Mansoor Sadiq

The slowdown of construction activities in Pakistan has started impacting associated industries, leading to limited job opportunities. Talking to INP-WealthPK, Senior Vice-Chairman of the Association of Builders and Developers of Pakistan (ABAD) Khawar Munir suggested that the government come up with an immediate plan to contain the ever-increasing prices of construction material. Munir said approximately 70-80 percent of under-construction projects had halted due to increase in the construction cost and power tariff, causing the shutdown of most of the allied industries and rendering almost 20 million people jobless. It is worth mentioning that the demand for new housing units is increasing due to the rising population. The construction sector employs more than 9% of the total labour force.

“Owing to import restrictions in the past several months, a steep surge has been witnessed in the prices of construction material, particularly of steel, cement, marble, and timber,” he said. During a random survey conducted in the twin cities of Rawalpindi and Islamabad, dealers and retailers of cement, steel, ceramics, marble tiles, plastic pipes, woodworks, electric appliances, glass and bricks were of view that the business activities had almost halted. Wajid Bukhari, a representative of Pakistan Association of Large Steel Producers (PALSP), told WealthPK that the prices of steel bars had skyrocketed following an increase in the prices of gas, electricity and petroleum products. He said the massive increase in costs and raised power tariff had brought the steel industry to the brink of closure.

It is noteworthy that the electricity prices have surged by 78 percent from PKR28/unit (with taxes) in June 2022 to approximately PKR50/unit (with taxes) in July 2023. Gul Wali Khan, a brick retailer from Rawalpindi, told WealthPK that the sales were low during the last six months due to increase in the brick price. He said an A class (machine-made) brick cost Rs14 and a B Class brick PKR13.50. Similarly, brick awwal (A class) costs Rs14.50 and Brick-Awwal (A+class) PKR16.50. He said the current wave of inflation had seriously impacted the construction industry due to which people were taking least interest in construction of new houses. Owing to diminished construction activities, cement sales have also witnessed a substantial decline in the last three months.According to the All-Pakistan Cement Manufacturers Association statistics, local cement despatches during June 2023 were 3.487 million tons compared to 4.979 million tons in June 2022.

Talking about the challenges facing the paint and coating industry and possible prospects in Pakistan, Secretary of Pakistan Paints and Coating Association Iftikhar Rahat said the slowdown of the construction and automotive industries had seriously impacted the industry. Saima Saleem, Sales Manager at Agency 21 International, Pakistan’s largest estate agency network), told WealthPK that the construction sector was confronting the challenge of inflation and rising prices of material, thus leading to the slowdown of construction activities. She said the rising cost of construction material had reduced the profit margin for developers and construction companies, with delays and cancelation of projects limiting public investment. In the given situation, the industry stakeholders, government, and construction companies should come forward with a practical approach to address these challenges responsible for the slowdown of construction activities.

Credit: INP-WealthPk