By: Staff Writer
Colombo (LNW): The construction industry continued to perform at a subdued level in August 2023, yet reaching towards the neutral threshold, Central Bank report revealed.
Construction firms tend to undercut prices to secure the limited available projects in a highly competitive tender bidding process, CB report claimed.
The lack of new projects continued to have a severe adverse impact on the industry as reflected by the continuous decline in New Orders.
Many Industry stalwarts highlighted that the limited availability of local and foreign funded construction projects is still a major concern in the industry.
In this background, firms laid off contract based employees to scale down operations as reflected by the continuous decline in Employment.
Further, Quantity of Purchases continued to decline, yet at a slower rate during the month. In the meantime, Suppliers’ DeliveryTime shortened during the month mainly due to reduced pressure on supplier capacity.
The sentiment amongst the firms towards the next three months remained positive as they experience an improvement in availability of projects from September mainly due to the expected recovery in the economy
Spiraling prices of building materials specially cement and steels in recent times have stalled the building work resulting 23.1 percent contraction in the construction sector causing a loss of 75 percent of around 1 million workforce, industry stakeholders complained.
Sri Lanka’s building construction work, has had a steep fall of 23.1 percent in the second quarter of 2023 against the same quarter last year, Census and Statistics Department confirmed this week.
The price of a 50 kg bag of Cement is being sold at the local market at an exorbitant price of Rs.2150 but it can be sold at a price of Rs.1850, a trade ministry report revealed.
The cement companies are earning an undue profit after tax of Rs 300-400 by selling 50 kg bag of cement, a senior member of the committee on public finance COPF said adding that the tax component was around Rs 850 he said adding that he has compared landed price and retail price including taxes and profits.
According to the trade ministry report presented to the committee on public finance a metric ton of Steel QT Bars could be sold at a price of Rs 290,000 including taxes of Rs49,000 and dealers margin.
But the local market price is Rs. 360,000 and therefore the companies are earning a massive profit of Rs 70,000 per mt, he pointed out adding that this price could be reduced by lowering taxes.