Construction industry calls on govt. to prioritise sector once normalcy established

• Wants restrain processes causing unnecessary delays 
• Calls for shorter construction approval cycles
• Urges need to look at protecting domestic players

By Shabiya Ali Ahlam
In a bid to assist the revival of the construction sector that has been badly hit by the economic woos induced by the coronavirus, the industry has called on the government to prioritise kick starting the construction projects no sooner some normalcy is established and urged the need to restrain the processes that lead to 
unnecessary delays.

Acknowledging that the economic depression will be worse in 2Q20, the Chamber of Construction Industry of Sri Lanka (CCI) has proposed a series of measures the government should take to assist the sector, to steer through the challenges ahead.

“In most countries the performance of the construction sector is often considered the barometer of economic development. 

It is important to note that globally the highest bankruptcy rates are seen in the construction sector due to the many variables faced. As such, it is of paramount importance to safeguard the industry,” the CCI said.

In the list of measures that has been put forward to the government, the CCI firstly stressed the need to accelerate the donor-funded projects.

It proposed that an effective way to do so is to shorten the payment cycle to contractors by paying up to 90 percent of monthly progress bills, without waiting for detailed checking with measurements.

Alongside recommencing the projects that were already initiated but stalled in the last few months, due to the curfew imposed to contain the pandemic, the chamber said it is imperative to encourage investors, as stated in the president’s manifesto and reduce the time taken for planning approval to two weeks.Currently, this activity takes over 12 months. To cut delays, the CCI proposed to appoint a committee, which should meet on a weekly basis, chaired by a senior construction professional, preferably at the level of advisor to the president. 

It also suggested that the same advisor to the president should be tasked to monitor and coordinate the infrastructure projects and foreign direct investment (FDI) to facilitate smoother implementation and avoid issues impeding progress.

Further, the CCI requested the government to consider granting special incentives to investment projects over Rs.1 billion, if contracts are signed before the end of this year and minimum 70 percent, if the investment is from overseas. 

It stressed that the incentives could include total duty and tax-free imports for all project items and income tax exemption for a reasonable period. 

“Construction, if undertaken by a foreign company, it should have a joint venture (JV) for at least 40 percent of value of contract with a local construction contractor with adequate registration with the CIDA. Similar arrangement should be in place for the consultancy component as well,” the CCI said.

Lastly, the CCI stressed the need to protect the domestic construction contractors and consultants and to do so, the chamber stressed the government must ensure that all projects with the majority local funds and costing less than Rs.10 billion are undertaken only by Sri Lankan-owned companies.

The construction sector contributes to about 8 percent of Sri Lanka GDP and provides employment (direct and indirect) to over 950,000 persons.