Construction sector :
The importance of rebuilding confidence among stakeholders
Over the past five years we have witnessed a huge transformation of
not only Colombo, but also several other cities in different parts of
The construction industry has been growing at the rate of 22 percent
and contributes seven percent to the GDP. Unfortunately, this has
declined slightly, hence it is necessary to re-build confidence among
the stakeholders of the construction industry, by ensuring continuity of
work so that acceleration will continue in the future.
After many representations by the Chamber of Construction Industry
and other stakeholders for more than a decade, the Construction Industry
Development Authority Act (CIDA) was set up last year. However, some of
the important features in the earlier draft Bill tabled in Parliament by
Dr Rajitha Senaratne in 2009 were not included in this Act.
Under this Act it is imperative to have a national construction
policy. To develop a national policy encompassing all the important
aspects, it is advisable to consult all stakeholders of the industry and
we will proactively participate in its formulation.
Today, one of the most crucial problems affecting major cities is
traffic congestion and pollution. The situation will get worse as we go
on. Therefore, we believe that the Government urgently implement the
proposed Bus Rapid Transit (BRT) system recommended in the Transport
Ministry's policy statement. Its implementation could be a
Public-Private Partnership (PPP).
The Inland Revenue Act, has not extended the incentive package given
to the Board of Investment from March 31, 2015. This is unfortunate and
many of the investors and developers are holding on to their projects
until this matter is resolved. This is causing a lot of damage to the
enthusiasm of developers.
There are concerns among investors and developers, that construction
costs in Sri Lanka are higher than that of some other Asian countries.
However, if the cost is to be reduced, the negative list issued by the
Treasury to the BOI, to protect local manufacturers has to be revisited.
However, the situation today is that some of the major items such as
steel bars, ceramicware, aluminium extrusions and carpets are cheaper in
the region. In this context, if the cess could be removed or reduced,
only for such materials, then the building costs can be proportionately
reduced, making our industry more competitive.
Unfortunately, today, projects have to obtain approvals from at least
17 agencies and the time taken to eventually obtain the building permit
will take about one or two years. This is a huge deterrent, which has to
be considered urgently by the authorities.
In this connection, the concept of a 'One-Stop-Shop' is a
pre-requisite. In the past, the BOI, took the leadership with the
backing of the Head of State, to discuss strategic projects once a
month, with the developers and investors so that bottlenecks could be
overcome and developers could fast track their projects.
For example, in Singapore, 30 golf courses including 13 international
courses and around 18 major multi-sports complexes are available. Sri
Lanka could at least promote seven golf courses and facilities for
multi-sports including indoor Stadia, within the Western Province.
This concept is possible since land is available bordering the Outer
Circular and other Expressways. The projects could be used by schools
and the public or exclusively private. It could be offered on a BOT
basis to local and foreign investors.
One of the major constraints facing the construction industry, is
executing agencies not following the published procurement procedure.
This is applicable not only for road projects, but, also for other
For example, the delay in the construction of the Northern
Expressway, is reportedly due to the relevant agency not following the
proper and appropriate procedure. The Chamber of Construction Industry (CCI)
is in a position to advise the National Procurement Agency regarding
appropriate procurement policy, since our membership includes high
calibre professionals in all sectors relating to the construction
We wish to support the previous policy decision, to award the
Northern Expressway contracts to local contractors, who have proved
their ability to construct expressways, and for which Letters of Intent
and awards have also been issued by the RDA.
Therefore, to 'fast track' the Northern Expressway project the
Government should re-constitute the procurement strategy to ensure the
contractors' ability to undertake a project of this magnitude.
This may be achieved, if the local contractors who have been selected
for individual packages, are called upon to form joint ventures (JV)
with other local contractors. Contractors have invested heavily on
machinery, equipment and also manpower resources, to undertake the
projects. Hence, they will suffer financial and other losses if the
project is stalled at this stage.
Our Chamber is in a position to facilitate this project for the
Government by negotiating a equitable solution for the benefit of all
stakeholders. The shortage of skills is another reason why the cost of
construction is high. This has been caused by skilled personnel leaving
Sri Lanka for better prospects overseas. This is a major problem facing
the construction industry.
Unfortunately, the number of young school-leavers, joining the
industry, is marginal, despite the opportunities in the construction
industry being more remunerative and challenging and also the chance to
work with new technology.
Several government agencies are training the young, but are unable to
meet the demand.
The variety of jobs on offer are immense and the industry looks for
trainees from all parts of Sri Lanka, including the North and the East
for on the job training opportunities as fabricators, welders, crane
operators, electricians, plumbers, masons, glaziers and refrigeration
and airconditioning technicians.
The writer is the President of the Chamber of Construction Industry.