The construction industry which was hit by crisis after crisis starting from Easter Sunday attacks, Covid pandemic and the economic crisis is finally taking off, said Secretary General / CEO, Chamber of Construction Industry of Sri Lanka (CCI) Eng. Col. Nissanka N. Wijeratne (Retd).
He said that with the Sri Lanka economy returning back to near normalcy they see the construction sector too bouncing back. “This was very evident at the Build Sri Lanka Housing & Construction International Expo 2024 which concluded at BMICH where there were record numbers of stalls and huge industry participation.”
“In addition there was a special Chinese pavilion and the fact that foreign suppliers participated in it in large numbers shows that they too see a growth in the local construction industry.”
He also said though Sri Lanka construction cost is one of the highest in Asia, (only second to Singapore) some of the building material costs have come down and this argues well for the industry. “We see a around 30 to 40% drop in cement, steel and paints.”
He also said that with the government starting to pay back long overdue amounts to contractors, it has helped companies to look at setting some of their long overdue payments and also look at reinvesting.
Eng. Col. Nissanka also said that some of the suspended government sector projects in government offices, building of key bridges, schools have also started since 2023 February and this too helps the industry to grow.
He said that mini road projects will be starting but he does not expect highway projects to recommence.
Speaking about some negative sentiment he said that though the tourism sector is on a mega refurbishment drive this enthusiasm is not evident in the apartment segment.
The main reason for this is that VAT for the sector has gone up by 18% and this is added to the customer driving them away from investing in this segment.
He suggested that Sri Lanka should introduce ‘generation loans’ for youth where the payback is around 40 years which will entice youth to build their own homes.
The Secretary General/CEO said that the brain drain is a major issue for the industry as during the crisis periods over 350,000 staff migrated,started self-employment projects or changed their professions.
“Due to this the industry will have to import labour and even qualified staff. But this will see dollars draining out of the country.”
He also justified paying overseas staff higher salaries as their productivity is very high as against local staff whom he said takes regular leave citing various excuses like weddings, funerals and other engagements while foreign staff only takes ‘Sunday off’!
He suggested that new highway projects should only happen when Sri Lanka’s debt restructuring is completed and the country gets more FDI.
“I also think that large infrastructure projects should in the future be initiated as Public Private Partnerships. (PPP) “Though I don’t see viability in having a highway to Ratnapura, I strongly recommend that the Kadawatha to Mirigama strep should be connected urgently.”
He recalled that the internal rate of return (IRR) for the Colombo Katunayake and Colombo Galle highways was very high and constructing them was highly commendable. “Similarly the IRR for LRT train project, extension of the Kelani Valley Railway line and the expansion of the BIA too were very productive, but Sri Lanka never went ahead with them during that time.”
