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February 8, 2017

‘Local construction firms get only four CPEC projects’


February 8, 2017

LAHORE: The government has allocated only four projects to the local constructors under the China-Pakistan Economic Corridor (CPEC), and those too under strict conditions, Sikandar Hayat Khattak, chairman, Constructors Association of Pakistan (CAP), said.

“The conditions of these projects are so stringent that hardly any local construction firm will qualify for it,” Khattak said while talking to The News on Tuesday.

Chinese firms were being given huge incentives besides income tax and other duty exemptions on the CPEC projects, while the local industry was not being provided with a level playing field, he added.

The condition, to sign a joint venture (JV) with a local partner in mega projects has also been revoked by the government for the Chinese in CPEC-related projects, despite that a 70-30 percent JV was mandatory for foreign firms to develop the local sector, ensure technology transfer and human resource development, Khattak added.

He said the Chinese companies were only sub-letting earth work to the local constructors, which was much lower than their working capacity. The CAP chairman said the local industry was able to compete with international constructors.

Both M-I and M-II were completed by the local constructors when the Turkish contractor left the M-I project and the other sub-let almost all the M-II work to the local constructors, he added. In Murree Road Project also the local constructor supplied pre-mix due to their expertise in the sector.

“We are requesting the ministry of commerce and Federal Board of Revenue (FBR) to increase the age of import for used construction sector machinery to 15 years instead of 10 years. Latest modern machines use 100-Octane fuel which is not available here, while the available fuel in Pakistan destroys these machines causing losses to the sector,” Khattak said.

The non-availability of loans and financial facilities to the construction industry, due to the sector’s high-risk ranking, was also hampering growth, he added.

“Pakistan needs a construction bank like Turkey, China, and India, which will provide guarantees, and other banking products for the construction sector,” he said, and added that he believed this would result in tremendous growth of the construction sector.

The CAP chairman also said the government can revive the Pakistan Steel Mills in the wake of the ongoing construction work of the China-Pakistan Economic Corridor (CPEC) development projects.

“Huge quantity of iron products are being used in all types of construction and development projects of the CPEC, which is enough for the revival of the PSM as all its production can be consumed. Currently, it being imported from China by the Chinese companies,” he said.  Talking about political involvement in awarding the public sector development and construction projects, Khattak said Khyber Pakhtunkhwa was almost free from such involvement, while in Punjab, this was huge. “No work seems to be possible without political involvement in Punjab,” he said.



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