Govt. innovates to revitalise sluggish construction sector

• Budget 2024 proposes new “experiment” to support the industry

 The government has embarked on an innovative approach to bring out the depressed construction sector from its current plight with President Ranil Wickremesinghe announcing that a new “experiment” will be conducted to support the industry.
As per the proposals outlined for the sector in the budget 2024 speech, Wickremesinghe said the government agencies will provide free lands where construction companies would be allowed to erect buildings according to the plans of the respective government agencies.

“After construction, the institutions will have to pay a monthly rent to the construction company. Upon recovering the construction cost and receiving corresponding dividends, the full ownership of the building will be handed over to the government agency,” said Wickremesinghe.
The construction of the new building complex of the Ministry of Foreign Affairs has been selected as a pilot project under the new proposal.
Further, plans are afoot to implement a new programme which is aimed at uplifting the living conditions of people living in urban estate housing in Colombo and the development of the construction sector. For this, the construction industry will be given the responsibility of building large houses and shopping malls in urban estates in Colombo city.

“We will give those lands to them for free. The only condition they will have to fulfill is to provide new houses to the people residing in that estate. “If these families ask for houses in that housing complex, they should be given a house in these urban estates. If these families ask for houses in another place, the construction company should fulfill that request,” said Wickremesinghe.
Up until August 2023, Sri Lanka’s construction sector continued to show constrained performance, however, it did move towards the neutral threshold according to the construction Purchasing Managers’ Index (PMI).
According to the most recent construction PMI survey results published by the Statistics Department of the Central Bank, respondents highlighted that companies often reduce prices in order to secure the limited projects available in a fiercely competitive tender bidding process.
Nevertheless, the sentiment among the firms is positive on the outcome towards the end of the year due to the expected recovery in the economy.