The 21st edition of the “Build Sri Lanka” housing and construction exhibition concluded last week at the BMICH. On the surface, it was a modest success: stalls were staffed, catalogues were exchanged, and the usual dignitaries cut the usual ribbons. But beneath the low hum of polite conversation, a far more urgent story was unfolding – one that policymakers appear to have missed entirely.
For an industry that contributes nearly 8% to Sri Lanka’s GDP and employs over 500,000 people, the quiet profile of this year’s exhibition was telling – the kind that settles over an industry bracing for impact.
The Chamber of Construction Industry (CCI) President, Manilal Fernando, used the platform not to celebrate, but to warn. Two specific points he raised should be ringing alarm bells in the Treasury and the Ministry of Housing. But because the event lacked high-level political attendance, these warnings have so far fallen into a policy void.
Fernando noted that after a brutal slump from 2020 to 2023, the industry saw a fragile recovery in 2024. But that green shoot is now withering. “With the rupee volatility due to the war in the Persian Gulf,” he said, “again we are heading for uncertain times.”
According to CCI, Sri Lanka’s construction industry is an importer in disguise. Over 60% of construction materials from steel and cement to tiles, fittings, and MEP (mechanical, electrical, plumbing) components are either directly imported or have high import content. Even locally manufactured items rely on imported raw materials.
When the rupee depreciates, costs don’t just rise; they leap. And here is the crux according to Fernando : current contractual payment mechanisms do not automatically reflect these real-time cost increases. As he warned, unless cost escalations are correctly reflected in contract payments, many contractors and consultants will simply be unable to perform. That means stalled projects, abandoned housing schemes, and unfinished infrastructure – paid for, but not delivered.
The second issue is even more maddening because it is entirely within the government’s control to fix. Fernando revealed that a set of long-overdue amendments to the Construction Industry Development Act (CID Act) was finalised in 2024. These amendments were developed over six years by the National Advisory Council on Construction, approved by the Legal Draftsman, and could be enacted within two months.
But instead of enacting these ready-made fixes, CIDA is now pushing for a complete overhaul of the Act – a process that will take a minimum of two years to reach parliament.
He pointed out that without these amendments, the industry lacks a fair, transparent price variation mechanism. Right now, MEP contractors and others complain that CIDA’s official price indices do not reflect actual market price fluctuations. The CCI, therefore, proposed a simple solution: a joint committee (CCI + reputable contractors + CIDA) to oversee index compilation. But even that cannot be implemented effectively without the Act’s update.
The construction industry, once a bellwether of national economic health, is now whispering its crises in a conference hall with no television cameras to air high-decibel news stories or make it a headline event.
The builders of Sri Lanka are not asking for subsidies. They are asking for predictability, fairness, and speed. The war in the Persian Gulf is beyond Sri Lanka’s control. But the CID Act and contract index reforms are not.
By Sanath Nanayakkare
from The Island https://ift.tt/ER8bfxo
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