WOULD HALTING PARATE EXECUTION BE A RELIEF TO CONSTRUCTION INDUSTRY?

Since 2019, the construction industry has gone through a very difficult and destructive journey, declining from a 21 percent growth rate to almost completely cutting down our contribution to gross domestic product (GDP).

During this time, due to the halting of projects, stoppage of payment, ill-treatment from consultants and others, the construction industry became a very humble and pitiful industry. Other than a small percentage of culprits, servicing of loans, etc. became very difficult, even for the genuine contractors. This was not their fault, rather the fault of the government.

At this time, some banks treated these fallen contractors in almost inhumane ways, to the extent of taking up their personal homes. Considering this situation, the halting of the parate execution seems beneficial.

However, the Governor of the Central Bank and some leading bankers have mentioned that the wilful defaulters are taking advantage of this and in the future, no financial institutions will give loans or facilities, which limits the micro, small and mediumsized enterprises’ (MSME) access to finance.

One praiseworthy proposal is to improve the business revival units in the banks, which have already done a wonderful job by aiding the MSMES by resolving Rs.85 billion in debt. Another great decision is, if the low-interest loans are provided by foreign and donor agencies, who can be encouraged by the Central Bank, to support the construction industry. What is unfortunate is that, a US $ 100 million soft loan was ready for the relief of the construction industry and we are extremely saddened that this aid was shut down.

The Ceylon Institute of Builders (CIOB) proposes to engage a high-powered committee, which includes the private and public sector, so that financial aid, restructuring and survival programme can be done on a case-by-case basis

IF THE NONPERFORMING LOANS OF THE CONSTRUCTION INDUSTRY RISE TOO HIGH AND THE INDUSTRY IS LABELLED AS A VULNERABLE INDUSTRY, ALL OF US SHALL FAIL

for the burdened contractors.

The banks complain that the contractors use their financial support for other reasons such as personal luxuries. However, this is a very small group of contractors, who engage in such activities; it is precisely for this reason that such a high-powered committee can evaluate who should receive aid and who should not.

However, the view of the governor is very fair because 80 percent of the funding for the banks is from the depositors and without this, nothing can be achieved. Thus, the situation of the banks is also no laughing matter and people may often fail to see this because the concerns of the banks are often ignored by the public.

Therefore, the CIOB once more proposes that low-rate loans from foreign funding, a high-powered committee to evaluate the real situations and who/who not requires and has the capacity for financial support, fair distribution of construction work, creating a development bank for the industry, instead of the government bearing all the weight, are critical decisions.

If the nonperforming loans of the construction industry rise too high and the industry is labelled as a vulnerable industry, all of us shall fail. Therefore, we propose these actions as critical actions, so that the genuine and capable contractors and enterprises are not ruined and our industry can be a huge contributor to GDP of Sri Lanka.

(Dr. Rohan Karunaratne is President of the Ceylon Institute of Builders (CIOB))