Constructors Association of Pakistan (CAP) Chairman Syed Afzal-ur-Rehman has said that nearly 400 Annual Development Programme (ADP) projects remain incomplete because contractors have not received their outstanding dues.
Talking to the media, the CAP chairman said delayed payments to contractors had become the main reason behind the suspension of development work on hundreds of public sector projects.
The delays, he said, had deprived people of much-needed infrastructure while slowing economic activity and increasing unemployment across Sindh. Further the partly completed works’ life had also been deteriorating as they were not being used, which was an indirect loss to public funds, he added.
He alleged that the prolonged delays on bureaucratic inefficiency and excessive red tape coupled with penetration of corruption were multiplying issues and had contributed to economic stagnation and sluggish growth.
Highlighting the importance of the construction industry, he said it consumed nearly 80 per cent of Pakistan’s national development budget, including allocations under the Federal Public Sector Development Programme (PSDP), provincial ADPs and private investment. In return, he added, the sector paid the highest tax per million rupees of turnover compared to any other industry.
He said the construction sector was Pakistan’s economic engine and second-largest industry after textiles, which provided on-job training with employment to millions of skilled, semi-skilled and unskilled workers.
Referring to a recent World Bank study, he said poor infrastructure cost Pakistan between four and six per cent of the of GDP annually, equivalent to nearly US$6 billion. He argued that increased construction activity could help recover much of these losses by improving transport, storage communication services and water storage works.
The World Bank had also stressed reforms in the construction industry, he said. According to Rehman, more than 25,000 registered construction and housing companies were operating as small and medium enterprises in Pakistan, making local investments while directly employing millions of people.
He appealed to both the federal and Sindh governments to ensure immediate release of outstanding payments for ongoing ADP projects across the province. He said many projects awarded over the past 15 years were now around 75 per cent complete and currently stalled due to non-payments.
Timely release of funds, he added, would allow their completion and enable the public to benefit from the development schemes at the earliest. He pointed out that after the 18th Amendment, record taxes had been collected and so, there was no reason to delay the payments.
The CAP chairman also presented a comprehensive set of recommendations to address the issues of the construction industry in Sindh. He proposed that no new tenders should be invited — except for emergency works — until sufficient funds were made available to clear outstanding dues.
He also called for price adjustments to reflect increases in construction input cost arising from the Gulf War and payment of compensation for delayed dues in accordance with the Pakistan Engineering Council (PEC) criteria.
Among his other recommendations were simplifying the Sindh Revenue Board (SRB) tax rules, implementing the Sindh finance department’s decision that the SRB tax liability rested with government departments rather than contractors, and ensuring there was no distinction between the ADP and non-ADP-funded projects. He urged the Sindh government to constitute a high-level committee in consultation with all stakeholders to introduce comprehensive reforms and ensure the implementation of its recommendations.
