Construction sector upbeat, expects boom after Eid
KARACHI: Construction on private sector high-rise projects and public development works in Punjab and Khyber Paktunkhawa partially resumed on Friday after remaining suspended for over a month due to the Covid-19 lockdown.
Meanwhile, construction activities in Sindh, particularly in Karachi, have yet to resume as the standard operating procedures (SOPs) have not been finalised, builders claimed on Saturday.
Construction activities at over 500 high-rise buildings and development projects all over the country were halted last month when the pandemic made its way to Pakistan.
On Friday, the government implemented a tax amnesty scheme for the realty sector allowing wealthy people and overseas Pakistanis to invest undeclared money in construction and development sectors to mitigate the impact of Covid-19 pandemic on the country’s economy.
The amnesty scheme, the second offered by the incumbent government in less than a year, only allows builders and developers of housing societies and projects to avail economic incentives of direct and indirect taxes. The duration of completion of the project is 2.5 years for availing the incentives.
Before the issuance of the ordinance, the scheme was approved by the federal cabinet headed by Prime Minister Imran Khan. The ordinance is titled as the Tax Laws (Amendment) Ordinance 2020. The government has yet to release the ordinance and only issued details of the ordinance.
The indirect beneficiaries of the package are related industries of cement, iron and steel, woodworks, goods transport. The capital gains tax is exempted on the sales of constructed residential property with a maximum land area of 500 sq yard and 4,000 square feet in case of a flat.
No inquiry will be required regarding source of unexplained income of individual builder or developer who invested in an eligible project, any amount invested by a shareholder or partner of a builder or developer as capital or land transfer, on or before December 31, 2020.
Following the approval of the ordinance, builders and developers are upbeat. However, they expect full boom in construction activities after Eidul Fitr. By then, the coronavirus pandemonium would have slowed down too, sector representatives hope.
Around 60 per cent of the construction projects are in Karachi. The cost of each project is not less than Rs3 billion while more than 500,000 people are directly involved in the construction.
Some 50 per cent of construction workers and labour are currently involved in wheat harvesting in Sindh and Punjab and are likely to return to these projects after Eid.
Talking to Dawn, Chairman Association of Builders and Developers (ABAD) Mohsin Sheikhani said the organisation is in touch with the Sindh government for finalisation of SoPs for construction industry.
He said establishment of Construction Industry Development Board (CIDB) would ensure uniform laws in the sector which would allow ease of doing business besides opening doors for local and foreign investment.
Founding Member National Steel Advisory Council and MD Razaque Steel, Irshad Mowjee said the price of steel bars made from billets has risen by Rs2,000 per tonne, followed by Rs6,000-7,000 per tonne rise in steel bar made of scrap in the last one month due to the vulnerable exchange rate.
Fixing time limits for projects and grey structures under construction package would force genuine builders and developers to start construction and would avoid speculation which was always a case with property investments, Mowjee said.
He hoped that foreclosure laws would be given teeth which would allow mortgage companies to easily recover properties in case of default.
Mowjee said committing billions of rupees to Naya Pakistan low income housing projects with substantial tax reductions would be a game changer for the steel industry as demand would rise. Genuine players and finance houses would inject funds to jump start the economy.
Meanwhile, a cement maker said plants in Punjab and Khyber Pakhtunkhwa had reopened. The per day cement sales, which had dropped to 25,000 tonnes per day from 135,000-140,000 tonnes per day prior to Covid-19 lockdown, have now returned to 115,000 tonnes a day.
In Sindh and Balochistan, plant operations have resumed partially. The per day consumption, which was 22,000-24,000 tonnes per day before coronavirus outbreak, plunged to 5,000 tonnes and is now 10,000 tonnes a day.
He said fixing project deadlines under construction package was not feasible as getting NOC for a project requires four to five months period in Sindh and seven to eight months in Punjab.
President Karachi Iron and Steel Merchants Association (KISMA), Shamoon Baqar Ali was highly optimistic over soaring construction activities after Eid.
With the closure of steel markets over a month, importers are unable to clear 80,000 tonnes of flat steel products from the port and are now seeking incentives from the State Bank in this regard. Dawn news
Pm announced package for Construction sector.