The combination of the local economic crisis and the global increase in the cost of raw materials has paralyzed the sector. Professional bodies are concerned about competition between Bangladesh, Nepal, India and Malaysia, where foreign investors find lower costs per square meter to build. The government has agreed to raise the prices set for new road tenders by 20%, but is in arrears of Rs 200 billion.
Colombo () – Due to the current economic crisis, more than a million construction workers in Sri Lanka have lost their jobs and thousands have left the country in search of work, mainly to Japan, Malaysia, the Middle East and South Korea. Last week the Senate Commission in charge of the sector was convened to consider the necessary measures to mitigate the impact of the economic crisis. The Commission met with the associations that represent small, medium and large construction companies and discussed possible intervention plans for the sector, whose labor force is made up of 90% semi-skilled workers.
Since 2021, many construction companies have gone bankrupt and a large number of professionals have left the country, especially experienced civil, electrical and mechanical engineers. Meanwhile, the prices of raw materials used in construction, such as cement, iron, aluminum, PVC pipes, cables, roofing materials and steel, as well as coatings for floors and walls. But another major problem is the lack of institutions that offer training opportunities for apprentices in the sector.
Neville Dissanayaka, an experienced civil engineer and general manager of a large residential complex in Colombo, told that “steel prices reached 340,000 rupees per tonne, while the price of a bucket of sand rose to 5,000 rupees. Material suppliers quote at will and prices rise day by day. Of approximately 1.5 million people employed in the construction industry, currently 75-80% are unemployed.
“Restrictions on the importation of construction materials such as tiles, air conditioning systems and elevators have further hurt the construction industry. Also, the government has to pay around Rs 200,000 crore in arrears for various projects that ran in 2020-2021,” Neville adds.
Civil engineer Mayantha Igalawithana believes that “the cost of building a square meter in Sri Lanka is increasing exponentially compared to other countries in Asia. Consequently, foreign investors favor countries like Bangladesh, Nepal, India and Malaysia, rather than Sri Lanka. Sri Lanka’s construction industry has contributed around 9% of the country’s GDP and therefore this collapse has a strong impact outside the sector as well.”
According to the National Construction Association of Sri Lanka (NCASL), 95% of construction projects have been delayed due to shortages and high prices of raw materials. The Ceylon Institute of Builders (CIOB) noted that “the construction industry cannot sustain itself due to these pressing problems.”
As a first response, the Colombo government agreed to pay contractors 20% of the prices that had been set for construction projects undertaken by the Road Development Authority and the Maga Neguma company, due to rising costs.
Photo: Flickr / Joseph Castell
