[caption id="attachment_85162" align="alignleft" width="258"]
CDASL Chairman Suresh Rajendra[/caption]
By Madhusha Thavapalakumar
The Board of Investment (BOI) has begun providing approval on a case-by-case basis for Letters of Credit (LCs) for construction sector imports on the request made by the Condominium Developers Association of Sri Lanka (CDASL).
As exclusively reported by The Sunday Morning Business on 26 April 2020, the request was to exempt the industry from import restrictions introduced by the Government to avert a foreign exchange crisis.
CDASL Chairman Suresh Rajendra, who is also the Head of Property at John Keells Holdings (JKH), told us that approvals could take anywhere between a day and two weeks.
“If the requested items are not on the negative list, the BOI approves within a day. If it is on the negative list, the BOI has to send it to the Treasury or the Central Bank of Sri Lanka (CBSL) for approval, which can take a week or so,” Rajendra noted.
He added that the BOI is in the process of expediting the approval process for negative list items or to obtain blanket approval from the relevant authorities.
To contain the widening trade deficit and impacts it would have on foreign exchange reserves of the country, import restrictions that were there from mid-March were further expanded to all imports, and construction raw materials were not given any exception.
The CDASL request received a positive response almost immediately from the Director General of the BOI, along with another request of extending the project period permitted under the BOI agreement that are currently underway but impacted by Covid-19.
“If contractors are prevented from importing stuff they need for projects, they will pass the delay damages onto the developer. So I’m hopeful that there will be some good news on these requests. We have not yet received a formal response, but responses so far have been reasonably positive,” Rajendra told us at that point.
According to the letter, construction sites have been shut down due to the ongoing restrictions, and global supply chains for materials and equipment have been severely impacted.
In addition to this letter, the CDASL also sent a letter to President Gotabaya Rajapaksa on 17 April requesting relief for the property development and construction industry, and exempting them for the import restrictions is one of them.
Elaborating on the economic shock caused to the construction industry by Covid-19, the CDASL in the letter proposed eight measures to help them get back on their feet, of which permitting the importation of raw materials and the extension of the BOI project period were among them. The CDASL has also requested clarification on restricted import items in order to avoid further disruption in project supply chains.
Furthermore, the CDASL has requested to waive off levies such as the Port and Airport Development Levy (PAL) and cess on project-related material for a stipulated time period to stimulate development activities and reduce costs.
Moreover, their foremost request in the letter was to permit and facilitate the commencement of construction projects as soon as practically possible. The CDASL assured that “a resumption of work could be done based on clear regulations and restrictions as advised by the Government’s health authorities”.
The second request was to include property developers among the list of industries or sectors eligible for financial concessions recently announced by the Central Bank to help with working capital or cash flow pressures. It is notable that following the Easter Sunday attacks last year, the construction industry, which is suffering since late 2018, requested the Ministry of Finance to provide them a moratorium similar to that of the tourism sector. However, the request was shot down by then Minister of Finance Mangala Samaraweera.
The CDASL also requests the President to encourage new investments greater than a stipulated value by granting attractive concessions.
In addition to these measures, the CDASL also requested to fast track the implementation of real estate investment trusts (REITs) and related legislations, and also to encourage foreign investment in Sri Lankan real estate. REITs are corporations that own and manage a portfolio of real estate properties and mortgages.
Rajendra was optimistic that the 30-member Presidential Task Force appointed on Wednesday (22) would look into their concerns and grant their requests. The Task Force headed by Basil Rajapaksa was appointed by President Rajapaksa and aims to revive the economy that has been severely hit by the Covid-19 pandemic.
In the meantime, the Chamber of Construction Industry of Sri Lanka (CCI) has requested the President to appoint a member of their Chamber in the Task Force in the wake of impractical regulations introduced to the sector by the Ministry of Health and Indigenous Medical Services.
Two weeks ago, CCISL President Eng. Maj. Ranjith Gunatilleke told us that only a person from the industry would understand the difficulty in implementing the regulations imposed on them, which includes maintaining one metre distance at construction sites, carrying a reduced number of people in the construction elevator, and employing workers only from within the construction area.
According to the CBSL External Sector Performance Report for December 2019, Sri Lanka’s building material imports for last year amounted $ 1.5 billion, similar to the previous year, while base metal imports were at $ 562 million.
According to research done by the General Sir John Kotelawala Defence University (KDU), amongst the raw material consumed by Sri Lanka’s construction industry, the highest volume of 33% is being used for office buildings and 11% for market complexes.
Sri Lanka’s Gross Domestic Product (GDP) was Rs. 14,449 billion in 2018, of which the construction sector’s contribution was approximately Rs. 1,083 billion. The total debt from the construction sector to private and state banks stands at 20% of their contribution to GDP, which is over Rs. 216 billion.
