Chamber of Construction Industry welcomes tax cuts

The Chamber of Construction Industry lauded tax reductions within the sector, saying the measure was crucial for its survival.

“Although the announced tax cuts have no immediate impact on the construction industry, from July onwards its beneficial effects are expected as the lowered taxes will be effective from 1 April 2020. As such, it is a welcome move for the construction  industry,” said Eng. Nissanka  Wijeratne, former Secretary to the Ministry of Housing and Construction and the present Secretary General and CEO of the  Chamber of Construction Industry while addressing a seminar organised by CCI Sri Lanka on ‘Measures to Revive the Domestic Construction Industry’.

Wijeratne pointed out that the construction industry contributes 8% of the country’s GDP and as such the delay in outstanding payments to contractors and consultants for ongoing Government-sponsored projects in the last quarter of 2019 and first quarter of 2020 had threatened the survival of the industry. 

He also expressed optimism that following Parliamentary Elections due in April, normalcy would return to the political landscape and economy with a stable government in place. 

He further emphasised that there was a need for new regulations to safeguard the interests of the domestic construction industry against stiff competition from foreign constructors involved in foreign-funded projects that utilise the same machinery and manpower to undertake locally-financed projects despite legal limitations.

Central Bank of Sri Lanka Deputy Governor Mahinda Siriwardana outlined the current economic outlook and said the country’s external vulnerability was high due to foreign debt volume of $ 56 billion, which was around 62% of GDP in 2020. The consequent debt servicing obligations are estimated at $ 6 billion this year. However, with the stable monetary and fiscal policies expected after Parliamentary Elections, the fiscal deficit, currently at 6-7% of GDP, is hoped to be gradually reduced to 4% from 2020-2024. 

He also stressed that the CBSL was ever mindful of the important role played by the domestic construction community in the national economy.

Former Chief Justice and Attorney General Mohan Peiris underscored the need for speedy conflict resolution in the construction industry through arbitration among respective parties as provided for in the Construction Industry Development Authority Act, instead of litigation involving judicial procedures at high financial and time costs.

Project Director of the Western Region Planning Project and Aerocity Development Project Planner Lakshman Jayasekera stated that developing countries like Sri Lanka, although lacking the funding needed to launch development projects, were rich in assets and skills which could be successfully harnessed for development, without seeking foreign loans, by entering into strategic ventures based on public-private partnerships. While citing many examples from South and East Asian regions, he presented a list of projects identified as viable in Sri Lanka.

Former Secretary to the Ministry of Transport Eng. and Planner Nihal Somaweera contributed to the seminar by speaking on improvements to the railway network and investment potential while Sanken Overseas Ltd. Executive Director Eng. Mevan Gunatilleke spoke on the export of construction services. The Merchant Bank of Sri Lanka and CEYLEX Engineering Ltd. were sponsors of the event.