Construction contractors have no option other than terminating projects that had commenced which would result in all employees in the construction sector losing jobs due to the staggering cost of construction material and the non-viability of a return on investments, said Past President Chamber of Construction Industry, Ranjith Gunatillake.
He said around 500,000 workers in the construction sector had lost their jobs since the beginning of the economic crisis this year which led to the government deciding to stall major construction projects. Private and public sector construction project investors will be compelled to terminate projects unless the return on investments are workable, Gunatillake said, adding that urgent measures and intervention by the authorities is crucial to sustain the sector, a key cog in the economy.
According to the construction sector expert, a proposal to set a up a task force comprising four ministry secretaries and four construction chamber members was made to President Ranil Wickremesinghe when he was the Premier to look into the issues affecting the sector and make recommendations on what projects should be be stopped, at what stage and the percentage of completion of the projects and what projects should proceed.
The construction chamber also called on the Construction Industry Minister six months ago to instruct industry stakeholders through ministry secretaries to adjust the cost of construction but the request had not been passed down to the stakeholders, Gunatillake said, adding that work on projects cannot go on with the alarmingly high cost of construction materal such as steel, cement, tiles and sanitary fittings which has gone up by around 300 percent.
He said the budgetary allocation made about two years ago for state sector projects in not adequate today due to the surge in prices of construction material and labour costs.
The Government’s move to stall work on construction projects without settling the outstanding bills of contractors would adversely impact the dependents in the sector accounting for over one million, Gunatilleka said.
The Central Bank cautioned that there could be hyperinflation which would aggravate the conditions forcing the authorities to terminate construction projects which would put the livelihoods of many in danger.
According to the Central Bank data inflation recorded a 64% year-on-year rise in August.
According to estimates, the Government is said to owe around Rs. 150 billion (US$ 416.7 million) to contractors for work already carried out.
Construction is one of the key sectors that has boosted the country’s overall economic growth in the past. The sector provides employment for nearly one million people including 600,000 direct jobs.