Aug 19, 2015 (LBO) – Sri Lanka’s construction industry policy changes when governments change and this is a major concern facing the industry, a senior official said.
“With changes of government we have found that projects awarded during the previous regime are suspended and the new government reviews all the projects,” Surath Wickramasinghe, President of the Chamber of Construction Industry Sri Lanka, said.
“Over 100 projects are in the pipeline to get started, but as a result of this investors are reluctant to proceed with projects and are holding on,” he noted.
“In addition, the developers suffer huge losses and even need to retrench their staff, affecting the confidence of the developers and investors, both foreign and local.”
Wickramasinghe proposes passing new legislation to rectify this issue.
“To prevent recurrence of this type of situation, we should take remedial action to advise Ministers responsible for construction to bring in legislation through Parliament, to make it legally binding to ensure continuity of projects, when governments change,” he said.
“This is the practice in most countries including India.”
“Our objective is to ensure, that Sri Lanka’s construction industry in the future is competitive with our counterparts in South East and South Asia.”
The construction industry has been growing at the rate of 22 percent, and contributes 7 percent to the island’s Gross Domestic Product.
Sri Lanka’s government elected in January said that there are over 300 billion rupees of bills to be paid for unsolicited proposals and contracts without agreements for roads building.
In March an 85 million US dollar tender for a runway overlay and associated work at the Bandaranaike International Airport (BIA) awarded to Access Engineering was annulled by the government.
The development initiatives of the government are handled by the Board of Investment (BOI).
However, Wickramasinghe says this system lacks the power to take overall responsibility as in the past.
“Projects take almost one year to get approval, as they have to obtain approval from around 17 state agencies,”
“Tax holidays, land leases and other concessions called for by the investors too have been withdrawn by the Treasury due to the introduction of the Strategic Development Projects Act in 2008 removing the powers BOI enjoyed thus far.”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.”
Wickremesinghe was speaking at a recent seminar organized by the National Chamber of Commerce of Sri Lanka, on the “Construction Industry and the Way Forward”.