Access Group Chairman Sumal Perera flanked by Managing Director Christopher Joshua being presented a memento by Colombo Stock Exchange Chairman Vajira Kulatilaka and CEO Rajeeva Bandaranaike
Pic by Kithsiri de Mel
By Chandeepa Wettasinghe
Sri Lanka is about to enter into a medium-term construction boom due to the past delays and despite the challenges the industry will be facing over the coming year, a leading construction and real estate company said yesterday.
“The construction sector will have a big boom over the next four to five years,” Access Engineering PLC Chairman Sumal Perera said after he ceremoniously opened market trading yesterday at the Colombo Stock Exchange.
He noted that though the civil war ended in 2009, there was a long gestation period for construction projects due to delays in getting state approvals, which had left a lot of capital unutilized.
“(After) getting all the necessary state approvals, you will notice here in Colombo that all the tower frames and buildings are coming now, only five to six years later. So we believe that the industry is poised for a big growth phase for the next five to six years,” Perera added.
Access Engineering Managing Director Christopher Joshua noted that though the company has just completed a construction project in Papua New Guinea and there are encouraging prospects in its recent expansion into Djibouti, the company will mainly focus on local operations.
“There were even some projects in the Maldives that we were asked to participate in but there are a lot of opportunities here still,” he said.
He added that the resumption of the Central Expressway construction, the decisions to go ahead with the construction of elevated highways and the Port City, increased private sector infrastructure needs and renewed interest coming from China show the opportunities available in the island.
Sri Lanka’s economic growth during the past administration had centred on a debt-fuelled infrastructure development drive, with China becoming involved on many projects, both in construction and with financing, which the new government had criticized for being too costly.
Joshua said that the main limiting factor for increased growth would be the lack of skilled labour for construction.
Meanwhile, Perera said that with the tax increases spelt out in the budget, the company will have challenges going ahead.
“We have some challenges in the way of the last budget increasing the corporate tax from 12 percent to 28 percent and some other indirect taxes coming up. We believe that we’re coming in for a high tax, high interest rate era,” he said.
However, he noted that the situation did not come as a shock, since the government had informed them of the decision ahead of time and that Access Engineering will be able to play on its strengths to continue its successive journey.
Perera added that the decision to introduce the Financial Transaction Levy and the Capital Gains Tax to reduce the likelihood of the creation of asset bubbles is welcome from a personal standpoint since it discourages gains for high-net-worth individuals, while Joshua noted that from a business standpoint, creating a level playing field is always welcome.
Access Engineering has a land bank centred mainly in Malabe and had in the past let known its intentions to further develop its real estate business.