Daily Mirror (Sri Lanka) - - CONSTRUCTI­ON / REAL ESTATE - By Shabiya Ali Ah­lam

The con­struc­tion sec­tor has an im­por­tant role to play in the de­vel­op­ment of the econ­omy and keep­ing it ac­tive is vi­tal for the achievemen­t of so­cio-eco­nomic de­vel­op­ment goals of pro­vid­ing shelter, in­fra­struc­ture and em­ploy­ment. Thus it goes with­out say­ing the in­dus­try is vi­tal for the con­tin­ued growth of the econ­omy. Sri Lanka’s con­struc­tion space is as­pir­ing, but ac­cord­ing to its stake­hold­ers, the in­dus­try is plagued by low con­struc­tion vol­ume, skilled worker short­age, high con­struc­tion costs, and un­equal com­pe­ti­tion from for­eign con­trac­tors. The sec­tor came un­der fire overnight fol­low­ing the Easter Sun­day ter­ror at­tacks that brought the en­tire coun­try to an al­most stag­nant state. The sen­ti­ments and pre­cau­tions that fol­lowed the shock­ing event that took place on April 21, 2019, are ob­served to be dras­ti­cally crip­pling the con­struc­tion sec­tor, and brought about a whole new set of is­sues. Mir­ror Busi­ness re­cently sat down with the Cham­ber of Con­struc­tion In­dus­tries (CCI) Sec­re­tary Gen­eral and CEO Eng. Col. Nis­sanka N. Wi­jer­atne to gain some clar­ity on the sta­tus of the in­dus­try given the re­cent events. Dur­ing the interview, Wi­jer­atne pointed out the sen­ti­ments, chal­lenges and as­sis­tance sought to help sus­tain ac­tiv­i­ties. Fail­ing which, the en­tire econ­omy would feel the neg­a­tive spillover ef­fects in time to come. Fol­low­ing are the ex­cerpts from the interview. What is the cur­rent sen­ti­ment in the con­struc­tion sec­tor?

Very bad. It is a cul­mi­na­tion of sev­eral events start­ing from Oc­to­ber 2018 where the po­lit­i­cal in­sta­bil­ity led to a set­back on what­ever de­vel­op­ments that were putting the in­dus­try on the path of re­cov­ery. Then came the Easter Sun­day ter­ror at­tacks.

Af­ter Oc­to­ber there were many de­lays in pay­ments es­pe­cially pub­lic sec­tor for gov­ern­ment con­tracts. Those pay­ments were made only in march. The gov­ern­ment paid about Rs.80 bil­lion but still ac­cord­ing to the Fi­nance Min­istry about Rs.30 bil­lion is out­stand­ing. How­ever, ac­cord­ing to con­trac­tors it’s more than that. The Rs.30 bil­lion is of the cer­ti­fied ones that came to the Fi­nance Min­istry. Due to the fre­quent oc­cur­ring of is­sues, many cer­tifi­cates were held up and haven’t been pro­cessed.

With this cur­rent sce­nario the in­vestors will think twice and those who have al­ready kicked off are al­ready wit­ness­ing a damp as they are un­aware what lays in the fu­ture, es­pe­cially pri­vate sec­tor de­vel­op­ers. There will be a lull pe­ they say, tourism will take about eight months to re­cover, the con­struc­tion will take longer.

What is the im­me­di­ate hit?

In this sit­u­a­tion what could hap­pen is many com­pa­nies could go bank­rupt. Ar­chi­tects and engi­neers pass­ing out from uni­ver­si­ties, and those fol­low­ing vo­ca­tional train­ing cour­ses will not find em­ploy­ment as projects are un­able to progress. There will not be enough work load.

We have had meet­ings with the min­istry and rel­e­vant au­thor­i­ties, un­less the gov­ern­ment does some­thing to jump start the econ­omy, there will be a se­ri­ous prob­lem.

We need an in­no­va­tive ap­proach. Like what For­mer Pres­i­dent Ranas­inghep­re­madasa ini­ti­ated at the time, the 200 gar­ment fac­tory pro­gramme within three months, where each em­ployed 500 peo­ple. We need some­thing sim­i­lar.

There is also the is­sue of mak­ing avail­able com­mer­cial ex­plo­sives. The sup­ply of ex­plo­sives for quar­ry­ing has stopped com­pletely. Crusher op­er­a­tors have com­plained to us that the stock has run out and they are un­able to carry out any work go­ing for­ward. Even dur­ing the height of the war with the LTTE, com­mer­cial ex­plo­sives were made avail­able un­der strict mon­i­tor­ing where a re­quest would have to be made to the au­thor­i­ties in writ­ing be­fore­hand and the blast­ing would take place in the pres­ence of armed forces.

We un­der­stand that there is a sit­u­a­tion at hand and that un­wanted par­ties want to get their hands on such el­e­ments, we don’t want that, but a sys­tem is nec­es­sary. We have to be cau­tious but we need to get things go­ing. The gov­ern­ment has to take some mea­sures to pro­mote de­vel­op­ment and keep it go­ing. They need to be more proac­tive in their ef­forts.

