May 11, 2009

Export Development Canada

Targeting development projects could pay off for Canadian companies, official says

VINCE VERSACE

staff writer

With increasing economic stimulus work being announced worldwide, there are international opportunities for Canadian construction through Multilateral Development Bank (MDB) funded projects.

“Canadian companies could benefit by targeting MDB-funded projects where they have a competitive advantage,” explained Marie-Claude Erian, sector advisor, infrastructure and environment, Export Development Canada (EDC).

In 2008 almost $100 million was awarded to Canadian companies that bid on contracts funded by MDBs such as the World Bank and the Asian Development Bank.

In the current business climate, taking on MDB-funded projects could be a good way to diversify the markets a company operates in, EDC said.

A recent EDC webinar explored how Canadian companies can position themselves to secure MDB-funded infrastructure contracts.

Representatives from the World Bank, Inter-American Development Bank, African Development Bank, Asian Development Bank and EDC all spoke during the webinar.

Erian explained Canadian companies have four areas of work opportunities where they appear very competitive in securing MDB-funded work.

These include: consulting contracts for MDBs directly, consulting and engineering services contracts for the borrower, smaller funded MDB projects with price tags of US$10 million or less for goods and services and sub-contracts to major foreign engineering and construction firms.

Canadian companies obtained 15 contracts worth $13.6 million last year through the African Development Bank alone, occupying top spot among countries dealing with that MDB.

Ezzeddine Cherni, trade commissioner and liaison with the African Development Bank, said Canadian companies are well positioned in securing consulting services contracts in Africa.

“The consultancy services are subdivided into pre-investment studies, detailed design studies, supervision and control of work implementation and technical assistance,” noted Cherni.

For the Asian Development Bank, its long-term strategic framework from 2008 to 2020 is focused on work concerning infrastructure, the environment, regional co-operation and integration, financial sector development and education.

The bank issued US$10.1 billion in loans and US$672.7 million in grants in 2007.

“Short contracts or joint initiatives are recommended for the first time a company decides to pursue a contract,” said Hiroyuki Maruyama, a senior procurement specialist with the Asian Development Bank.

“This will help gain the necessary experience for future contracts.”

Working with MDBs will require a letter of guarantee and EDC can provide a guarantee to a company’s bank, so its working capital is not impacted.

Credit insurance is also advised because it protects against the risk of not being paid under a specific contract.

EDC also recommends political risk insurance because it will protect a company from the inability of transferring or converting funds, as well as repatriating equipment, to perform a job.

Participation in an export-guarantee program will also help free up working capital for an MDB contract or any other export contract.

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