By Ndamu Sandu
October 23, 2011
THE construction industry wants the State Procurement Board (SPB) to impose a 25% added value to all foreign construction companies’ bids to improve the competitiveness of locals as it emerged that Chinese and South African firms are getting most of the contracts.
The recommendation is part of measures the sector wants government to institute to grow the industry, which is on the increase since the use of multi-currencies in 2009.
According to a paper presented to government, the industry is of the view that locals are getting a raw deal as they are inadequately equipped to compete with foreign companies.
“This is as a consequence of hyperinflation experienced before the introduction of the multi-currency system when obsolete and depreciated capital equipment could not be replaced,” the industry said.
The sector said the prevailing high interest rates had made local bids uncompetitive compared to foreigners who have access to cheap finance, equipment and materials from their countries of origin.
There is no government incentives that exist for the construction industry to reduce the cost of importing capital equipment such as those offered to the agriculture and tourism sectors, the industry said. “On average, contractors are made to pay a US$250 non-refundable bid bond by SPB each time they go to tender, an exorbitant amount in the present economic environment,” the sector said.
The Procurement Regulations of 2002 granted a 10% preference to locally-based contractors over external ones.
It also said a 10% preference may be given to previously economically disadvantaged contractors…Read more.