Legislator raises concerns over bill allowing freer entry of foreign contractors

A MINORITY legislator expressed concern Thursday over a bill that could allow freer entry of foreign contractors, which he said may threaten a key source of employment for Filipinos.

During deliberations on House Bill No. 7337, which seeks to amend Republic Act (RA) 4556 or the Contractors’ License Law, House Minority leader Bienvenido M. Abante, Jr. said foreign contractors’ dominance of the construction industry is already “the status quo.”

“The unregulated entry of foreign contractors at this time of an extended pandemic will adversely affect small and medium-sized Filipino contractors and deprive Filipino workers of job opportunities in their own country,” Mr. Abante said.

Section 3.1, Rule 3 of the Implementing Rules and Regulations (IRR) of RA 4556 restricts ownership in the construction industry to Filipinos. It reserves regular licenses only to contractors or firms that are either Filipino sole proprietorships and firms with 60% Filipino ownership.

HB 7337 proposes in Section 17 to add the following provision: “Only persons, regardless of nationality or citizenship, properly licensed and registered with the board in conformity with the authority may practice construction contracting in the Philippines.”

In his sponsorship speech, House Committee on Trade and Industry Chair and Valenzuela representative Weslie T. Gatchalian said RA 4566 did not promote competition because its IRR failed to properly translate the intent of the law.

“The IRR introduced nationality-based classifications which are not found in the enabling law and acted as a barrier to entry for foreign contractors,” he said.

The Supreme Court recently voided the nationality requirement in licensing rules for contractors set by the Philippine Contractors Accreditation Board (PCAB). The case stemmed from PCAB’s denial of Manila Water Company’s application to accredit its foreign contractors.

“With these amendments, this representation is confident that the country will be able to generate more foreign direct investment in the construction industry to spur economic recovery after the tragedy that is COVID-19. Our country badly needs more investment in the construction and real estate industry during this time,” Mr. Gatchalian said.

Foreign direct investment (FDI) inflows declined 18.3% during the first half.

According to Mr. Gatchalian, opening up the construction industry could increase FDI inflows from the current $35.8 million to $216.1 million.

“As a result, the construction sector’s share of total FDI is projected to increase from 0.36% to at least 2.2%,” he said.

“We should take note that these estimates only take into consideration the direct impact of liberalization on the construction sector and has not taken into account the multiplier potential on other related or complementary businesses,” he added. —