Global geopolitical tensions and ongoing supply chain disruptions are reshaping economic conditions worldwide, affecting key sectors such as construction and infrastructure development.
In an interview with The Sunday Morning Business, University of Vocational Technology Professor and Construction Industry Development Authority (CIDA) Chairman Chandana Jayalath discussed the impact of emerging global dynamics on the Sri Lankan construction sector, as well as the country’s overall economic outlook.
Following are excerpts:
What primary shifts are likely to affect Sri Lanka’s construction sector from the current geopolitical developments and global instability?
Global instability is likely to affect the construction sector mainly through fluctuations in material prices, financing conditions, and investor confidence. Many key inputs used in construction, including steel, fuel, and machinery, are tied to global supply chains. When geopolitical tensions emerge, these supply chains are disrupted and prices tend to fluctuate.
However, at the same time, this situation provides an opportunity for Sri Lanka to strengthen local capacity, especially by localising production and engaging in building technology-related innovations. There is room to expand local material industries, explore other construction technologies, and improve project management practices, ensuring efficiency.
Reducing waste and adopting circular construction methods will also help the industry remain stable during uncertain periods. If these developments are implemented and if these areas are properly addressed, the construction sector can become more competitive and resilient amid shocks.
The construction sector is undoubtedly a key driver of economic recovery. The sector was influential in terms of the overall reported economic growth in 2025, reporting a 9.2% expansion in the year. In light of the external shocks we continue to face, what reforms would you recommend as necessary for the construction industry to face future global challenges?
Construction plays an important role in economic recovery because of its strong multiplier effect across the economy. In fact, it has one of the highest multiplier effects in any economy.
When construction activity increases, employment opportunities expand and local industries that supply materials also benefit. Infrastructure development also improves productivity and supports investment, leading to a rise in investment confidence.
A healthy construction sector therefore contributes directly to national development and is essentially a foundation. However, growth in the industry must be supported and driven by quality, safety, and long-term sustainability to ensure that development is both effective and responsible.
What would you recommend as necessary reforms for the construction industry to face potential future global challenges of similar nature?
The construction industry needs to modernise in several areas to remain competitive, with four key areas in particular.
One such area is digitalisation. We need to ensure improved use of digital tools such as Building Information Modelling (BIM), digital approval systems, and smart monitoring technologies. Another requirement is improving productivity through modern equipment, skilled labour, craftsmen in particular, and standardised practices.
Sustainability must also become a priority, with more energy-efficient buildings, environmentally responsible and green materials, and circular construction practices.
In addition, improving dispute resolution mechanisms is essential to ensure efficiency. Fast, professional resolution mechanisms can reduce project delays and cost overruns. My view is that the modern construction sector is about building national capability.
In order to modernise, how important is addressing human capital concerns for the future of construction in Sri Lanka?
Human capital is the single most important factor in the future development of the construction sector. Skilled craftsmen, engineers, and technicians are essential for building modern infrastructure. Hence, we must invest heavily in training, certification, safety standards, and professional ethics.
When our workforce becomes globally recognised for skill and discipline, Sri Lankan construction professionals can compete anywhere in the world. Efforts are already underway to strengthen the workforce through initiatives such as establishing a national pool of construction craftsmen.
Individuals working in the sector in informal, ad hoc, and private capacities are encouraged to join this pool. This initiative aims to provide a more structured and stable working environment while supporting long-term workforce development.
With the rapidly changing tensions in the Middle East and elsewhere, and at a time of potential onset of a new global order, what is Sri Lanka’s position, especially in terms of key industries? If geopolitical tensions escalate further, how vulnerable is Sri Lanka?
The global environment is moving towards a more multipolar structure. Economic and political influence is no longer concentrated in a few countries, and new centres of growth are emerging across Asia, the Middle East, and the Global South.
For Sri Lanka, this change presents a few opportunities. Smaller countries can act as connectors between regions if they manage their economic and political strategies carefully. Sri Lanka’s location in the Indian Ocean offers advantages in logistics as well as the ability to act as a financial bridge and as a knowledge partner connecting East and West.
However, political stability and disciplined economic management will be important in making use of these opportunities. Therefore, the real question, regardless of what the world will do to us, is how intelligently Sri Lanka is situated within it.
Also, if geopolitical tensions worsen, Sri Lanka remains vulnerable in three major areas, specifically energy security, food supply chains, and foreign exchange flows. Global conflicts can affect fuel prices, shipping routes, and investment patterns, all of which influence the local economy.
These risks highlight the need to strengthen domestic capacity. Expanding renewable energy, modernising agriculture, diversifying exports, and maintaining strategic reserves for fuel and food can help reduce vulnerability and improve resilience, as well as move from dependency to strategic self-reliance.
The biggest change Sri Lanka needs is moving from a consumption-driven approach to a production-oriented mindset. The country has relied heavily on imports for food, industrial materials, and other essential goods. Building up domestic production across manufacturing, agriculture, and services will help improve resilience.
This means strengthening manufacturing, building export industries, modernising agriculture, and also developing high-skill services. Economic progress depends on productive citizens and stable institutions.
Given the situation, Sri Lanka must practice strategic neutrality while remaining open to economic cooperation. The country has historically followed a non-aligned approach, and this remains relevant even in the future. We should try to maintain friendly relations with all major powers and avoid becoming a geopolitical battleground. Diplomatic engagement should focus on national interests and economic collaboration rather than political alignment.
What role should governance play amid these changes?
Governance should focus on long-term and national planning rather than short-term political cycles. We need policy consistency for 20–30 years, strong institutions, evidence-based decision-making, and transparent regulatory systems. Sri Lanka must become a predictable, rules-based economy to attract investors, professionals, and entrepreneurs, and also to make them feel secure.
We are at an important point, with global changes creating both risks and opportunities. We do have several advantages, including our strategic location, human resources, and natural assets. However, these strengths need to be supported by discipline, innovation, and hard work.