ASEAN contractors project rosy future
(China Daily)
Updated: 2004-11-15 09:29

"A big market is beckoning," Diao Chunhe, vice-chairman of China International Contractors Association, said.

"According to our forecasts, Chinese contractors will chalk up more projects in ASEAN in 2005 with a contractual volume doubling this year," he said.

From January to September, Chinese contractors have signed deals worth more than US$3 billion and the figure is expected to reach US$3.5 billion to US$4 billion for the whole year.

Diao based his predictions on the fact that the ASEAN nations have shrugged off the shadow of the Asian financial crisis and are on a fast track.

"ASEAN nations are on a rapid economic rebound," he said. "Their demands for infrastructure construction are rising sharply."

At the expo, ASEAN countries such as Indonesia, Myanmar, Laos and Cambodia rolled out the red carpet for Chinese construction companies, said Diao.

Major contractors such as the China Harbour Engineering Company, the China Railway Engineering Corporation, the China National Chemical Engineering Corporation and the China Metallurgical Construction Corporation have all indicated the ASEAN market is a business priority.

They already have had a number of projects there and are familiar with the market conditions.

The projects stimulate the local economies and create jobs for local people.

According to Sun Yue, an official of Sinohydro Corporation, China's leading water and hydro power facilities construction giant, 80 per cent or 1,600 of the company's workers in ASEAN are locally hired.

SMEs will also find they are suitable for some small projects, which those behemoths usually are not interested in, he said.

Such projects include the construction of hotels, small roads and factories.

In addition, construction equipment manufacturers and suppliers can also take slices from the cake, Diao said.

Power equipment is among the most needed in the mix.

Diao also pointed out Chinese contractors are still relatively small players in the world.

China now clinches a total of US$20 billion worth of foreign construction deals globally, accounting for less than 1 per cent of the world's total.

Chinese construction firms are comparably weak in financing, which reduces their competitiveness in bidding, said Diao.

BOT (build-operate-transfer), a contracting form that requires contractors to have adequate starting funds, has dominated China's contracted deals, he said.

"A company without enough capital will have to fail the bid," Diao said.

Another bottleneck that affects Chinese contractors' development is the lack of professionals.

The association is doing its bit to rectify this situation, Diao said.

It signed an agreement with the British Institution of Civil Engineering Surveyors, the world's leading body for civil engineering specialists, to have Chinese staff trained there.

Meanwhile, CHINCA is implementing a credit-rating system among its members to curb vicious competition.

"Some of Chinese companies offend the industrial regulations and bite each other in bidding for overseas projects," Diao said.

"This has greatly stained Chinese contractors' reputations and weaken our competitiveness," he added.

The association is speeding up efforts to build the ratings system to caution those unfair players.

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