Implement recommendations of Presidential Committee -CCI
No action has been taken yet on the report with 50 action points which was finalized on May 18, 2023 by the Presidential Committee for the Revival of Construction Industry chaired by Chief of Staff of the President Sagala Ratnayaka and comprised 28 members representing all sectors of the construction industry and line ministries last February, alleged Eng. Nissanka N. Wijeratne, Secretary General, CEO Chamber of Construction Industry of Sri Lanka (CCI) addressing the 19th AGM held in Colombo recently.
“This report contained valuable suggestions to restart suspended foreign funded projects with a total value of US$ 3,000 million and earn an income of US$ 1.5 billion by 2025 from the export of construction services. Also, it made valid proposals to attract foreign investors by improving the Ease of Doing Business index,” he told the audience. In the present economic scenario the way forward will be to attract more foreign and local investments and increase export of construction services.
“To attract foreign investments it is essential to establish rule of law, drastically reduce corruption and improve on Ease of Doing Business Index. However still we are nowhere near this condition. To increase exports it is imperative to remove bottlenecks as stated in the committee report. As the apex representative body of the construction industry the Chamber will continue to lobby to achieve these,” Wijeratne said.
In 2022 the construction industry had to suffer contractions repeatedly in every quarter, in percentages more than the slump in GDP. It is to be noted that the construction industry shrunk by 20.9% on average over the year 2022 whereas the GDP shrunk by 7.8%. This was followed by the largest ever slump of the construction industry by 38.3% in 1Q 2023 with the economy shrinking by 11.5%.Prior to this period of shock, the construction sector had to contract by 13.2% in 2020 with the economy shrinking by 3.6%. In 2021 there was a marginal growth of 0.8% from the low level the sector fell in 2020. From the above it is clearly seen that the construction sector only progressed downwards since the beginning of 2020. Even though the government authorities seem reluctant to consider, the construction sector is the worst affected sector now, he said.
Apart from the economic recession the factors that caused this predicament can be summarized as the Covid -19 lockdowns, the suspension of Government capital work from March 2022, rupee devaluation, import restrictions, high bank interest rates and high cost of materials. The net outcome of this is the loss of employment to about 500,000 engaged in the construction industry and allied manufacturing and supply companies, ranging for professionals, middle level technical officers and other staff and construction workers. Most of these employees are seeking to migrate overseas. The stand of the Government is that the capital projects could be started only in 2015. But the situation is that by then there may not be an effective local construction industry left, Wijeratne cautioned.
“Then even for small projects the Government may have to invite foreign companies which will aggravate the flight of foreign exchange,” he added.