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Contractors' Wto 'Survival' Threatened By No Regulation

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

and NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemdia.net

The Bahamian Contractors Association's (BCA) president yesterday warned it was "critical to our survival" under WTO for the Government to finally enact regulation of the $2 billion industry.

Leonard Sands told Tribune Business it was "beyond urgent" that the Construction Contractors Act be enforced, as the absence of regulation left the industry totally exposed to being overwhelmed by foreign competition within two years if the Government's World Trade Organisation (WTO) accession target is met.

The BCA chief said he had yesterday written to Desmond Bannister, minister of works, requesting that he meet with the Association's Board "to discuss the possible negative impact of WTO on an unregulated building industry".

Mr Sands added that Mr Bannister, as minister responsible for the construction industry, simply needed to implement the regulations accompanying the already-passed Act - and appoint the Board that will oversee its operation - to initiate the oversight regime.

Without it, he expressed fears that Bahamian contractors and other industry players could be squeezed out by increased competition from foreign rivals exploiting a liberalised trade environment to grab an even greater share of locally-based projects.

The ongoing absence of a licensing and certification regime, showing what each Bahamian contractor is capable of doing, has often been blamed for foreign developers' reliance on overseas construction companies, and Mr Sands yesterday implied that WTO membership could exacerbate this trend unless the Minnis administration acted swiftly.

Referring to the "looming impact" of WTO, he said: "I wrote to the Minister [Mr Bannister] today, requesting that our team and he have a sit down to discuss the possible negative impact of WTO on an unregulated building industry.

"Everyone in the WTO - the Caribbean and beyond - has an opportunity to participate in your country. You can imagine that we're not prepared, we've not had the time to train people and get them ready for competition. We will have people from Jamaica, Antigua and Grenada looking at this market, next to the US, and saying: 'Why not come here?'

"We have to prepare for that kind of involvement in this industry. With the construction industry not being regulated, as it is now, we're in a more risk averse position than we'd like to be. It's something the Government has to move on quickly before 2019. It is critical for the survival of our industry, and persons who have invested their life in providing construction services in this country."

Whether the Bahamian construction industry is opened up to foreign contractors and workers, and to what extent, has yet to be determined. Much will depend on the feedback provided by the sector to the Government, since it is best-placed to identify the potential opportunities and threats presented by the WTO's liberalised, rules-based trading regime.

Once this happens, it will then be up to the Bahamas' WTO negotiating team to try and incorporate this position into the final terms governing this nation's accession to full membership. Given that the construction industry is already relatively open, due to foreign developers' reliance on overseas firms, it is unlikely that the Bahamas will be unable to close the sector to such competition.

"He just needs to appoint the Board, the Construction Contractors Board, and put in place the regulations," Mr Sands said of the actions required by Mr Bannister.

The construction industry remains the last Bahamian profession to enjoy self-regulation, which would be overseen by the Board through its enforcement of licensing, certification and regulatory standards.

Without it, Mr Sands said Bahamian contractors, sub-contractors and tradesmen - plus affiliated industries such as building materials suppliers - could be placed at "a huge competitive disadvantage" by WTO membership.

"We have to prepare for it," he told Tribune Business. "We have to conduct training courses, all kinds of business courses to help our contractors and vendors deal with this outside competition.

"We have to deal with that, prepare for that. If not, it's going to be a shock. Some of them [overseas contractors] come strongly capitalised. Any time you add a lot of competition, it's going to be difficult for the local market. We need the Government to recognise the risk.

"We have an unregulated sector and we're inviting the world to play in it, that's the risk we're running right now," Mr Sands continued. "WTO allows for everyone to come on a level playing field and enter your market. Our market is a $2 billion unregulated industry.

"If you have companies coming from larger economies, and with more experience, it would certainly be to the detriment of the local companies, tradesmen and contractors. We're not there yet; to be able to take on a $1 billion company from Jamaica, for instance, or $100 million.

"One or two companies may be able to compete, but what about the smaller companies doing $500,000 to a $1 million worth of work? We need to create a playing field and environment where local companies can benefit and prosper."

Calling for the Government to have the Construction Contractors Act in force "prior to 2019", Mr Sands said he was "trying to find every means to get in his [Mr Bannister's] face to get this done".

"This is beyond urgent," the BCA chief reiterated. "We need to have the Board sitting and doing the work that the Act provides for, as well as the regulations that currently exist within the legislation. The regulations will give more protection because when you open everything up, you're opening up for everyone to participate.

"The BCA is most concerned that the timeline to regulate the construction industry is slipping away. The time is slipping away fast, and if we don't do what it is necessary to do we are concerned that the window of opportunity to take advantage of a regulated construction industry will be lost.

"If we do not do that, we're going to do the reverse and put ourselves in a bad position for WTO, which we have committed to doing in 2019."

The Construction Contractors Act promises to yield significant benefits for the industry, consumers and the wider Bahamian economy if it functions as intended. The Act when implemented, will introduce a system of licensing and self-regulation, where Bahamian contractors are certified according to their qualifications and scale/scope of work they are capable of undertaking.

This would place them on a 'level playing field' with foreign contractors, enabling them to better compete for multi-million dollar contracts on foreign direct investment (FDI) projects that come to the Bahamas because their capabilities are certified. It will also give consumers greater protection.

Comments

Porcupine 2 years, 5 months ago

So, we should continue to ask what is the rush to join WTO. Who will benefit, what are the downsides. Without a doubt, the pain will exceed the gain. Except, for the very few who will benefit, as they usually do. Trade deals rarely help "the people".

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