Local construction industry calls to trim foreign presence

Sri Lanka’s construction sector professionals recently called to cut down the number of foreign consultants, contractors and labourers employed in mega infrastructure projects taking place in the country, stressing the practice has proved detrimental to the local construction industry.

Terming the mega construction projects which include ports, highways and airports that are being undertaken by the government ‘futuristic’, Chamber of Construction Industry Sri Lanka (CCISL) President Surath Wickramasinghe grieved over the reluctance of authorities to allow local construction sector professionals to get involved in these projects.

According to Wickramasinghe, the CCISL has been appealing on a regular basis to the Treasury to include in their contracts with donor funding organisations a substantial portion of the work to the local construction industry.

“Unfortunately, t his never happens and as a result, most of the infrastructure projects are handled by the foreign counterpart at huge cost to the government. The irony of this matter is that when we check with the donor countries or multilateral development banks, they maintain that it is not their fault but that of the Treasury for not negotiating for the involvement of the local construction industry when funding is sourced for projects,” he noted.

According to Wickramasinghe, the local construction industry today possesses the advanced expertise in both consultancy and in contracting in several sectors such as roads, highway construction, irrigation, high-rise development and urban development projects.

Meanwhile, the CCISL President renewed the industry’s call for an Infrastructure Development Fund similar to the Infrastructure Development Fund in India and many other countries, where international funding institutions have helped to accelerate development of the physical infrastructure in their countries.

“Unfortunately, the Treasury is not thinking out of the box. They are still adopting old models of economic theory, which is ineffective in today’s technologically advanced world,” Wickramasinghe said.

The CCISL proposed the setting up of the fund during the presentations it made for Budget 2012.

The construction sector recorded a growth of 21.6 percent in 2012 compared to 14.2 percent in 2012, recording the highest growth registered by the sector for the past 10 years.

Sri Lanka has completed the construction of a new port in Hambantota, an airport in Mattala, an expressway connecting Colombo and Galle, a container terminal in Colombo, etc. A few more expressways are currently being constructed along with several other landmark commercial constructions in Colombo.

However, almost all of these were funded and constructed employing foreign designers, contractors and labour, mainly from China.

According to the latest Central Bank Annual Report, the private sector contributed to the growth in the sector particularly with hotel and housing construction activities.

The sector contributed to 8.1 percent of the overall GDP and 23.9 percent of the change in GDP growth from 2011 to 2012 becoming the growth driving sub sector in the industry sector.

As per the price index compiled by the Institute of Construction Training and Development (ICTAD), the cost of construction activities had increased by 12.2 percent during the year compared to the increase of 5.4 percent in 2011.