Project exports promotion council of india

Time for reform in construction

5 June 2013, 15:24 GMT | By Richard Thompson

Lowest-price-wins procurement trend is creating a disconnect between clients and policymakers

It is very difficult to gauge the health of the region’s construction industry. On the one hand, a look at the volume and value of projects under way or in the pipeline can tell you how much work is available to fill orderbooks and create employment. 

On the other hand, it is an industry where more firms go bust during a boom than during a slowdown, due to the need for strong cash flow to maintain operations during a boom.

Overlaid on this is an apparently unbreakable culture of adversarial relations between the construction client and the contractor, which ensure an endless stream of work for contract lawyers. At the root of many of these issues is the fixation of many major construction clients, and almost all public sector bodies, to award major construction contracts to the lowest-priced bidder, and to pass on the entire commercial risk of a contract to the contractor.

While the intention of the lowest-price-wins procurement is to ensure that the government buyer gets the best deal possible on these huge investments, it is an increasingly out-of-date procurement model that actively works against some of the key policy objectives of Middle East governments.

Two priority issues for Middle East governments is creating jobs and careers for locals and ensuring sustainable development aims are met. Regulations and legislation are being rolled out across the region to achieve this.

Yet, far removed from the policymakers and legislators are the procurement officials, who are required to adhere to lowest-price-wins rules of public procurement.

This disconnect results in frustrations across the construction industry. But it also means that governments will find it difficult to deliver their policy promises.

With the region’s construction market picking up quickly, now is the perfect opportunity to roll out some much needed reforms.    

11.0 country profile : ETHIOPIA

National name: Ityop'iya Federalawi Demokrasiyawi Ripeblik

Current government officials
Languages: Amharic, Tigrigna, Orominga, Guaragigna, Somali, Arabic, English, over 70 others

Ethnicity/race: Oromo 40%, Amhara and Tigrean 32%, Sidamo 9%, Shankella 6%, Somali 6%, Afar 4%, Gurage 2%, other 1%
National Holiday: Independence Day, May 28
Religions: Islam 45%–50%, Ethiopian Orthodox 35%–40%, animist 12%, other 3%–8%

Literacy rate: 42.7% (2011 est.)

Economic summary: GDP/PPP (2011 est.): $94.76 billion; per capita $1,100.

Real growth rate: 7.5%. Inflation: 33.2%. Unemployment: n.a. Arable land: 10%. Agriculture: cereals, pulses, coffee, oilseed, cotton, sugarcane, potatoes, qat, cut flowers; hides, cattle, sheep, goats; fish.

Labor force: 37.9 million (2011); agriculture and animal husbandry 80%, government and services 12%, industry and construction 8% (1985).

Industries: food processing, beverages, textiles, leather, chemicals, metals processing, cement.

Natural resources: small reserves of gold, platinum, copper, potash, natural gas, hydropower.

Exports: $2.75 billion (2011 est.): coffee, qat, gold, leather products, live animals, oilseeds.

Imports: $8.25 billion (2011 est.): food and live animals, petroleum and petroleum products, chemicals, machinery, motor vehicles, cereals, textiles.

Major trading partners: Djibouti, Germany, Japan, Saudi Arabia, U.S., UK, Italy, India, China (2006).

Communications: Telephones: main lines in use: 908,900 (2011); mobile cellular: 6,517,000 (2011). Radio broadcast stations: AM 8, FM 0, shortwave 1 (2001). Television broadcast stations: 1 plus 24 repeaters (2002). Internet hosts: 167 (2011). Internet users: 447,300 (2011).

Transportation: Railways: total: 681 km (Ethiopian segment of the Addis Ababa-Djibouti railroad) (2011). Highways: total: 36,469 km ; paved: 6,980 km; unpaved: 29,489 km (2011). Ports and harbors: Ethiopia is landlocked and has used ports of Assab and Massawa in Eritrea and port of Djibouti. Airports: 86

Geography

Ethiopia is in east-central Africa, bordered on the west by the Sudan, the east by Somalia and Djibouti, the south by Kenya, and the northeast by Eritrea. It has several high mountains, the highest of which is Ras Dashan at 15,158 ft (4,620 m). The Blue Nile, or Abbai, rises in the northwest and flows in a great semicircle before entering the Sudan. Its chief reservoir, Lake Tana, lies in the northwest.

