bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Friday 23.08.2019 | Name days: Valgudis, Ralfs, Vitālijs

Specialist: price dumping in construction hits critical level

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

The Chairman of the construction firm SIA Latvijas energoceltnieks (LEC), Andris Asars-Asarovskis, believes that price dumping in building industry has reached its critical level in company’s 20 years existence.

The difference between the lowest price in tenders reaches up to 40% below the average price. «Dumping not only brings losses to the national economy by unpaid duties, but also degrades the whole construction industry, and clears the way for the invasion of foreign constructing enterprises in Latvia, » Asars-Asarovskis points out to agency LETA.

According to the expert, dumping prices are likely to be the result of tax liabilities and reserves accumulated in «fat years».

«To a certain extent, dumping is a «survival game in Latvian style», which is done with the hope that «I will pull through, but others will not». However, the actual situation shows that rarely any significant competitor would withdraw from the market due to dumping. By lowering the price below the objective market level, the company damages its business activities, because it undertakes the «subsidizing» of the particular project. Often it is difficult to understand how it is possible to purchase even the necessary building materials with the offered price. It is equally absurd to assume that the dumping losses will be recovered from new projects, » said Asars-Asarovskis.

He added that the situation of dumping is possible as long as companies have reserves from the previous years, which are rapidly running out, and by the next year, are likely to end. Besides, long-term dumping will have negative consequences on the competitiveness of building industry.

The Chairman Asars-Asarovskis explains that «in long term, such mutual price wars may have a negative result, because they facilitate the invasion of foreign companies in Latvia. Domestic enterprises will be weakened from the struggle; there will be no investments in the development of enterprises, in innovation and modernization of technologies, as well as, in the improvement of workers’ professional skills. When the economic growth starts to revive, and strong foreign companies arrive, domestic companies will be unable to compete and keep the market».

The specialist is of the opinion that the contracting entity has to regard the offers of cardinally lower prices with caution. One of the major problems is that often clients, who are not experts in industry, are not able to critically assess the objectivity of the offered price. However, they have to be sure that the paid money not only guarantees a qualitative construction of the intended unit, but also that the invested monetary instruments are paid in taxes and return to state budget.

It is also stressed that «in tenders the client, whenever faced with unreasonably low prices that differ significantly from the offered sum, must not rejoice about the opportunity to build an unit cheaply, but should be careful, because there is an actual risk that it will not be built, or, at least, not in the expected quality. To promote an adequate evaluation of an offer, it is worth bringing in competent experts who could assess the validity of the proposed price».

During the last year, the building tenders held by Riga Municipality revealed many cases of dumping, when the proposed price was by 30% lower than the building cost estimates for new unit.


Leave a reply

  1. Nelia says:

    I’m quite pleased with the infomratoin in this one. TY!

Lithuania backs Sinkevičius as European Commission nominee

The Lithuanian parliament on Thursday, August 22, voted to support Virginijus Sinkevičius, the Lithuanian Minister of the Economy and Innovation, as the country’s pick for the next European Commission.

New member of Riga Freeport board rushes to meet controversial Šlesers, TV Ziņas says

Riga councilman Sandris Bergmanis has a day after being elected to the board of the Freeport of Riga Authority met with businessman and former Latvian minister Ainārs Šlesers, according to the news programme TV3 Ziņas.

Latvian power production drops to lowest level in year

Energy companies in Latvia produced 357 655 megawatt hours of power in July, which is the lowest level of national power output since July 2018. This allowed to cover 64% of the Latvian electricity consumption, according to AS Augstsprieguma tīkls.

Compensation payments of defunct Latvian PNB Banka begin

With operations of the Latvian bank, AS PNB Banka, stopped, the process of paying the guaranteed compensation to its clients has begun on August 22, according Citadele, the lender tasked with the payments.

Riga planning to introduce tourist fee – one euro per day

The Riga City Council is discussing a plan to introduce a tourist fee charging all places of tourist accommodation a fee of one euro per day.

Expert: With Belarus electricity freezing Baltics’ solidarity, Moscow is over the moon

In a blow to Lithuania’s far-reaching plans, Latvia has announced it looks forward to buying electricity from a nuclear power plant in Belarus’ Astravyets under construction 50 kilometres away from Vilnius.

WHO: Little risk from microplastics in drinking water

The World Health Organization has declared that the current level of microplastic particles in drinking water does not pose is not a serious risk for health, yet more research was necessary to determine their effects on human health.

