At around 5 p.m. on Sunday (4), the up-market Thalawathugoda area bore witness to an unusual and desperate plea for help. A middle-aged man, adorned in respectable attire and carrying a backpack, sat near the entrance of a high-end supermarket. His earnest request for Rs. 1,000 to facilitate his return home went largely unnoticed, drowned in the cacophony of city life and the suspicion surrounding those seeking financial assistance.
In Sri Lanka, the act of panhandling has become an unfortunate norm, with deceptive beggars often weaving fabricated tales to elicit sympathy and financial aid from unsuspecting passersby. However, unlike the typical scenes of desperation, the man at the Thalawathugoda supermarket carried himself with dignity and asked for a modest sum, all while promising to repay the borrowed amount upon reaching home.
This man was K. Premasiri, a 47-year-old resident from Hungama, Hambantota. His journey to Colombo was fuelled by a promising job opportunity as a cement and concrete finisher, conveyed to him by a friend. The financial support for this venture had come from a borrowed sum of Rs. 2,000 from a neighbour.
However, the promising venture took an unexpected turn. The job vacancy that initially brought him to Colombo had been filled during his journey, leaving him in a confusing situation. Unyielding in his pursuit, Premasiri spent the subsequent two days exploring alternative work sites, only to be met with the disheartening reality of an oversaturated job market.
Construction sites, emblematic of potential employment, were overflowing with workers, where the day fee for any type of work had soared to Rs. 2,500-3,000, intensifying the competition.
Premasiri’s desperation heightened as hunger became a constant companion during two consecutive nights of relentless job hunting in Colombo. Approaching The Sunday Morning, he laid bare his struggles, emphasising on the absence of a support network in Colombo and the financial strain on his friend, who had provided three meals despite awaiting payment until the completion of the job.
“I want to go back home. I can’t be a burden to my friend. We’re all in the same boat. There’s nothing more I can do in Colombo now. I better go back home,” lamented Premasiri, in a heartbreaking reflection of the silent battles faced by many in their quest for a livelihood amid the absence of job opportunities in the construction sector.
Premasiri stands as a representation of more than 500,000 workers who find themselves without employment opportunities following the closure of Sri Lanka’s entire construction sector from 2020. The industry bore the brunt of the harsh impact of Covid-19, exacerbating an already-challenging financial crisis.
Over the course of nearly two years, the sector grappled with the dual challenges posed by the pandemic and economic downturn, ultimately succumbing to collapse. Presently, despite certain positive shifts in economic indicators, the construction industry continues to face significant obstacles on the path to recovery.
Unemployment
Speaking to The Sunday Morning, National Construction Association of Sri Lanka (NCASL) Chairman M.D. Paul highlighted the severe impact on employment within the sector. He revealed: “Nearly 60% of direct employees and 50% of indirect employees have lost their jobs due to the gradual termination of site operations.”
Before the sector faced a severe setback in 2020 due to the Covid-19 pandemic, he said there had been approximately 750,000 direct employees and over 500,000 indirect employees engaged in various roles on construction sites around the country. Despite construction activities recommencing after the end of the pandemic, Paul stressed that the economic crisis had further crushed the sector.
Highlighting the absence of a national policy for Sri Lanka’s construction sector, Paul said that all small, medium, and large-scale companies were facing the same fate. Although several projects have recommenced at provincial level and some small- and medium-scale companies are gradually resuming operations, Paul lamented that more than half of the country’s construction sector was at a complete standstill.
Expanding on the repercussions, Paul noted: “All road constructions and other mega-scale constructions commenced by the Government have now come to a standstill.” This, he said, had dealt a major blow to the entire construction sector and would pose a huge risk in the future.
He also expressed concern about the departure of skilled professionals: “Many talented engineers, technicians, architects, quantity surveyors, etc. are leaving the country in search of jobs.”
Paul warned of future difficulties in finding qualified employees when the Government decided to recommence construction projects, stressing that this was a huge issue, but that there had been no discussions at Government level to recommence construction.
