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High interest rates threaten onstruction sector revival

12 Oct 2022

  •  Construction Chamber says sector will ‘never’ move forward with high interest rates
  • Notes no reduction in the rate of job losses due to dearth of investment 
By Imsha Iqbal  Due to increased interest rates and a reduced number of investments, the construction industry continues to languish in the standstill it has been pushed into with the economic crisis, The Morning Business learns. Speaking to The Morning Business yesterday (11) Chamber of Construction Industry Sri Lanka (CCI) immediate past President Maj. Eng. Ranjith Gunathilake stated: “The construction industry will never move forward when the interest rates are at 28-30%.” Eng. Gunathilake explained that in order to revitalise the construction industry, investors are required, but with the prevailing high interest rates, people are hesitant to use their money for development purposes. “We have been saying that industry workers are out of work,” Eng. Gunathilake reiterated, while stating that industry stakeholders have spoken to the authorities about the repercussions they face from decisions, and the industry’s woes. Pointing out that investments have gradually reduced as people can no longer afford the costs of construction, he said: “I can’t see any future for the industry.” He further noted that the present Government has openly declared that there will be no more capital investment, while adding that the amount of investment that comes through the Board of Investment (BOI) of Sri Lanka is “very negligible”, as investors are reluctant to invest in the country until political stability is ensured.   In February this year, Eng. Gunathilake had told The Morning Business: “All construction materials have gone up by 20-65% or more, leading to an overall construction cost increase of over 50%. This situation is further exacerbated by the increase in labour costs, which has also increased by over 20%. However, I feel that this increase in labour costs will either come down or stagnate.”  Elaborating on political stability, Eng. Gunathilake said that whichever party or government could assure political stability would be the best choice for the country, as this would bring about economic stability.  He also said: “We also need to think about how to elevate the GDP amidst the debt paying. Thus, the Government should be focused on achieving ‘effective economic targets’ with a balance of professionals, as only politicians and people cannot be relied on to overcome the situation.”   During a protest held on Sunday (9) at Thimbirigasyaya, a professional from the industry lamented: “When we put up vacancy advertisements earlier, very few people responded, because people preferred bigger companies due to the higher salaries, obviously. Now, when we put up a vacancy, there are so many calls. Our staff has to switch the phones off, because many people are without work. It is a vicious cycle.” 


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