CIOB urges CBSL, funding agencies and banks to revive construction sector

• Govt. owes over Rs. 200 b to contractors; unilaterally halts State-funded projects
• Ceylon Institute of Builders claims 650,000 have lost employment
• Cites import restrictions, high cost of locally made material; rupee depreciation and high interest rates among other reasons for crisis

The Ceylon Institute of Builders (CIOB) is calling on the Central Bank, multilateral funding agencies and the banks to come together to discuss and revive the crisis-hit construction sector putting thousands of people out of livelihoods.

Aimed at realising this objective, CIOB will hold a multi-stakeholder forum tomorrow at the Sri Lanka Foundation Institute, Colombo 7 from 4:30 p.m. to 6:30 p.m.

To revive the construction sector, CIOB has made three recommendations. They are:

1. Give soft loans to contractors to service existing loans partly, so that their credibility can be re-established. Such provisions will provide them with the ability to restructure their loans

2. Identify the most value-added projects to the country which are being partly completed and complete them. Such revivals will create an interest in the construction industry

3. To retrain and certify skilled workers so that they can secure overseas employment. To provide relief to unemployed construction workers, it would be beneficial to retrain them with an internationally accepted certification so that subsequent foreign employment could be secured. This would also have the additional benefit of bringing badly needed foreign exchange to Sri Lanka through their remittances

CIOB said the Construction Industry is one of the largest industries in Sri Lanka. In 2016, it contributed 9.6 % to the GDP. Nearly 2.6 million stake holders including architects, engineers, contractors, suppliers, quantity surveyors and manufacturers depend solely on the industry. The industry and its contribution to the GDP has since then fallen to a range below inflation.

Due to the inadequacy of locally manufactured materials, the currency crunch has forced small, medium and large-scale stakeholders to a standstill due to their high dependence on imported materials. This has led to the unemployment of 650,000 direct workers (many being from the poorest classes of society) and copious small, medium and large contractors to face bankruptcy.

This decision obliterates the development of the construction industry and halts the built environment of Sri Lanka. 

A key reason for this being that banks have no way of funding due to high interest rates, in spite of the fact that the Government owes above Rs. 200 billion to contractors and the Government unilaterally decided to put a hold on the construction industry. Since the majority of contractors have forcibly defaulted to banks due to the aforementioned reasons, any further lending by banks is not viable.

At the seminar keynote address will be delivered by CBSL Governor Dr. Nandalal Weerasinghe, Prof. Chitra Weddikkara and Ch. QS. Lalith Ratnayake and will be the resource persons. Participants from the banking sector and donor agencies, all sectors from the construction industry including trade chambers, major and specialist contractors, professional organisations representing engineers, architects, quantity surveyors, consultants and all other stakeholders of the construction industry will be joining the event. Contact CIOB on 0112 508139 or [email protected] for participation.