As for foreign-funded projects, Paul highlighted that only those financed by the Asian Development Bank (ADB) and World Bank (WB) were currently ongoing. He said that the Japan International Cooperation Agency (JICA) had expressed willingness but was waiting until the Government restructuring process was completed.
“The Government must consider reviving the construction sector right now,” he urged, noting that the current state of affairs not only posed an economic challenge but also jeopardised the availability of skilled professionals in the country’s workforce.
SL construction industry
The Sri Lankan construction industry is a pivotal force in the nation’s economic landscape, contributing significantly to socioeconomic growth. Operating within a broad spectrum, the construction sector produces diverse products ranging from individual houses to substantial infrastructure like roads, power plants, and petrochemical complexes.
Experiencing noteworthy growth, the construction industry marked a 12% increase during the first quarter of 2016 compared to the same period in 2015. The industry has emerged as a primary beneficiary amid the surge of new infrastructure projects, driving rapid urban development in Sri Lanka. As the fourth largest sector, it has consistently contributed 6-7% to the GDP over the past decade.
In 2022, the size of the construction market in Sri Lanka reached an estimated value of $ 12.8 billion. Projections indicated that the market is anticipated to experience a Compound Annual Growth Rate (CAGR) exceeding 5% between 2024 and 2027.
Several factors contribute to this anticipated growth, including the alleviation of foreign exchange liquidity pressures, robust remittances, improved earnings from tourism, and an upswing in private investments within the construction sector.
Nevertheless, mega construction development projects such as road constructions, luxury apartment constructions, and mega-scale mixed development projects are yet to be recommenced due to the unavailability of funds and investors.
Projects on hold
Amid the ongoing economic crisis, the maintenance and development of the entire road network in Sri Lanka have ground to a halt. Numerous new projects that were poised to commence have faced significant delays and some have been suspended due to a lack of interest from foreign investors. Several road development initiatives initiated under the Government’s iRoad programme and the National Road Development Programme have come to a standstill.
Last year, the ADB agreed to provide a crucial $ 53 million in assistance to continue upgrading Sri Lanka’s rural road network until debt restructuring took place. Simultaneously, the ADB approved a $ 350 million special policy-based loan to provide budgetary support for economic stabilisation in Sri Lanka. This programme is part of a broader financial assistance package aligned with the International Monetary Fund (IMF) Extended Fund Facility (EFF), aiming to stabilise the economy, lay the groundwork for recovery, and ensure sustained growth.
Several significant road construction projects – including those funded by the World Bank, EXIM Bank of India, and the ADB – have experienced delays. Completion timelines for these projects which were originally set for 2019 and 2020 have been extended, causing concerns about their impact on Sri Lanka’s infrastructure development.
Notably, the OPEC Fund for International Development (OFID)-funded Badulla-Chenkaladi Road Improvement Project (BCRIP) package and various contract packages under the ADB-funded iRoad programme have either been terminated or recommended for termination. The lack of funds has been a critical factor in these delays, leading to the suspension of maintenance on some roads.
While the ADB has pledged $ 53 million, the funds will only be disbursed once the loan restructuring process is complete, which is expected to take another seven months. In the interim, the Road Development Authority (RDA) will initially receive $ 10 million from the Treasury, equivalent to Rs. 3 billion, to be utilised for road maintenance and partially completing projects under the National Road Development Programme and iRoad projects. However, this amount may not cover all maintenance needs, necessitating prioritisation of high-impact roads and projects.
Additionally, Sri Lanka faces challenges in attracting foreign investors for major highway projects, leading to the temporary suspension of critical initiatives, including the Central Expressway Project, Ruwanpura Expressway, Port Access Elevated Highway Project, and Elevated Highway Project from New Kelani Bridge to Athurugiriya. Currently, these mega road development projects remain on hold.
RDA Director General L.V.S. Weerakoon said the mega-scale projects would only be recommenced after the Government’s debt restructuring process was completed. “The investors are waiting till we complete the debt restructuring,” he stressed.
Speaking to The Sunday Morning, a senior official at the Urban Development Authority (UDA) said that the authority had already opened the mixed development projects for investments, but mega-scale construction projects were yet to be commenced.