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Surath Wickramasinghe, President Chamber of Construction Industry explains the way forward for the construction industry to get over the present doldrums.

The Sri Lankan economy showed minus growth in 2001 due to seven years of stagnation and the construction industry was in a perilous condition. During the last nine months, under the tenure of the UNF Government, the prospects for the industry have not improved.

During the first few months after the peace talks, the construction industry took a positive turn and was almost on the threshold of an economic boom with the peace dividend. This may not be possible now due to the current political crisis and uncertainty about the future. Once again, investors will be on hold and the decision-making process of both political and bureaucratic systems will slow down. This will once again put the clock back and reverse whatever little progress that has taken place up to now.

Under these circumstances, investors are cautious to invest in Sri Lanka due to lack of confidence in the Government's stability. Investment promotions of the Government have also not achieved the desired results. Consequently, the industry is currently facing severe hardships from the spiralling downturn in projects and in its real output. Many firms are therefore unable to meet staff wages and even pay the loan repayments to banks.

This situation has been compounded by the non-payment of dues to industry members by State authorities while banks heap penal interest on the dues outstanding, and also resort to legal action. If this situation prevails, the local construction industry will have to curtail operations further, resulting in at least a million people being unemployed.

This situation is similar to the one faced by the tourist industry sometime back. The Government then rescued it by adopting policy measures which allowed the banks to temporarily freeze dues from loss-making establishments. The sector was thus able to survive and to subsequently revive and contribute to the economy.

The Chamber of Construction Industry, Sri Lanka (CCI) has determined from all available indicators, that the Government should urgently intervene in a similar way to arrange with the banks to freeze all dues, comprising capital and interests, for one year. This should include a request to the banks to refrain from taking legal action during this period.

To counter this problem, we appealed to the Government to identify and prioritise at least three or four mega projects to 'kick start' the industry - a matter on which upto date no decision has been taken. If this decision is taken, the whole industry will move forward and will be a catalyst to activate services, manufacturing and other sectors in the industry to be mobilised to accelerate economic development. This is the paradigm adopted by most developing countries and the most effective way of attracting foreign investment.

To prevent further damage to the industry, we believe the following projects should commence immediately:

The Southern Highway, which has been ready for implementation for nearly two years, could commence work, especially since the consultants and contractors have been selected and as the funding mechanism is in place. If this project takes off, at least 2,000 to 3,000 persons would find employment; The Kotmale Power Project, where the money is available and is ready for implementation; The expansion of the only international airport should commence immediately on a priority basis; The expansion of the Port and connected facilities.

If not, regional ports, particularly in India, with their expansion plans, will become more attractive to the detriment of the Colombo Port.

Many foreign-funded projects allied to the construction industry are on hold due to non-availability of local counterpart funds.

These projects could be offered to the private sector and implemented through public-private partnerships. If not, the funds may be withdrawn to the detriment of the industry and the country.

Super highway construction is another urgent priority and is a prerequisite for rapid development. Now that the Southern Highway is becoming a reality, the Chamber is promoting as a priority the North-East Highway, a single highway serving several important locations. The North-East Highway from Colombo will have links to the Katunayake Airport, Kandy and Kurunegala and at Habarana a link to Anuradhapura and Jaffna to the North and Batticaloa and Trincomalee to the East and North East. This project could be parcelled in to several sub-projects similar to the Mahaweli Development Project concept by assigning sections of the highway to donor countries.

Alternatively, the public sector along with private sector highway engineers could get this project moving. If the Government intends to speed up the development process and achieve its goals and targets when public finances are in dire straits, public and private partnerships is the magic word. The CCI can coordinate this work.

Urban regeneration is another important sector where the Government could facilitate the implementation of at least one or two mega projects. This could be achieved by motivating the private sector to undertake projects involving slum clearance and warehouse relocation and free prime land in the city by relocating these on alternative land. This way we could transform cities with no cost to the public purse. Due to bureaucratic delays and lack of commitment and interest and their unbending nature to accept new concepts for development, the Government has not been able to seize the moment.

North and East reconstruction and rehabilitation is another priority. Several agencies are involved with work. Multi-lateral and donor funding has already been received or have been pledged to the Government.

However, the process of implementation has not yet been defined. Public sector organisations connected with rehabilitation and reconstruction work particularly in the provinces are very protective and reluctant to delegate work to the private sector. Due to this attitude and lack of coordination, duplication of work and enormous delays occur while the would-be recipients continue to suffer.

Since there is much work to be done, planning and designing should commence immediately if implementation is to be done within the next five to six months. The industry could be mobilised to undertake this work immediately. The CCI can initiate and coordinate this work with the Government and donor agencies and ensure that the project is implemented speedily to the required standards.

In the past, policy makers and bureaucrats took decisions independently with no coordination. The right decisions are often not taken and consequently nothing gets completed. The country cannot afford to waste scarce financial resources at the expense of medicare, education and other social and infrastructure needs of the people. The Government should therefore, have confidence in the CCI and obtain advice on construction related projects.

The CCI comprises consultants in various fields and contractors specialising in a range of areas. It has the technical expertise in different disciplines from valuation, quantity surveying, surveying, architecture, planning, designing of projects ranging from irrigation to building construction and infrastructure development. The Government should make use of these resources to implement its development programme. Sri Lanka faces a national emergency and a financial crisis.

The CCI is of the view that the President, Prime Minister and all political parties should collectively agree on a policy of 'Sri Lanka first', with a common national development agenda. It can assist the Government to identify priorities in the construction industry.

If Sri Lanka is to progress and move forward rapidly, all elected governments should ensure the implementation of this agenda and any additions included thereafter as national priority projects. This is the only sensible and pragmatic way forward.

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