Construction sector to fully recover in 1Q 2025

Sri Lanka’s construction sector will totally recover in the first quarter of next year, said President, Ceylon Institute of Builders (CIOB), Dr Rohan Karunaratne.

He said that one of the main reasons for this is that donor agency projects which were stalled due to many issues are now going to recommence.

Both Japan International Cooperation Agency (JICA) a governmental agency that delivers the bulk of development assistance for the government of Japan for over 30 years and the Korea International Cooperation Agency (KOICA) established in 1991 to enhance the effectiveness of South Korea’s grant aid programs for developing countries have told the new President Anura Kumara Dissanayake that they would recommence their projects. These include key landmarks like the Bandaranaike International Airport development, water electricity distribution, school and other local government building construction and several other infrastructure projects restarting by both institutions.

“In addition the World Bank too has indicated they also would follow and these would bring several projects like building or rural bridges back to life.”

Dr. Karunaratne said that all these projects will see sub contracts being offered to local contractors which will start flowing the funds back to them which had dried for a long period.

He also said that many investors have confidence that corruption when awarding these to the local companies would be minimal. “This positive sentiment with regard to corruption will also bring in new investors to the country which once again will help the construction sector to revive.”

He also disclosed that due to virtually shutting down of the construction sector due to COVID pandemic, economic crisis, payment delays of government contracts and other reasons around a staggering 2,800 small and large construction companies from around 5,000 were shut down. The construction industry in total involves around 2.6 million people both directly/indirectly and had a turnover of almost 3 trillion rupees and contributed around 9.6% to the GDP in the past. He however said that manpower in the construction sector to engage in these projects would be a major challenge as many workers from these closed companies have migrated for overseas jobs and others have found employment in other sectors.

There are also many construction companies that are in debt to local banks and in a bid to overcome this they have written to the IMF seeking a USD 100 million soft loan which can be given to these companies in ‘red’.

“This IMF loan we request to distribute among the companies at around 4% interest via Central Bank and local banks to settle their loans,” said Vice-President CIOB, Ruwan De Silva.

“We have received a positive response from the IMF in this regard,” he added.