Ceylon Institute of Builders writes to Basil on ensuring infrastructure project continuity 

Finance Minister Basil Rajapaksa

CIOB President Dr. Rohan Karunaratne (left) and Vice President Ruwan De Silva

The Ceylon Institute of Builders (CIOB) has written to Finance Minister Basil Rajapaksa on the importance of continuing with key infrastructure projects.

The letter follows the recent Cabinet decision for cessation of Government procurement for infrastructure projects with immediate effect.

CIOB has opined the decision made is “not the way to relieve the country of its dangerous economic predicaments”.

This view is whilst CIOB acknowledges the enormous challenges faced by the country and the continual effort of the Government in steering the country through loan repayment challenges, the pandemic and numerous other national and international concerns.

CIOB says the concern regarding the construction industry’s use of imported materials and its heavy reciprocal impact on Sri Lanka’s foreign currency reserves may serve to be one reason that pushes officials to halt the industry in such a way.

“However, the answer lies in increasing the local production of these materials (and possibly pushing exports) and other novel measures, and not halting construction projects completely,” said the letter sent last week by CIOB President Dr. Rohan Karunaratne, with copies to State Minister of Rural Housing, Construction and Building Materials Indika Anuruddha Herath, Construction Industry Development Authority Chairman Eng. (Professor) N.T. Sohan Wijesekera, and Chamber of Construction Industry CEO and Secretary General Eng. Col. (Retd.) Nissanka N. Wijeratne.

The letter requested Minister Rajapaksa to consider the repercussions of the recent Cabinet decision, which the letter states as follows.

1. The Sri Lankan construction industry employs, directly and indirectly, one million people and, as of 2014, contributes 9.6% to the GDP. It is one of the sectors in the group that generates the second-highest employment opportunities in the economy (Department of Census and Statistics, 2018). Please understand that hundreds of thousands of people from material suppliers, manufacturers and sub-contractors down to the poorest labourer are affected by contractors. The finances and stability of the contractor trickle down to all levels of society and through various supply chains. Therefore, halting the industry harms all these systems and obstructs the daily survival of thousands of everyday workers.

2. The construction industry is one of the main cells in the chain of function that holds together Sri Lanka’s industries, workforce and economic systems. Halting Government procurement can hinder the activity and employment in these other sectors and break the smooth function of the country and its people.

3. Since 2015, the construction industry in Sri Lanka has been experiencing severe financial difficulties and cash flow problems due to government changes, terrorist attacks, COVID-19, etc. Amidst these, when many tenders for construction and infrastructure development were called by the Government from 2020 onwards, this gave us new hope and zeal to revive construction and thereby support the nation.

Upon hearing the news that there would be a halt to Government tenders of infrastructure and construction projects, the banks have again started tightening their position regarding facilities granted to construction companies. We once again fear that this will lead to further deterioration of our financial condition.

4. Furthermore many construction companies have invested substantially on human resources, machinery and money, in pursuing the tenders that have already been called. They have also incurred financial payments in arranging bank guarantees for the tenders. Cancelling these tenders, many of which are ready for awarding, will result in these companies incurring further losses.

“Our advice to the Government at this difficult moment in time is to discard any projects that are deemed to be unwanted/impractical and only allow projects that are necessary for the country. Hence, we kindly appeal to your good self to consider the enormous challenges that the construction industry is facing at this moment and consider altering this decision for the good of the Sri Lankan people and its industries,” the CIOB letter further emphasised.

It also assured Minister Rajapaksa of CIOB’s fullest support and cooperation in finding measures to relieve any issues that the Government may incur in fulfilling this critical request.