‘Slow economic growth, main reason for current crisis in construction industry’

Senior Professor of Economics at the University of Colombo, Ranjith Bandara pointed out that the reason for the current crisis in Sri Lanka’s construction industry is the country’s slow economic growth.

He made these views at a panel discussion, themed ‘Way Forward For the Construction Industry Crisis in Sri Lanka,’ organized by the Ceylon Institute of Builders (CIOB) at the Organization of Professional Association of Sri Lanka (OPA) recently.

The other speakers at the panel discussion included Eng. Major Ranjith Gunatillake, President, Chamber of Construction Industry Sri Lanka (CCI SL), Ranjan Sibera, Director of Board of Investment (BOI), and Aravinda Perera, Managing Director of Rocell Ceramics Lanka.

The event was well attended and saw the participation of an impressive gathering of key stakeholders and professionals representing construction industry as well as various other industries. The panel discussion was moderated by Eng. Mevan Gunathilake. Kelani Cables (Pvt) Ltd, ESNA Allied Enterprises (Pvt) Ltd, Frigi Engineering (Pvt) Ltd and Nawaloka Construction (Pvt) Limited were the main sponsors of the event.

Prof. Bandara further stated that Sri Lanka’s current economic growth rate has dropped to 3.5% and not only the construction industry also other key industries have taken a fairly big hit due to economic slowdown.

Highlighting the reason behind hosting the event, President, CIOB, Dr. Rohan Karunaratne said, “The construction industry of the country is currently facing a huge crisis and its contribution to Gross Domestic Product (GDP) has come down to 6% from 10% in recent times. This clearly indicates that Sri Lanka is falling behind compared to its regional peers.”

“As a responsible organization, we at Ceylon Institute of Builders firmly believe that it is our duty to find proactive solutions to get the industry out of the current state. The main purpose of hosting this event is to get a clear understanding of the current status of construction industry in Sri Lanka and come up with solutions to redress the existing issues. We will then present our proposals to the authorities.”

Speaking at the event, President, CCI SL, Eng. Major Ranjith Gunathilake pointed out that dominance of large-scale foreign companies in Sri Lanka’s construction sector may bring about collapse of local companies.

He stressed that it is acceptable to allow such companies to operate in Sri Lanka with the hope of getting their expert knowledge and financial strength, but the government should give due recognition for local companies and come up with new guidelines and policies to protect the local companies from competition.

BOI Director Ranjan Sibera, speaking at the event said, “Construction cost per square foot in our country is very much higher than regional peers, due to high taxes, high raw material cost, Labor cost and waste, etc.”

He also said that foreign investors tend to pull out and invest in other countries in the region due to political instability in the country.

Aravinda Perera, Managing Director, Rocell Ceramics Lanka, pointed out that in light of the prevailing conditions in the industry, demand for construction materials has decreased and this will affect a number of suppliers, subcontractors in a big way.

The Ceylon Institute of Builders is an organization where a group of most illustrious construction professionals and builders of Sri Lanka advocate for the betterment of the construction industry.

Daily News link: http://www.dailynews.lk/2019/09/19/finance/197314/%E2%80%98slow-economic-growth-main-reason-current-crisis-construction-industry%E2%80%99

Daily FT link: http://www.ft.lk/business/Slow-economic-growth-cause-for-current-crisis-in-construction-industry-Prof-Ranjith-Bandara/34-685960