The state is giving more and more national infrastructure tenders to foreign companies, instead of preferring local companies, the Israel Builders Association complains. The Builders Association said that they had enough know-how and experience to manage complex projects, and that the state should enact laws ensuring that the tenders would stay in Israeli hands. "Such laws exist all over the world," Builders Association CEO Eliav Ben-Shimon stated. "This decision could also prevent the conduct we saw in Operation Protective Edge, when foreign contractors abandoned projects before their completion."
According to the builders, the state publishes tenders every year that not only give no preference to Israeli companies, but even give advantages to international companies. For example, the builders say that Israeli contractors must meet the Ministry of Housing and Construction's highest standards, while foreign companies are not required to meet this standard.
The builders give many examples of tenders explicitly specified as international, including the 2012 tender for purification of the Kishon River land; NTA Metropolitan Mass Transit System Ltd.'s tender for construction of the Carlebach St. railway station in Tel Aviv, which was issued only in English; and the tender for reconstruction of Platform 5 at Ashdod Port.
According to the builders, demands by Israeli groups for giving preference to Israeli companies are usually answered by assertions that Israelis lack sufficient know-how and experience in such projects, and that foreign bidders lower the cost of the project. "This claim is unfounded. As far as cost is concerned, participation by Israeli companies will increase tax receipts and add hundreds of jobs," Ben-Shimon declared. "As for lack of experience, a list of projects that were very complicated from an engineering standpoint and carried out by partnerships with Israeli companies was compiled, some of which were led by the Israelis on their own."
Accepted around the world
In many countries around the world, foreign construction entities wishing to take part in national infrastructure tenders must choose between a partnership with local entities or establishing local companies subject to local construction laws and taxation. France, for example, requires foreign investors to be partners in local businesses, and allows construction companies to enter only if they register as French and pay taxes like a local company. In Vietnam, foreign infrastructure operators are required to establish an equal partnership with a local company.
"Israeli governments and regulatory agencies should act to strengthen the local construction industry through legislation and conditions requiring any government party ordering contracting work to leave a substantial part of the project in the hands of Israeli companies," Ben-Shimon said.
The Ministry of Finance said in response, "The government companies issuing tenders that are relevant to Israeli companies give preference to Israeli companies according to certain criteria. At the same time, there are tenders, such as for procuring railway cars, which are irrelevant to Israeli companies."
The Ministry of Transport said in response, "International tenders are published when know-how and experience unavailable in Israel are required. All the civilian parts that require no international experience are performed by Israeli companies. In any case, foreign companies use local companies and Israeli workers."
The Israel Ports Company said in response, "In the Platform 5 tender, the Ports Company was legally required under the GPA agreement to hold an international tender."
NTA said in response, "International tenders are published in English. The language in which they are written reflects no preference whatsoever for a local or foreign company."
Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2015
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