Board, Construction Industry Arbitration Commission and the Construction Manpower Development Foundation.
CIAP is the central authority in the Philippine construction industry in terms of construction policy and program formulation, development and implementation.
It is mandated by law to promote, accelerate and regulate the Philippine construction industry in conformity with national goals.
Limits decried
Many construction players and some government agencies have criticized CIAP for imposing limits to the entry of foreign contractors. But the agency said it was open to foreign contractors since 36 years ago.
“It is only lately that we’ve open the industry to 100 percent foreign participation but we have accommodated foreign construction firms on a 60-40 arrangement. But the fact that the industry is now open to full foreign participation does not mean it can skip regulation. They still need to register if they want to operate in the Philippines. No company, foreign or local, is exempted from regulation,” said Castelo.
While foreign undertaking of a Philippine project is now fully allowed, foreign participation in government projects is still based on a 60-40 arrangement. Those projects under the Public-Private Partnership scheme give foreign contractors 100 percent authority.
For foreign-funded government projects, foreign contractors are allowed to participate 100 percent under special license. Similarly, for locally-funded projects, foreign contractors are allowed 100 percent participation through the grant of a regular license.
Foreign contractors seeking AAAA license are allowed by the government as long as they can produce at least P1 billion in equity deposited at a Philippine bank as proof that they can finance the project.
The Construction Accreditation Board will check the company’s integrity and documentary requirement.
Infrastructure plan
The Philippine Development Plan 2011-2016 identified the country’s insufficient infrastructure as a key constraint in achieving inclusive growth.
The logistics master plan envisions to advance Philippine competitiveness through the establishment of an efficient transport and logistics sector that will contribute toward a robust and resilient Philippine economy.
In addition to the policy thrusts and initiatives of the government and the priority sectors we are promoting, the Philippines recognizes the importance of infrastructure development to economic growth in terms of productivity and efficiency, and to the ordinary citizens in terms of mobility and access to basic utilities.
Thus, one of the priorities of the government is the development and implementation of infrastructure projects to further ease doing business in the Philippines and facilitate the smooth flow of people, goods and services.
”We have a lot of opportunities for investors especially as the Duterte administration is very keen to spend on infrastructure development. The Philippines will benefit from better infrastructure in power and utilities, roads and bridges, water and sanitation, and railways, airports and ports, ICT, security and defense,” Castelo said.