‘Halting projects, non-settlement of dues will harm economy’
Government’s decision to stop local projects construction and the non-settlement of their dues will have a major negative impact on the economy, said President of Ceylon Institute of Builders Dr. Rohan Karunaratne at the Organization of Professionals Association AGM last week. Government debt to contractors is around 150 billion.
Dr. Karunaratne explained the consequences of stopping the construction industry which is one of the largest GDP contributors to the economy. With the potential of contributing over 300 billion to GDP (almost 10%) and over one million people being involved in the industry, ceasing construction projects has put the jobs of around 500,000 people at risk.
He said that over 5,000 contractors are in trouble, struggling to settle the OD amounts to their banks. Almost all the companies are using bank funds to complete construction projects as the government has stopped almost all the projects without settling their bills. An enormous portion of banks’ NPA of around Rs. 200 billion is made up of the construction industry. The construction supply chain is very lengthy and consists of around 4,000 SME sector companies.
Obstructing the construction industry has a detrimental effect on the economy and social systems, given that it nurtures and takes care of 3 hierarchical layers of people. The top layer is made up of top construction companies which strongly support the nation economically and socially. “They employ hundreds of thousands of people and provide them with all necessary benefits to them and their families as well as supporting their community by ventures like CSR programs like the construction of hospitals, to uplift the social lives of people.”
The second layer includes technical officers, supervisors, QS, draftsmen etc. “They too are given a substantive amount of social and financial benefits by the Construction Industry.”
Third layer is very important. It includes the skills and non-skilled workforce of Sri Lanka. These are some of the poorest people in the country, however contractors pay them high salaries which give them the ability to change their lifestyles entirely, educate children, buy new motor vehicles and such. All layers of society are left devastated when projects cease, therefore the construction industry requests government support to restart important and necessary projects in the country instead of awarding projects to construct pointless or avoidable buildings/structures with good governance and a transparent procurement system.
“This reduces the amount of money spent on construction and keeps the workforce and all the communities it supports alive, preventing massive and insurmountable social fallout.”