CDASL Chairman Suresh Rajendra[/caption]
By Madhusha Thavapalakumar
The Board of Investment (BOI) has begun providing approval on a case-by-case basis for Letters of Credit (LCs) for construction sector imports on the request made by the Condominium Developers Association of Sri Lanka (CDASL).
As exclusively reported by The Sunday Morning Business on 26 April 2020, the request was to exempt the industry from import restrictions introduced by the Government to avert a foreign exchange crisis.
CDASL Chairman Suresh Rajendra, who is also the Head of Property at John Keells Holdings (JKH), told us that approvals could take anywhere between a day and two weeks.
“If the requested items are not on the negative list, the BOI approves within a day. If it is on the negative list, the BOI has to send it to the Treasury or the Central Bank of Sri Lanka (CBSL) for approval, which can take a week or so,” Rajendra noted.
He added that the BOI is in the process of expediting the approval process for negative list items or to obtain blanket approval from the relevant authorities.
To contain the widening trade deficit and impacts it would have on foreign exchange reserves of the country, import restrictions that were there from mid-March were further expanded to all imports, and construction raw materials were not given any exception.
The CDASL request received a positive response almost immediately from the Director General of the BOI, along with another request of extending the project period permitted under the BOI agreement that are currently underway but impacted by Covid-19.
“If contractors are prevented from importing stuff they need for projects, they will pass the delay damages onto the developer. So I’m hopeful that there will be some good news on these requests. We have not yet received a formal response, but responses so far have been reasonably positive,” Rajendra told us at that point.
According to the letter, construction sites have been shut down due to the ongoing restrictions, and global supply chains for materials and equipment have been severely impacted.
In addition to this letter, the CDASL also sent a letter to President Gotabaya Rajapaksa on 17 April requesting relief for the property development and construction industry, and exempting them for the import restrictions is one of them.
Elaborating on the economic shock caused to the construction industry by Covid-19, the CDASL in the letter proposed eight measures to help them get back on their feet, of which permitting the importation of raw materials and the extension of the BOI project period were among them. The CDASL has also requested clarification on restricted import items in order to avoid further disruption in project supply chains.
Furthermore, the CDASL has requested to waive off levies such as the Port and Airport Development Levy (PAL) and cess on project-related material for a stipulated time period to stimulate development activities and reduce costs.
Moreover, their foremost request in the letter was to permit and facilitate the commencement of construction projects as soon as practically possible. The CDASL assured that “a resumption of work could be done based on clear regulations and restrictions as advised by the Government’s health authorities”.
The second request was to include property developers among the list of industries or sectors eligible for financial concessions recently announced by the Central Bank to help with working capital or cash flow pressures. It is notable that following the Easter Sunday attacks last year, the construction industry, which is suffering since late 2018, requested the Ministry of Finance to provide them a moratorium similar to that of the tourism sector. However, the request was shot down by then Minister of Finance Mangala Samaraweera.
The CDASL also requests the President to encourage new investments greater than a stipulated value by granting attractive concessions.
In addition to these measures, the CDASL also requested to fast track the implementation of real estate investment trusts (REITs) and related legislations, and also to encourage foreign investment in Sri Lankan real estate. REITs are corporations that own and manage a portfolio of real estate properties and mortgages.
Rajendra was optimistic that the 30-member Presidential Task Force appointed on Wednesday (22) would look into their concerns and grant their requests. The Task Force headed by Basil Rajapaksa was appointed by President Rajapaksa and aims to revive the economy that has been severely hit by the Covid-19 pandemic.
In the meantime, the Chamber of Construction Industry of Sri Lanka (CCI) has requested the President to appoint a member of their Chamber in the Task Force in the wake of impractical regulations introduced to the sector by the Ministry of Health and Indigenous Medical Services.
Two weeks ago, CCISL President Eng. Maj. Ranjith Gunatilleke told us that only a person from the industry would understand the difficulty in implementing the regulations imposed on them, which includes maintaining one metre distance at construction sites, carrying a reduced number of people in the construction elevator, and employing workers only from within the construction area.
According to the CBSL External Sector Performance Report for December 2019, Sri Lanka’s building material imports for last year amounted $ 1.5 billion, similar to the previous year, while base metal imports were at $ 562 million.
According to research done by the General Sir John Kotelawala Defence University (KDU), amongst the raw material consumed by Sri Lanka’s construction industry, the highest volume of 33% is being used for office buildings and 11% for market complexes.
Sri Lanka’s Gross Domestic Product (GDP) was Rs. 14,449 billion in 2018, of which the construction sector’s contribution was approximately Rs. 1,083 billion. The total debt from the construction sector to private and state banks stands at 20% of their contribution to GDP, which is over Rs. 216 billion.