Due to the economic crisis and other issues, over US$ 3 billion worth donor funded projects are on hold in Sri Lanka, disclosed Secretary General CEO Chamber of Construction Industry Sri Lanka, Nissanka Wijeratne.
He said that this includes nearly 100 donor funded projects and requested the government to mediate to restart them soon. “In addition there are also locally funded projects that were suspended after reaching 70% completion.”
He said that this and due these and many negative events in the past, the construction industry suffered repeated contractions from March 2020 to date creating a major negative impact to the industry with some companies shutting down or downsizing and over 200,000 losing employment.
“We as the Chamber have drafted a set of proposals and have forwarded it to the government and expect some of them to be implanted in the next budget.”
He said that they suggested introducing the scheme to offer housing loans to first time home builders at a concessionary interest rate of 5-6% with a payback period of 40 years. This is common in the Western world and is termed, ‘2 generation loans’. The CCI has also suggested that ‘property development’ projects should be exempted from VAT as otherwise it will become a cost to the buyers further increasing the already high property values.
“Implement the Golden Paradise Visa with a lower threshold of US$ 100,000, paid through a bank to invest on an apartment, allowing 5-year residency.” Establishing a Development Bank with stakes given to other willing banks also would be a move to kick start the construction industry in supporting new development projects. The CCI has also suggested adopting the PPP model to develop state lands, based on income sharing at the time of sale of developed units based on an agreed formula, rather than requesting land value upfront. He said that very often there are construction contract delays on receiving payments for work done.
“To mitigate this to some extent the government must allow taxes including VAT in the construction industry to be computed on cash received basis as opposed to accrued basis.”
In the past this was allowed to construction (contracting & consultancy) companies. He said in some instances there is excess of locally made construction materials and the government must encourage export of them by exempting them from CESS.
The demand for crushed aggregates and sand has dropped by over 50% thus threatening the livelihoods of workers who were engaged in quarrying these. To mitigate this allow export of these items until the construction industry is back to normal level, he urged.