Gatchalian moves to amend law to remove restrictions on locally-funded projects

Senator Sherwin Gatchalian has filed a measure amending a 78-year-old law to remove restrictions and foster greater competition on locally-funded government public works projects.

Gatchalian has filed Senate Bill No. 1009 to amend Commonwealth Act No. 541 or “An Act to Regulate the Awarding of Contracts for Construction or Repair of Public Works.”

The senator, who is the vice chairman of the Senate Committee on Economic Affairs, said amending CA 541 has long been overdue and very much needed at this time given the government’s current thrust on infrastructure development via the Build, Build, Build Program.

“For 78 years, such domestic preference policy has confined competition in the construction industry within our territorial boundaries and has discriminated in favor of domestic businesses with substantial market power and political influence,” Gatchalian said in a statement on Saturday.

“In this light, this bill seeks to provide a more level playing field and extend equal opportunities to eligible and qualified domestic and foreign bidders to participate in the bidding by the Government for public works projects,” he said.

SB 1009 fine-tunes the decades-old law to ease restrictions that prohibits foreign contractors from bidding on locally funded public works projects.

The bill amends Section 1 of CA 541 to state that it is now the policy of the state “to extend equal opportunities to eligible and qualified bidders to public works projects of the government and to attract domestic and foreign investments in the construction industry to improve market dynamism, encourage innovation, and reward good performance."

Gatchalian noted that domestic businesses with substantial market power and political influence have been benefiting from a restrictive policy that confines competition in the Philippine construction industry.

The senator noted that public construction grew by only 8%, while private construction grew by 58% between 2010 and 2015 due to the lack of genuine competition in the public construction industry.

“The lack of genuine competition in the public construction industry impairs public welfare as there are fewer incentives for existing domestic firms to innovate and puts at risk the delivery of reliable, safety-compliant and quality public works,” Gatchalian said.

The senator said the measure should be considered “in the context of positioning the Philippines more competitively and attracting new investments in the construction industry to enable the Government to deliver the much-needed infrastructure that would support the country’s initiatives in providing a business climate conducive to investments in the country.”

“The enactment of this measure will encourage and attract foreign firms that possess the capacity to construct vital projects and are capable of sharing technical expertise with local firms to enter the Philippine construction market,” Gatchalian said. —Ted Cordero/KG, GMA News