Two Chinese Construction Companies Approved to Work in Israel Disqualified

The Housing Ministry says the two firms failed due diligence checks made after permits were awarded in October.

Nimrod Bousso
Nimrod Bousso
Construction in Rishon Letzion, December 22, 2016.
A typical sight in Israel: Construction in Rishon Letzion, December 22, 2016.Credit: Ofer Vaknin
Nimrod Bousso
Nimrod Bousso

Two of the six foreign construction companies invited to Israel to help speed home construction were dropped from the list after they failed a due diligence test and have been replaced by two others, the Housing and Construction Ministry said earlier this week.

The two disqualified companies and their replacements are all Chinese. The two that were eliminated are Jiangsu First Construction Corporation, which scored second highest in the competition for the six slots awarded last October, and China Haushi Enterprise Company, the ministry said.

Longxin Construction and Jiangsu Shuntong Construction, which ranked seventh and eighth in the original scoring, will take their place, the ministry said. As a result, five of the six companies approved remain Chinese and the sixth one is Portugal’s Mota-Engil Engenharia e Construcao SA.

The government hopes the foreign builders, which were selected from about 49 applicants, will help solve a serious manpower shortage and bring advanced building technology to the country.

The government has been struggling to speed up the pace of construction and get more homes on the market to help stem soaring home prices. One obstacle is a severe shortage of trained workers for so-called “wet” construction such as plastering and concrete work. Very few Israelis have these skills. Another obstacle is backward building technology.

The Housing Ministry didn’t detail why the two companies were disqualified, but it said the due diligence process examined the reliability of the companies’ financial reports and past work they had completed.

Jiangsu First Construction is a closely held company based in Haimen City in Jiangsu Province that has won contracts in Algeria and Saudi Arabia as well as in China. It employs 12,000 people and has annual turnover of $1 billion.

Jiangsu Shuntong Construction, based in Jiangsu Province, has turnover of $1.4 billion and 18,600 employees including 200 engineers. It has done work in China, Singapore and the United Arab Emirates.

Under the rules of their permits, the six builders have to show they have each begun work on at least 100,000 square meters of construction by the second year they are in Israel, 150,000 in the third year and 250,000 in the fourth.

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