Local construction industry in collective effort to grab tenders from foreign giants

By Chandeepa Wettasinghe
The local construction industry stakeholders are hoping to collaborate with each other and receive state support to compete with the influx of foreign construction giants, as more Western Province Megapolis projects are tendered by the government.

“We need to have a consortium and bag those large constructions in our country,” Ceylon Institute of Builders (CIOB) President Dr. Rohan Karunaratne said last week, during the launch of a Hatton National Bank credit card for the CIOB members.

The CIOB launched its Master Builder programme, which would allow several local parties to form consortiums and pursue large construction projects.

Dr. Karunaratne noted that local construction firms are not able to compete with foreign entrants.
“With all this construction, we have ample opportunities, but ladies and gentlemen, it’s not the truth. It’s very hard to fight with those (foreign) companies. They have enough quantities of resources: financial, material and labour,” Dr. Karunaratne said.

He noted how Colombo’s solid waste incinerator project tenders under the Western Province Megapolis Project had been bagged by foreign parties recently.

Dr. Karunaratne said that the Port City, Western Province Megapolis Project, higher urbanization and increasing tourism arrivals would lead to higher demand for construction compared to the past couple of years.

“Sri Lanka’s construction sector has grown from 9 percent in 2009 to 21 percent—a very attractive figure compared to world construction rates, in 2012. But it had been brought to 12 percent now. But we are targeting double-digit growth in the next four to five years,” he said.

Construction slowed down in 2015 and 2016 due to government intervention into projects which were underway.

However, the construction and property development industries have come under increased scrutiny by the Treasury and Central Bank, for excessive credit being absorbed by these industries and fears that this would lead to a weakening of the country’s financial system.

The policymakers said that they are ready to introduce macroprudential measures to curtail credit to these industries, if required.

Meanwhile, Dr. Karunaratne said that the industry is lobbying the government to drive more business from foreigners to locals.

“We are discussing with the government. Even last week at the prime minister’s meeting, we requested 20 percent of the components of the foreign contracts to be given to local contractors,” he said.