Another difficult year for construction industry

Monday, 24 February 2025 03:10 - - {{hitsCtrl.values.hits}}

The news that only half of our requests have been met in the 2025 Budget brought us to the conclusion that 2025 will be another dark year for construction

Since 2019, the construction industry has declined amidst the Easter attacks, COVID and economic crises. The industry’s growth rate which once was 21% has fallen to 6%. Around half of contractors have exited the industry while the remaining half struggle every day to survive.

However, by submitting the construction industry’s Budget proposal to the Government, CIOB hoped that 2025 would be a turning point for the industry. However, the news that only half of our requests have been met in the 2025 Budget, brought us to the conclusion that 2025 will be another dark year for construction.

The construction industry once held a market size of $ 10 billion. Usually Government contracts contribute about $ 3-4 billion. However this year we have, more or less, $ 1.3 billion Government projects. This leaves contractors to fight over these which leads them to competitively bid for unrealistic prices, simply for their survival. This however is highly dangerous for contractors and they face inevitable demise.

Though we, as an industry, have planned to contribute about 7% to the GDP this year, we now know that we are unable to reach these figures.

Immediate/urgent requests to the Government

In the future, to support the construction industry, we hope that given its anti-corruption policies and the good governance that is seen today, the Government encourages FDIs (Foreign Direct Investment), PPPs (Public-Private Partnerships), private sector projects and foreign-funded projects within the construction industry.

To help us travel this difficult journey in 2025, we request the Government’s immediate attention to the approval of the Cabinet paper which has already been finalised by the industry and handed over to the Secretary, Ministry of Urban Development, Construction and Housing. We urgently require its approval and the issuance of relevant directives.

We also recommend that the Government, together with construction industry Development Authority (CIDA), create a system for the fair distribution of work so that contractors receive fair shares of work, for their survival.

(The writer is the President, Ceylon Institute of Builders.)

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Another difficult year for construction industry

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