Construction industry hits wall

  • 2013-01-23
  • From wire reports

RIGA - The rejected amendments to Latvia’s Construction Law, which stipulated shortening the period of time for contesting construction permits, may result not only in worse international assessments, but also in investments lost and jobs not created, Economy Minister Daniels Pavluts told Nozare.lv.
The minister said that, by not solving these issues quickly enough, Latvia cannot hope to achieve higher positions in international assessments, for example, by the World Bank’s ‘Doing Business’ or the Global Competitiveness Index, which are taken into account by investors when deciding on investments.

Prime Minister Valdis Dombrovskis, the Cabinet of Ministers, the Coordination Council for Large and Strategically Important Investment Projects and the Saeima Economic, Agricultural, Environmental and Regional Policy Committee previously agreed on the necessity of a quick solution to these issues to not hamper new investments and jobs, said Pavluts.

The minister agreed that the amendments require additional discussions, but was puzzled by the parliament’s decision to vote down the amendments and refuse to review them. He emphasized that problems in the construction process are currently among the main factors hampering further improvements in Latvia’s business environment and investment attraction.

Currently, harmonizing construction projects may take longer than their implementation, said Pavluts.
In the first reading on Jan. 17, Saeima voted down amendments to the Construction Law, which stipulated shortening the period of time during which a construction permit may be contested.
Saeima Economic, Agricultural, Environmental and Regional Policy Committee agreed on Jan. 16 that the regulation on construction permits should be considered as a separate bill and asked Saeima to review it as urgent, but this proposal was not supported by the parliament.

Under the current procedure, if a construction permit is contested, the respective construction project is put on hold, except for construction projects of national importance.

Not prepared
Construction experts believe that the amendments to the Construction Law were not fully prepared; this was the reason for their being voted down by Saeima in the first reading.
Construction Development Strategic Partnership Board Chairman Valdis Birkavs says that the procedure of contesting construction permits will be brought to order when the new Construction Law will be passed, in a half-year or a year.
The procedure of contesting construction permits requires thorough analysis. The amendments were rushed; therefore, they could not be approved. The amendments should have been harmonized and balanced with the Administrative Procedure Law, which makes it possible for residents to file complaints about officials; however, if such opportunities are used without any limitations, they may be easily abused, says Birkavs.

Construction firm YIT Celtnieciba Board Chairman Andris Boze says that the amendments should have been harmonized with the Administrative Procedure Law and the Spatial Planning Law.
However, there is hope that, when these amendments are drafted more thoroughly and harmonized with other laws, they will be passed. Now that the country is moving toward the euro, the parliament will not allow investment outflows caused by messy legislation, says Boze.

Finding solutions
The regulations on the procedure of contesting construction permits is an important factor for the development of the construction sector and attracting investments, said the Saeima committee’s chairman Vjaceslavs Dombrovskis. Previously the Foreign Investors Council in Latvia said there were serious problems in this area, the Economy Ministry then revised the current procedure and came up with proposals for improving the procedure of contesting construction permits, stressed Dombrovskis.

Last year, 1,114 construction permits were issued in Riga, of which 15 were contested - this is just 1.35 percent of the total number of construction permits, Ilze Osa, head of the Economy Ministry’s Construction and Housing Policy Department, told Saeima on Jan. 17. She said that, in order to prevent the current situation where construction projects may be put on hold for years after a construction permit is contested, the period during which a construction permit can be contested should be reduced to one month.

Representatives from the Latvian Association of Local and Regional Governments and Latvian Association of Construction Companies said that their associations supported the proposal in principle.