Builders Want Crisis Measures Updated

Alina Toma Vereha

Members of the Romanian Association of Construction Entrepreneurs (ARACO) convened at Romexpo yesterday for their annual national conference and came to the conclusion that the Government urgently needed to resume discussions on crisis containment measures and their adaptation to the budget for 2009 and the new macro-economic forecasts, adopted upon signing the agreement with the IMF and the European Union. They are also demanding corrections to the Public Procurement Law, the Fiscal Code, insolvency laws, the Labour Code and the mandatory certification of company capabilities.

ARACO President Laurentiu Plosceanu stated: "The biggest problem still is that the State, that is, State institutions, still owes a tremendous amount of money to private contractors. Although public statements indicate that over 90% of the debt has been paid, the truth is that only a little more than half of the amount has actually reached the companies. The remaining money is blocked on the route between various institutions of the State." He stressed that public works beneficiaries needed to urgently present the tender schedule and the financial resources available for investments this year. Private contractors also agreed among themselves to ask authorities to create a system for subsidizing interest on loans taken by city halls and condominium owners to improve the heating insulation of residential buildings. The measure would also involve the banking system, or only the State-controlled CEC Bank.

One of the current risks is that the State may accept dumping prices offered during public tenders. In order to prevent corruption, the authorities need to accept the appointment of regional commissions including representatives of construction trade unions and business associations to monitor tenders for and the execution of contracts for public works. In many cases, very small prices were accepted in tenders and then increased by over 50% during the execution, ARACO members say.

ARACO also demanded that VAT should be due upon collection, not invoicing, while reinvested profited should be exempted from the profit tax. In their opinion, the VAT should be smaller for building consolidation works, heating insulation and social housing construction. ARACO also prepared some recommendations for construction companies to help them pass the crisis. According to Laurentiu Plosceanu, contractors should join business associations and consolidate at regional level or by types of works. Concurrently, investments in technological development should be formalized within policies. Additionally, contractors should prefer Romanian-made construction materials and invest in personnel qualification. Last but not least, contractors should be very careful when selecting business partners and customers.