Effects
of corruption on the construction industry
Construction
industry accounts for one third of gross capital formation.
Governments have major roles as clients, regulators, owners of
construction companies. The industry is consistently ranked as one of
the most corrupt; large payments to gain or alter contracts and
circumvent regulations are common.
Where
government is the client, attempts to counter corruption need to
begin at the level of planning and budgeting. At the same time they
will need to be complimented by a range of other interventions
including publication of procurement documents, independent and
community oversight, physical audit, and public-private
anti-corruption partnerships.
Collusion
retard economic growth and development by diverting resources from
social-economic development activities into coffers of a few. It
discourages legitimate business investment, and reduces the public
resources available for the delivery of public goods and services
especially to the poor.
Construction
is a RMB$1.7trillion industry in China, amounting to between 5 to 7%
of GDP. It accounts for a significant part of gross capital formation
– a little under one-third.
Corruption
is essentially destructive of public interest. A consequence of
corruption is that it dramatically increases the cost of construction
by undermining competition.
Corruption
on residential projects means less middle and low income housing.
Corruption on industrial and commercial projects means higher
commercial rents, and therefore higher costs of goods and services.
Ultimately the high cost of construction makes investment in building
unattractive.
Corruption
affects health and welfare of people when it touches the quality of
construction i.e. when buildings fail to meet safety requirements
and specifications due to corruption and bribery in building
materials and workmanship or to bribery of public inspectors.
Collusion
amongst building inspectors brings the concept of monitoring into
disrepute. Moreover, some actions of building inspectors, such as
delaying payments to contractors and consultants, threaten the
sustainability of the construction industry and in particular, the
development of emerging contractors.
In
this regard,
corruption undermines the promise to deliver infrastructure and
empowerment to any nation. The bottom line of corrupt practices
(collusion, money laundering, price fixing and kickbacks in the
construction industry) is that construction costs increase and owners
and tenants are footing the bill.
In
general
it means that corruption undermines health and competition, retards
economic development, deprives buyers of goods and services of the
real benefits of a healthy economy, and takes away the good character
of individual and groups.
The
effects of corruption as “having a corrosive impact on market
opportunities and general business climate. It deters investment,
curbs economic growth and sustainable development, distorts prices
and undermines legal and judicial systems”.
Competent
and honest contractors fail to compete, causing them to withdraw
themselves from the market and the field is left for further
corruption while the industry falls into disrepute.
If
corruption would be stemmed at its root, then that way the socially
skilled will not lose their advantage to the socially inept. And the
real talents or image of good professionals
in the industry will improve which will benefit the countries in the
long run if China is to become top place in the world market in the
next 20 years
