Construction industry and review of ongoing, awarded and proposed projects

Wednesday, 18 March 2015 00:00 - - {{hitsCtrl.values.hits}}

In respect of the Colombo Port City Project, CCI understands that there are four compliances to be adhered - Pic by Lasantha Kumara The Chamber of Construction Industry, Sri Lanka (CCI), is the apex body of the construction industry. In order that the Government may consider, we are submitting the following opinion regarding the current status of the Construction Industry in Sri Lanka, in particular, the move by the Government to review the procurement process followed in connection with several ongoing, awarded and proposed construction projects. It is our view that whilst reviewing the procurement processes followed in connection with Government awarded projects, the preservation of the business confidence which Sri Lanka has so far achieved, with both the foreign and local investors, is very important.

Taking a cue, from the Government’s 100 day program, it is our view that the impact to the construction industry, and the sector as a whole should be carefully examined during the aforesaid review process. There must be a fast track review, and the least sensitive projects should be allowed to proceed, especially those projects that have been awarded to local developers/constructors, either exclusively or in collaboration with Government agencies/foreign partners. CCI have noticed that reviews are to continue for the Colombo Port City Project, funded by the Chinese developers, the mixed development project by the Indian Developers TATA, and, two other projects – the Southern Expressway extension from Matara to Belliatta, and the much-needed Northern Expressway, which is funded to some extent by the local banks and a sizable portion of the construction undertaken by local contractors, have also been stopped for review. This type of action will no doubt affect the business confidence of developers, both local and foreign. In respect of the Colombo Port City Project, we understand that there are four compliances to be adhered. These being, EIA/IEE for the project (namely, for hydraulic landfill and protection of the city), sand mining for the project, archaeological impact assessment and finally for the master plan and infrastructure. The first of these has been done and approved by the Coast Conservation and Coastal Resources Department (CC&CRMD). The second has been done and awaiting approval from CEA after which the Geological Survey and Mines Bureau (GSMB) will grant the permit for mining. The third, the Archaeological Impact Assessment which has been carried out by the Archaeological Department itself. The fourth is for the Master Plan and Port City Infrastructure which will be implemented when the detailed master plan is obtained from the consultants for the project, in around one month’s time, and the UDA will be the approving agency. We are told that there is a school of thought that all these approvals should be in one comprehensive report. If that is the stance of the Government, it is best for the Government to request the developer to prepare a single report at the earliest, including references to the shortcomings highlighted in the media. It is noted that similar filling had been done already for the Colombo South Harbour (size greater that the Port City itself) and in countries like Singapore, where almost one third the country is on reclaimed land and large scale reclamation has been done in Japan, Maldives in the Emirates, Oman, etc. In fairness to the constructors, it is our view that if work is suspended as has been proposed by the Government, remobilisation of the project will be a costly exercise. Thus, it would be in the best interest of both parties to ensure that the review process is concluded speedily and efficiently. We are also of the view that when foreign funded projects are being reviewed, issues concerning the legality of freehold and lease hold transfers of land in favour of the foreign entities and persons should be carefully considered. From the perspective of the local industry, promotion of local entrepreneur participation at every stage of the project would be ideal. Import of human resources should be discouraged as far as possible to promote local recruitment, especially in areas where local talent and expertise is available. A few days ago, an International Magazine from the UK, interviewed the undersigned in his capacity as the President of the CCI and questioned regarding the current issues concerning the ongoing projects in Sri Lanka, and whether Sri Lanka is a stable economy for British investors to invest. The response given was that the prevailing uncertainty is temporary and the aim of the Government is to initiate a more transparent system that would in fact be a boost to investor confidence. The view was also expressed that after ending a three-decade-long civil war, Sri Lanka has a huge potential to be the new Growth Hub in Asia. However, in response, the journalist from the said magazine questioned the reason for the Sri Lankan Government taking unilateral action against investors (for example the unilateral suspension of the Port City Project without a fair hearing) without any negotiation, compromise or discussion. The CCI response to same was that a dialogue would have been favourable. It is the view of the CCI that the Government must be sensitive towards such views expressed by outsiders, and regarding the impact to the industry as a result of such unilateral action. If the present scenario continues for the next few months, signals will go to potential investors, both foreign and local, cautioning them from investing in Sri Lanka. This is a serious matter not only to the construction industry, but, also for the economy. Therefore, it is crucial that the Government makes a clear policy statement concerning its decision to review ongoing projects, what the Government aims to achieve, what mechanisms will be put in place to ensure that the review processes should be transparent and fair, and whether the Government would continue to honour contractual obligations. In which event, the CCI would advise the Government, that all formal contracts being legal, such contracts should be adhered as per the agreements. We are prepared to assist the Government, in any way possible as there is an abundance of expertise available at the CCI.