Over 100 projects put under review has affected investor confidence

Continuity of projects must be made legally binding

President of the Chamber of Construction Industry (CCI), Dr Surath Wickramasinghe says that one of the major concerns facing the construction industry today is the lack of Construction Industry Policy. Addressing a recent seminar organized by the National Chamber of Commerce of Sri Lanka, on the ‘Construction Industry and the Way Forward’, Wickramasinghe said the construction industry has taken off and has a sectoral growth rate of 22% and contributes almost 7 % to the island’s national growth.

“Consequently, with changes of Government we have found that Projects that have been awarded during the previous Government, the new Government suspends work to review the Project. In addition, the Developers have to suffer huge losses and even, need to retrench their Staff. This has definitely affected the confidence of the Developers/Investors, both Foreign and Local to the detriment of the Construction Industry. Furthermore, over 100 Projects are in the pipeline to get started. However, as a result of the above situation, they are reluctant to proceed and are holding on to their Projects until a stable Government is appointed,” the CCI President said.

Therefore, he said that to prevent recurrence of this type of situation, the Construction Industry Development Authority (CIDA) should take remedial action to advise their Ministers responsible for construction to bring in Legislation through Parliament, to make it legally binding to ensure continuity of Projects, when Governments change as this is the practice in most countries including India.

“The Government has a clear and transparent Policy on Procurement since January 2006. This document was signed by the President of Sri Lanka, stating that all State Agencies at all levels should follow the Procurement guidelines. Unfortunately, it is not being strictly followed and manipulated by some Government Agencies, due to political and other interests.

This is where the problem lies and immediate action should be taken by the Government to penalize such Agencies who do not follow this procedure. The Chamber of Construction Industry (CCI) are in a position to advise the National Procurement Agency regarding any improvements or modifications to this Policy document, if they so wish, as CCI has high caliber Professionals in their Membership,” Wickremasinghe said.

“The development initiatives of the Government are handled by the Board of Investment (BOI). However, this system lacks the power to take overall responsibility as in the past. Consequently, Projects take almost for 01 year to get approval, as they have to obtain approval from around 17 State Agencies. Furthermore, the Tax Holidays, Land Leases and other concessions called for by the Investors too have been withdrawn by the Treasury. This is due to the introduction of the Strategic Development Projects Act in 2008 removing the powers BOI enjoyed thus far.

Only the Mega Developments under it can now enjoy the facilities earlier offered by BOI. This is deterrent to Investor confidence as nearly 100 Projects are pending Approvals including its concessionary Agreements,” Wickremasinghe pointed.

He further said that since obtaining payment for work done by Consultants and Contractors are also a grave concern to the Construction Industry, it is vital to introduce a Payment Security Act similar to the Housing Grants and Construction Regeneration Act of UK.

“This is a long felt need to the Construction Industry in Sri Lanka. We earnestly believe that CIDA will take proactive action in establishing such an Act in Sri Lanka in the near future. Since CIDA will not have the necessary powers to implement such an Act. It is vital that a separate Ministry responsible for the Construction Industry been established, so that, these matters can be referred to this Ministry,” the CCI President said.