Government

Federal republic.

Economic Outlook

Estimated growth of 6.9% in 2011/12 made Ethiopia one of Africa’s best performing economies.

• 
  The government has brought down inflation but it remains at 10.3% in February 2013.
  
• 
  Ethiopia does not have major natural resources and the government wants growth from industrialisation.
  

Ethiopia’s economy saw a ninth straight year of robust growth in 2012, which was estimated at 6.9%. The growth was broad based with an increasing role for services and industry. This momentum is expected to continue in 2013 and 2014, at a slower pace though.

In an effort to combat inflation, the government implemented a tight monetary policy stance. This measure, aided by slowdown in global food and fuel price inflation, saw consumer price inflation decelerate to 10.3% in February 2013 from 31% in November 2011.

The government’s determination to hold down prices was further reflected in its prudent fiscal policy focusing on strengthening domestic resources and reducing domestic borrowing.

The strong fiscal stance, particularly measures to improve tax administration and enforcement, resulted in a fiscal surplus of 0.2% of gross domestic product (GDP) in 2011/12 from -1.6% the previous year. The balance of payments worsened, partly because of strong import growth relative to export growth. Between 2010/11 and 2011/12, the value of goods imports grew by 34% compared to a 15% growth in exports. Though external debt has been growing, the country will maintain a low risk of external debt distress in 2013.

Rebuilding official foreign reserves is a challenge, however, as reserves have fallen to less than two months of import coverage.

12.0 pepc : working committee members-

CHAIRMAN
Shri Avinash C Gupta Chairman & Managing Director Technofab Engineering Ltd. Plot No.5 Sector 27 C Mathura Road Faridabad: 121003
VICE CHAIRMAN
Shri Rajan Malhotra Regional Manager Larsen & Toubro Ltd. IFCI Towers, 14^th Floor 61, Nehru Place New Delhi: 110019
MEMBERS : WORKING COMMITTEE
Shri Gurjeet Singh Johar Chairman C&C Constructions Ltd. 70, Institutional Sector 32 Gurgaon-122001	Shri B. Seenaiah Managing Director BSCPL Infrastructure Ltd. 6-2-913/914, 5th Floor Progressive Towers, Khairatabad Hyderabad- 500004
Shri V.C. Verma Executive Director Oriental Structural Engineers Pvt. Ltd 21, Commercial Complex Malcha Marg New Delhi 110 021.	Shri Mohan Dass Saini CEO (Construction Division) Shapoorji Pallonji & Co. Ltd. SP Centre 41/44 Minoo Desai Marg Colaba, Mumbai: 400005
Shri Abhijit Rajan Chairman & Managing Director Gammon India Ltd Gammon House Veersavarkar Marg, Prabhadevi, Mumbai – 400 020	S Shri Abhay Sancheti Managing Director SMS Infrastructure Ltd. 267, Ganesh Phadnavis Bhavan Near Triangular Park, Dharampeth Nagpur-440010
Shri Arun Karambelkar President & Whole Time Director Hindustan Construction Co. Ltd. Hincon House Lal Bhadur Shastri Marg Vikhroli (West), Mumbai-400 083	S Shri R.N. Yadav Managing Director U.P. Rajkiya Nirman Nigam Ltd. Vishweshwariya Bhawan Gomto Nagar Lucknow-226010
Shri Mohinder Singh Saini Chairman Mokul Infrastructure Pvt. Ltd. 16-D, Basant Lok Vasant Vihar New Delhi-110057	S
INSTITUTIONS
Shri S.K. Sharma Deputy Secretary, EP(OP) Department of Commerce Ministry of Commerce & Industry,Govt. Of India Udyog Bhawan New Delhi- 110 011
Shri Prabhat Kumar Joint Secretary (ES & ITP) Ministry of External Affairs Room No. 3057, A Wing, 3^rd Floor Jawahar Lal Nehru Bhawan, Janpath New Delhi - 110003
Smt. Vanitha K. Venugopal General Manager Reserve Bank Of India Exchange Control Deptt. Amar Building, 5^th Floor Mumbai 400 023.
Ms. Tapasi De Dy. General Manager (Project Export Branch) ECGC Ltd. “The Metropolitan”, 7^th Floor Plot No. C-26/27 Bandra Curla Complex Bandra (E) Mumbai 400 051 Ph. 9522 26572329 09967541671
Shri Sriram Subramaniam Dy. General Manager Exim Bank Of India Ground Floor, Statesman House 148 Barakhamba Road New Delhi 110001 23326625, 23326254, 233221622, 23321742, 23721393Extn.211 Fax: [phone] E-Mail: [e-mail]
EX-OFFICIO MEMBER SECRETARY
Shri S.K. Sharma Deputy Secretary, Deptt.of Commerce & Executive Director Project Exports Promotion Council Of India

