Approximately 2,000 contractors have been forced to fold up their businesses in the last four years as a result of the slowdown in the economy and the Government's failure to settle a $600 million outstanding debt, according to T&T Contractors Association (TTCA) Mervyn Chin. The debts to contractors, described by Chin as long overdue, have been causing great hardship in the local construction industry as many contractors, sub-contractors and suppliers still owe banks, creditors, staff, and labourers and were struggling to make ends meet. Chin said if Government fails to address the situation soon, the construction industry can collapse, which would be hard to rebuild. Chin said the IDB had recommended that for T&T's economy to get kick-started, Government should pay them first. Outraged by the slow pace in distributing of payments, last week the TTCA in several full page advertisements called on Government to settle its payments to its members, who ranged from small to large.
The advertisement stated that as a result of the Government's failure to honour the debts, many businesses became insolvent, resulting in the loss of thousands of jobs. It also has deprived the State of the use of its economic assets, many of which are close to completion and critical to national development. The advertisement stated that TTCA on numerous occasions, and the public, have been led to believe by Prime Minister Kamla Persad-Bissessar and Finance Minister Winston Dookeran that settlement was imminent. The debt, Chin said goes back as far as 2007. TTCA stated that disregarding the terms of payment can not only create negative fallout, but highlight the contempt for contractors, stockholders and dependants in not fulfilling their obligations. TTCA listed 15 ministries and agencies that owe main contractors and sub contractors, who are official members of its association.
Among the 15 listed, Chin said the Education Facilities Company Ltd was the biggest defaulter. On Friday, the Housing Development Corporation (HDC), one of the 15 agencies listed, issued a public advisory in the daily newspapers insisting that the corporation has been honouring its commitment to pay all legitimate contracts. Remaining committed and dedicated to its procurement practices and prompt payments to all its contracts, the HDC stated that during the period May 2010 to its current date approximately $1.2 billion had been paid to its contractors. Warning that should these accusations continue to be levelled against them, the HDC said that it reserved the right to publish in detail all relevant information pertaining to the payments of its contractors, in any effort to remove any doubt. "Due to the inordinate delay in settling their indebtedness, companies are folding up in the absence of fresh work being undertaken," Chin said on Wednesday.
Chin explained that the contractual conditions allowed for interest to accrue if the client (Government) refuses to pay along the lines set out in the contract. The compound interest has been mounting, which taxpayers will have to pay, Chin said. Chin said they had hoped that the 2012 budget would have made provisions to take care of the debt, but this was not done. "The way it works out is if you don't pay the interest in five years the interest will work out to be the principle sum. The longer they take is more money they will have to fork out. Besides, no where in the budget I am seeing money set aside to pay this debt."
Contractors surviving by God's grace
From June of 2009, Chin said construction in the sector came to a grinding halt, leaving hundreds of contractors at their wits end. Of the 4,000 contractors in T&T, Chin said almost half of that figure have closed their businesses due to lack of payments and new contracts. Many of the contractors have not been able to land themselves jobs. "They are just surviving by the grace of God." Thousands of labourers were also thrown on the breadline.
Up to 2007, the construction sector employed 120,000 employees, according to statistics obtained from the Central Statistical Office, Chin said. "Almost half of the population were dependent on the sector. The industry was one area where people who came out of the jail easily found work. When these people get displaced what other profession they know." The problem has been further compounded by the absence of new work in the last 20 months. Chin said the Government has only paid $500 million. While admitting that the debts occurred under both the PNM and PP Government, his association has no intention of protesting or going to court. Taking legal action, Chin said will led to a prolonged court battle and if a contractor wins, he would end up losing in the long run.
"It just would not make any sense." Chin disputed that some contractors had done shoddy work on projects, stating that not one contractor has been hauled before the court, fined or jailed. "The contract made provisions that if a contractor did bad work, there is redress." Chin said everyday he is subjected to a barrage of insults and profanity from contractors who are still owed. "Members does come and cuss me as if I owe them. They are really getting desperate."