SL’s construction sector crashes, 90% of work suffers
Sri Lanka’s construction sector has crashed with 90 per cent of their work countrywide coming to standstill resulting in a possible loss of 75 per cent of the workforce mainly due to the shortage of cement, iron and other raw material and its high prices in the economic crisis, the National Construction Association of Sri Lanka complained.
Around 900,000 low income workers out of 1 million including 600,000 direct jobs in the building construction field have already lost their livelihood greatly affecting 1.2 million poor families in the low income strata, the association pointed out.
Over 1000 building material suppliers had to close down owing to non availability of items like cement, iron and other essential items for the construction industry such as aluminum, tiles, water pumps, and rain water gutters included in the temporarily banned import list, a move to stop the foreign currency outflow.
It also included some industrial machinery including metalworking machinery, packing machines and ball bearings, chairman of the association Susantha Liyanaarachchi told the Business Times.
Worsening the situation, the government has also suspended almost all major infrastructure projects forcing many building contractors into severe liquidity issues without paying unsettled bills amounting to Rs.150 billion.
Although many mega projects were started during the previous government, due to their inability to complete payments, the whole construction industry is in a great financial crisis, he said. The Treasury is also compelled to pay an additional 20 per cent apart from their bills in accordance with their contractual agreement due to this sudden decision of suspending mega projects,
On the other hand, contractors are estimated to owe the banking sector an enormous sum of Rs.200 billion.
The cement scarcity is largely affecting small time contractors and workers engaged in house building and repairing at present.
Total cement usage has fallen 19 per cent to 2,855,000 metric tonnes during the six month period to June 2022 reflecting the gravity of the situation and impacting the country’s total economic output, Finance Ministry data shows.
Cement imports dropped 84 per cent to just 35,000 metric tonnes in June from a year ago, bringing the first six months imports to around 1 million metric tonnes, down 26.2 per cent reflecting the severe foreign exchange crisis in the country.
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