13.0 FINANCIAL ASSISTANCE

There is no specific scheme to promote the exporting firms in the country.    However, some assistance is provided to exporters under Marketing Development Assistance (MDA) Scheme and Market Access Initiative (MAI) Scheme.    Other schemes for export promotion include Duty Neutralisation Schemes like DEPB, Advance Licence, duty concession schemes like EPCG and Reward Schemes like Served from India, Vishesh Krishi and Gram Udyog Yojana, Focus Market Scheme and Focus Product Scheme.

These schemes are reviewed periodically and necessary corrective measures are taken.
ANNEXURE-I

4.1 market development assistance (mda) scheme

Export Promotion Assistance given by Government

The Government of India encourages Indian project/product exporters by providing financial assistance under the following export promotion assistance schemes:

1. 
   Market Development Assistance (MDA) Scheme
   
2. 
   Scheme for Export Promotion by Small Scale Manufacturers
   
3. 
   Market Access Initiative (MAI) Scheme
   

MARKET DEVELOPMENT ASSISTANCE (MDA) SCHEME

Under this scheme assistance is given to individual exporters for participation in following export promotion activities abroad

• 
  Trade Delegations
  
• 
  BSMs
  
• 
  Trade Fairs/Exhibitions
  

Eligibility Criteria/Conditions

1. 
   Exporting companies with an f.o.b. value of exports of upto Rs. 30 crore in the preceding year. No such ceiling is applicable for participation in Focus LAC region.
   
2. 
   The exporter should have complete 12 months membership with concerned EPC etc
   
3. 
   Assistance would be permissible on travel expenses by air, in economy excursion class fair and/or charges of the built up furnished stall. This would, however, be subject to an upper ceiling mentioned in the table per tour.
   

S No. (1)	Area/Sector (2)	No. of visits (3)	Maximum Financial ceiling per event (4)
1.	Focus LAC	1	Rs. 2,50,000
2.	FOCUS AFRICA ( including WANA Countries)	1	Rs. 2,00,000
3.	FOCUS CIS	1	Rs. 2,00,000
4.	FOCUS ASEAN+2	1	Rs. 2,00,000
5.	General Areas	1	Rs. 1,50,000*
	TOTAL	5

AMMENDMENTS
REVISED GUIDE LINE FOR MARKETING DEVELOPMENT ASSISTANCE (MDA) SCHEME FOR EXPORT PROMOTION ACITIVITIES:

The competent authority has now decided that FIEO and ITPO will henceforth be treated as eligible grantee organizations for reimbursement MDA grants to the exporters who are also the members of other EPCs etc. and participating in the events organized/sponsored by FIEO and ITPO. However, for this purpose FIEO and ITPO will obtain a ‘NO OBJECTION CERTIFICATE’ as per the Annexure from the concerned EPCs of which the exporter is the member. The existing Guidelines for MDA stand modified to that extent, superceding relevant provisions/instructions and will be effective from 1.12.2007.

(Vide MOC&I letter no.2/11/2004 E-MDA (Part) dated 26^th November,2007)

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