The tourism sec­tor col­lec­tively re­quested for con­ces­sions to pre­vent fur­ther bleeding. Is the con­struc­tion sec­tor, that is sim­i­larly im­pacted, re­quest­ing for re­lief along these lines?

Our pro­cesses are ham­pered, al­most all of it. The gov­ern­ment should think of giv­ing con­ces­sions for the con­struc­tion sec­tor to help ease off the liq­uid­ity prob­lems of the con­trac­tors. One mea­sure sug­gested is to freeze the cap­i­tal-land in­ter­est pay­ment on all loans and over drafts (ODS) taken by con­trac­tors for at least six to 12 months so they are given some breathing space.

To ease the work­ing cap­i­tal prob­lem, we sug­gested the gov­ern­ment to look at ex­tend­ing a soft loan at a re­duced in­ter­est rate of eight per­cent that is re­payable over a pe­riod of eight years. The amount of loan can be con­sid­ered as 15 per­cent of the an­nual turnover dur­ing the last three years. This will help iron out is­sues to a cer­tain ex­tent.

Is the gov­ern­ment be­ing proac­tive enough in sup­port­ing in­dus­tries, es­pe­cially at a time where the coun­try could be caught in the mid­dle income trap? Could they be speed­ier in iden­ti­fy­ing is­sues faced by in­dus­tries and pro­vid­ing re­al­is­tic solutions?

Def­i­nitely, they cer­tainly could. The gov­ern­ment has to take some mea­sures to pro­mote de­vel­op­ment. For­eign di­rect investment­s (FDIS) will take few months to come in so im­me­di­ately the gov­ern­ment will have to start some projects with loans to re­ac­ti­vate the econ­omy. We need to keep ac­tive. They need to bor­row and start some use­ful projects. Ear­lier the is­sue was that the projects that kicked off weren’t pay­ing. They need to be smart about it and have the econ­omy ac­tive. They could start with ren­o­vat­ing the old ir­ri­ga­tion tanks, the re­turns would be faster.

The con­struc­tion sec­tor was ex­pect­ing an im­prove­ment in growth rate start­ing 2019, how has that changed now?

We were ex­pect­ing a nine per­cent growth. Now it is dif­fi­cult to say. It most likely will be neg­a­tive ac­tu­ally.

What are the chal­lenges that have sur­faced af­ter the Easter Sun­day Ter­ror at­tacks?

The chal­lenge is to keep afloat in this sit­u­a­tion. At nor­mal times we ex­pect to ex­pand and grow in some way, but now that is chal­leng­ing.

Now it’s about manag­ing to sus­tain. Un­less we grow we won’t be able to find em­ploy­ment for the new peo­ple. The con­struc­tion sec­tor pro­vides em­ploy­ment for ap­prox­i­mately 600,000 per­sons and pro­vides new em­ploy­ment for about 3,000 in­di­vid­u­als per year.this was not con­sid­ered enough when we look at the pro­jected work­load.

We needed about one mil­lion work­forces for about four years. But now all things have changed. Are the chal­lenges re­gion/ dis­trict spe­cific?

Not en­tirely. Its com­mon is­land­wide and the im­pact to the con­struc­tion sec­tor is felt across the coun­try. The slow de­ci­sion mak­ing by the gov­ern­ment is hav­ing the en­tire space af­fected.

Is the con­struc­tion sec­tor hav­ing a con­ver­sa­tion with the gov­ern­ment?

We have and we are. We are wait­ing for some solution for the con­cerns we have ex­pressed. They are try­ing.

What is the sta­tus of the on­go­ing projects around Colombo 03, where luxury ho­tels came un­der at­tack?

On­go­ing projects have restarted, no is­sues there. Some are how­ever go­ing at a slower pace. It is un­likely to be stopped since they have al­ready taken off.

What is the mes­sage you have for the gov­ern­ment and the con­struc­tion sec­tor stake­hold­ers?

Per­for­mance of the con­struc­tion in­dus­try is con­sid­ered the barom­e­ter of the econ­omy. If the econ­omy is go­ing down, it is first felt by the con­struc­tion sec­tor. The im­me­di­ate ac­tion the gov­ern­ment has to take is giv­ing a boost to the sec­tor.

For the stake­hold­ers we would like say that we have re­quested for a soft pack­age to help cope.

Per­for­mance of the con­struc­tion in­dus­try is con­sid­ered the barom­e­ter of the econ­omy. If the econ­omy is go­ing down, it is first felt by the con­struc­tion sec­tor. The im­me­di­ate ac­tion the gov­ern­ment has to take is giv­ing a boost to the sec­tor

CCI Sec­re­tary Gen­eral and CEO Eng. Col. Nis­sanka N. Wi­jer­atne Pic by Damith Wickramasi­nghe

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