Sri Lanka’s construction sector shows 15% growth
The Morning: Sri Lanka’s construction sector is now witnessing a modest recovery of 15% following the impact of the Covid-19 pandemic, having secured 15 Port City projects with the involvement of both the Government and foreign stakeholders, The Sunday Morning Business learns.
The severe impact of Covid-19 on Sri Lanka’s construction sector halted major Government projects, caused the layoff of 40% of Small and Medium-sized Enterprise (SME) contractors, and led to bankruptcies.
Speaking to The Sunday Morning Business, Ceylon Institute of Builders (CIOB) President Dr. Rohan Karunaratne said: “Currently, there is a 15% growth in the industry, which represents slow progress, and the new Government needs to focus on boosting this recovery.”
He added that the construction sector had requested a low interest loan from the International Monetary Fund (IMF) to help restart projects and had also proposed establishing a development bank specifically for the industry.
These plans are expected to materialise in 2025.
The industry is awaiting discussions with Government officials after the upcoming General Elections and anticipates clarity in the 2025 Budget regarding future construction projects.
Chamber of Construction Industry Sri Lanka President Archt. Jayantha Perera echoed these sentiments, stating: “The construction industry is picking up and should foreign-funded projects commence, the sector could see a significant boost.”
Perera also noted that upcoming elections had stalled Foreign Direct Investments (FDIs). “The future of the construction industry depends largely on the 2025 Budget. If key infrastructure projects do not proceed, the industry could face stagnation. However, with foreign investment and Government policies aligned, growth could accelerate.”
Perera stressed the potential within the tourism sector, noting that Indian investments could have a substantial impact on the industry.
Sri Lanka’s construction industry is expected to record real growth of 6.2% in 2024, largely due to a low base effect following the sharp decline of 21.8% in 2023.
Additionally, the Urban Development Authority (UDA) has announced plans to complete 22 mixed development, residential, IT, and tourism projects by the end of this year.
OSL take:
The expansion in Sri Lanka’s overall economy due to the increase in economic activities has resulted in the growth in the country’s construction industry. The local construction industry has therefore opened up a host of business/investment opportunities. These opportunities are mainly in the country’s development programme as well as in the expansion of private sector operations and the increase in the demand for housing in urban areas, especially in Sri Lanka’s commercial capital, Colombo. With Sri Lanka on a path to achieve hub status in the South Asian region, the business/investment opportunities in the country’s construction industry would also continue to expand, presenting many opportunities for foreign businesses/investors. Given that Sri Lanka is fast becoming an emerging business destination in the region, foreign businesses/investors could be rest assured that investing in the country’s construction industry would present a revolving business/investment opportunity in a key business destination in the South Asian region. Also, with the value of land and housing seeing an increase, investments in these areas would provide quick returns on investments.
| Article Code : | VBS/AT/20241015/Z_2 |