Subsidies to controversial Riga transport company could increase by EUR 20 mln

Amid the criticism of the Riga municipal transport company Rīgas satiksme for its losses and their effect on the Latvian state budget, a plan has been voiced to increase its subsidies, now 120 million euros, by another 20 million euros, Latvian Radio reports.

Latvian Minister keeping adviser detained by corruption watchdog for now

Latvian Agriculture Minister Kaspars Gerhards will clarify the reason, why his advisor and the mayor of the city of Ogre, Egils Helmanis, has been detained by corruption investigators, to decide on keeping him in office.

Trump, Macron willing to readmit Russia to G7, despite Crimea annexation

The leaders of France and the United States have expressed their backing to readmitting Russia to the G7 conference of world powers in 2020, despite Ukraine’s Crimea still being held by Moscow, CNN reports.

Latvian excise tax income up by 8% in first half of 2018

The Latvian excise tax income in the first half of 2019 has been 521 million euros, –an increase by 39 million euros, or 8.1% – compared to the respective period last year, showed data by the Latvian State Revenue Service.

Latvian PM: Most of freely available 2020 budget funds already earmarked

Discussing the 2020 Latvian national budget, Latvian prime minister Krišjānis Kariņš pointed out that its fiscal space is limited by previous decisions and that the expected losses of the Riga transport company will not permit raising wages and pensions nationally.

Corruption watchdog detains Ogre city mayor Helmanis

The Latvian Corruption Prevention and Combating Bureau has on Wednesday detained the mayor of central Latvian city of Ogre, Egils Helmanis, according to LETA news agency.

New members to Freeport of Riga Authority elected, despite criticism

The Riga City Council elected to the Board of the Freeport of Riga Authority, mayor Oļegs Burovs and councilman Sandris Bergmanis, despite heavy criticism of the latter for incompetence and lack of vision.

Italy loses government, coalition of right-wing, anti-establishment parties collapses

Italy has lost its government with Prime Minister Giuseppe Conte announcing resignation after the right-wing League party pushed for no-confidence motion to its own government.

Kaljulaid opposed to Estonian minister after police chief scandal

Alleging that Estonian Interior Minister Mart Helme has violated the law by trying to sack top police chief, Estonian President Kersti Kaljulaid has stated that the minister has no place in the government.

Planned Latvian economic cases’ court conceptually backed by government

The plan by the Latvian Ministry of Justice to establish a court of economic cases has on Tuesday, August 20, been supported by the Latvian Cabinet of Ministers.

Riga deputy mayor posts go to Harmony and independent politician

In the Riga City Council, deputy mayors have been elected with one post going to Anna Vladova from Harmony and the other – to Vadims Baraņņiks from the group of independent councilmen.

Latvia charges energy company executives for attempted fraud

Two board members of Latvian power company SIA Rīgas enerģija have been charged in a criminal case for an attempt to acquire with deceit the rights to supply electricity as part of the mandatory procurement component programme.

Consumer protection: 34% of Latvians admit post-vacation financial difficulties

During vacation, 77% of Latvians spend more money than planned, but 34% admit having trouble making ends meet after vacation, according to a poll by the Latvian Consumer Protection Centre.

Firms like Riga transport company to be banned from working with losses, minister says

As the European Union’s statisticians have classified the Riga municipal transport company Rīgas satiksme in the debt of the national budget, it is planned in Latvia to prohibit such companies from working with losses, Latvian Finance Minister Jānis Reirs has told LNT 900 sekundes programme.

Minor dies in large fire in Latvia

An underage person has been found dead in a large fire in the Latvian region of Vidzeme, the Latvian Fire and Rescue Service has said. Person wascsaved from burning house in Liepāja.

UK aims to end free entry of EU citizens on October 31

UK to stop free migration from European Union member states to the country right after the likely no-deal Brexit on October 31, the British government has stated.

Riga city elects new mayor – Oļegs Burovs – and restores decade-old coalition

The Riga City Council has elected Oļegs Burovs as the new mayor, ending two months of political discussions and restoring the coalition that has ruled in the Latvian capital for ten years.

EU: Rīgas satiksme cuts Latvian budget fiscal room in 2020 by 72 mln EUR

The Riga city company Rīgas satiksme should, according to European Union criteria, be in included in the general government sector, thus it would cut the fiscal space of the 2020 Latvian state budget by 72 million euros, Finance Ministry stated.