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Construction sector wants Indian or Chinese credit line 

14 Jun 2022

  • Needs credit to procure raw materials
  • Wants remainder of Indian line for payments to Indian suppliers
    By Imesh Ranasinghe  The construction industry has requested the Government to obtain a credit facility from India or China to cover the sector, The Morning Business learns. Certain construction industry operators have requested that the Government obtain a credit facility to be utilised entirely by the construction sector to obtain raw materials from India or China. However, speaking to The Morning Business, Chamber of the Construction Industry (CCI) of Sri Lanka President Ranjith Gunatilleke said that the Chamber has requested the Government to allow the use of the remainder of the $ 1 billion Indian credit line for essential imports to make payments to Indian suppliers for the import of cement and steel, which are mainly imported from India. He also added that the CCI, along with other construction industry associations, has been continuously pressuring the Government to settle dues owed to the construction sector. Last week, Opposition Leader Sajith Premadasa said in Parliament that the Government owes over Rs. 50 billion to local industry stakeholders for the ongoing, completed, and scheduled construction of infrastructure for State enterprises.   However, Prime Minister Ranil Wickremesinghe replied that the Government has to “slow down” in paying its dues, as it is crucial to save money for importing essential food items this year, even though increasing unemployment is among the concerns.  The Finance Ministry’s annual report for 2021 said that all the entities in the construction sector, including State-owned construction entities, have suffered from liquidity constraints due to the increased Government dues for the work undertaken by contractors. According to the report, total receivables from m Government entities to the State Engineering Corporation (SEC), Central Engineering Consultancy Bureau (CECB), and State Development and Construction Corporation (SD&CC) amounted to nearly Rs. 17.2 billion for work undertaken, while in the same vein, private sector construction entities have also been affected by the non-settlement of dues to the private sector. Further, Gunatilleke acknowledged that obtaining a credit facility from China would be crucial for the sector, as almost all the finishing items required for the construction industry, including carpets, sanitary fittings, and tiles, are imported from China. Already, under the existing $ 1 billion Indian credit line, $ 260 million was allocated to import raw materials, out of which $ 110 million has been approved for use, as of 31 May. Under the category of raw materials, $ 6 million was allocated for cement imports, and $ 44.7 million was allocated for steel imports. Gunatilleke stressed that almost all parties in the private sector have decided to stop investment in new construction projects for the next two years, as no return on investments could be expected due to the current economic scenario.


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