Construction industry blames red tape

THE Philippine Constructors Association Inc. (PAC) called on the Aquino administration to expedite the approval of construction permits, delays in which helped bring down the country’s ranking in the latest Doing Business Report of the World Bank Group. Levy Espiritu, PCA president, said the construction industry has long been wanting to shorten the process of applying for construction permits.

He said it usually takes a month to get a construction permit.

PCA also wants the government to strengthen the Construction Industry Authority of the Philippines (CIAP), and to authorize the agency to accredit and give licenses to construction companies that have reputable track records.

Such ‘green lanes’ should also be put in place in local government units (LGUs), Espiritu said.

He said construction permit fees account for only two percent of their total cost, but dealing with red tape jacks this up by 30 percent.

The industry official said the government should also take the lead in infrastructure development by amending the Build-Operate-Transfer (BOT) Law and aligning it with the requirements of its public-private partnership (PPP) initiative.

Espiritu said the government should tweak the guidelines on right of way acquisition to speed up the process.

“Ongoing projects are not being completed on time because of right of way acquisition issues,” he said.

Espiritu said bidding out of projects should be on a solicited mode to ensure transparency and fair competition, as “unsolicited bids are open to graft and corruption.”

The local construction industry plans to ramp up activity next year in line with the government’s PPP initiative.

Espiritu said the P500-billion construction sector is projected to expand 8 percent this year, and by double-digits next year as the government starts rolling out its PPP projects.

He said the private sector, which comprises about 60 percent of construction activities in the country, is responsible for much of the current boom.

Earlier, the World Bank and its private-sector investment arm, the International Finance Corp. (IFC), said the Philippines has become less business-friendly for local firms mostly because of its poor score in terms of dealing with construction permits.

In their report titled “Doing Business 2011,” the multilateral lenders said the country’s ranking in terms of ease of doing business fell by two notches to 148th from the 146th last year.

The report surveyed 183 economies.

Out of the nine criteria used in the study to measure a country’s competitiveness, the Philippines scored poor in terms of dealing with construction permits at 156th place from last year’s 111th.

“The Philippines made construction permitting more cumbersome through updated electricity connection costs,” the report said.

The report said getting construction permits takes 26 procedures from last year’s 24 procedures, while the cost rose 778.5 percent of income per capita from only 81.7 percent previously.

The number of days in accomplishing the construction permits, however, improved to 169 days from 203.

The report said 57 percent of new construction in the Philippines is considered illegal. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times