ECONOMYNEXT – Sri Lanka’s construction sector is expected to face several transformative shifts under new President Anura Kumara Dissanayake and the leftist-leaning National People’s Power (NPP) government after the November 14 poll. Here are five likely policy implications in the construction sector in a future NPP government:
1. Prioritization of Affordable Housing and Public Infrastructure:
The new Dissanayake administration is likely to emphasize social welfare and infrastructure development targeting public needs, such as affordable housing, hospitals, and public utilities. This may create more opportunities for government-backed construction projects, though profitability margins could be squeezed if price controls or government-directed project requirements are imposed. In its policy document, the NPP has clearly said that significant challenges to the construction industry’s stability such as inefficiencies within procurement, poor project management practices, political interference, corruption, and projects that launch without proper financial allocations will be addressed when it comes to power. These issues have compromised the quality and integrity of construction projects and have led to delays in the past.
2. Potential Nationalization or State Oversight:
In line with Marxist-leaning policies, President Dissanayake’s NPP may increase oversight over large-scale construction projects, especially those involving public land, major state contracts, or foreign investment. While outright nationalization is unlikely, given Dissanayake’s recent efforts to moderate party rhetoric, expanded state influence over project approvals and management could impact private sector autonomy and market competition.
3. Regulatory and Environmental Reforms:
The NPP’s policy platform often includes environmental protection and social impact considerations, potentially leading to stricter construction and zoning regulations. This could require additional compliance measures and investments in sustainability, but it may also open new opportunities for eco-friendly construction technologies and methods
4. Shift in Investment Landscape:
The focus on reducing external dependence, as well as potential skepticism towards certain foreign-backed megaprojects, may alter the investment landscape for construction. Large-scale foreign investors might face more scrutiny or delays, leading local contractors to play a more significant role or grapple with financing challenges if international funding wanes.
5. Public-Private Partnerships and Local Content Mandates:
To stimulate job creation and reduce unemployment, there could be mandates favoring local labour and material inputs in construction projects. While this may bolster the domestic economy, it could pose cost and logistics challenges for contractors reliant on imported materials or facing skilled labor shortages, necessitating industry adaptation. (Colombo/November 13/2024)