As an industry which relies on large scale investments to fund long-term projects, the construction sector is by nature, a business that relies on confidence, precision, and quality.
Elaborating on the challenges and opportunities anticipated within the construction sector, Hayleys Fentons Managing Director, Hasith Prematillake shared some unique insights on how the industry is faring and what it requires to progress moving forward.
Q: How has the construction sector performed over the recent past?
A: The construction sector’s performance tends to be closely linked to that of GDP. In a growing economy, demand for more infrastructure – be it residential or commercial property – is always likely to rise, even in the midst of economic downturns and political uncertainties.
By that measure, 2018 was a challenging but still overall positive year for the construction sector. Ever since the end of the war, our industry has enjoyed robust growth.
 |
| Hayleys Fentons employee at Colombo City Centre |
Renewed confidence in peace at the time helped Sri Lankans and foreign investors alike to feel more secure about their investments in Sri Lanka, leading to more longer-term planning being introduced to the country.
In 2018, tighter macro-economic conditions domestically and unfavourable exchange rate movements resulted in a weaker pace of growth for the domestic economy and the construction sector in general, however, this performance was markedly better than in 2017.
We have also seen notable shifts take place as a result of the rapid development of several large scale projects managed exclusively by foreign firms that tend to operate much larger economies of scale. This had the effect of crowding out investment into the domestic construction sector. The increased pace of development over 2018 also resulted in instances where some construction firms were cutting corners on structural, electrical and fire safety. This is certainly an area which regulators need to pay close attention to.
Overall, however, the majority of domestic firms have maintained a remarkable track record in terms of quality.
Unfortunately, while 2019 was off to a promising start, the aftermath of the 4/21 attacks has thrown our entire nation and its economy into a state of deep uncertainty. It is clear that the tourism sector and small businesses have been hardest hit, and severe knock-on impacts are anticipated across every sector of the domestic economy over the short-medium term.
Our hope is that all Sri Lankans – including the corporate sector and private citizens - can all play an effective role in expediting our recovery as much as possible.
Q: What is your outlook for 2019 and beyond?
A: In terms of the challenges related to policy reform, there is encouraging progress being made. As per the last budget, the Government has taken steps to remedy some of the distortions created by foreign firms bidding for large scale projects by compelling local participation. 
This is an immensely progressive step that will help to conserve and retain foreign exchange reserves while ensuring that local firms, their employees, and their related supply chains are all able to benefit from Sri Lanka’s continuing development.
Further, it creates opportunities for technology and knowledge transfer, enabling local players to step-up their capabilities. This too, can yield invaluable benefits to our economy over the long-term by helping us to build more sophisticated technical expertise among our people.
Another key challenge is in the enforcement of reliable standards. As a nation, this is an area of serious concern. We all need to be able to trust that the roof over our head and the floors beneath our feet are sturdy; hence, it is vital that the Government strictly enforce quality standards.
In that regard, we all need to do more to change our approach to quality on a cultural level. Sri Lanka is a nation with an ancient past that boasts of a rich culture and extremely sophisticated engineering expertise as evidenced by the monuments and irrigation systems that are still in use today.
In terms of an overall outlook, it’s clear that our nation faces new and serious challenges in every sector. National security is, of course, the utmost priority, but over the years it has become clear in order to ensure a stable and peaceful future for our nation, economic opportunities have to be enhanced across the board, and all citizens need to be provided with the tools and resources they need to meet their essential needs and enjoy a reasonable standard of living.
 |
| Solar power project for Brandix and Solar power project for Loadstar Pvt Ltd. |
We also remain confident that the setbacks we endure as an industry over the coming year will only be temporary.
The construction sector of any developing economy can never be completely halted because there is always latent demand. These cycles are inevitable in any economy. When responded to correctly, they help enhance the resilience of firms provided there is a policy environment which ensures an even playing field.
Q: How effectively do you think Sri Lankan can compete in overseas markets?
A: In terms of technical knowledge and expertise, Sri Lankan firms have a unique set of skills that we have to offer. We are also faced with some setbacks in terms of lack of resources to compete relative to larger firms in regional markets. However, this does not have to be a limitation, and if we play to our strengths, I believe that Sri Lankan firms like Fentons can make their presence felt when competing for even a portion of international projects. Already we have started planning to capture business in Cambodia, Bangladesh, Maldives, and Myanmar.
Sri Lankan companies have a lot to offer in terms of technical expertise.
Q: With the acquisition of Fentons by Hayleys back in 2015, how has your strategy changed?
A: We have gotten a great deal more ambitious since then. Where in the past, we had to always contend with somewhat limited resources. Hayleys has expanded our ability to take on larger work, while the synergies generated by the group help us to amplify our contributions back to the group.
Q: Has the Sri Lankan market shown much enthusiasm for renewable energy and energy efficiency?
A: When we look at emissions, China and India have two of the world’s largest carbon footprints and generally speaking our emissions are not of a scale that is significant enough by itself to contribute to climate change. Hence whatever we do on climate change, our fates will always be in the hands of the largest emitters and the steps that they take.
“We must always keep in mind that protecting our natural environment is not simply about mitigating climate change. It’s about moving to an economy of abundance. By being more efficient with energy usage, and utilizing freely available renewable energy sources, we can potentially reduce our total consumption as a nation.”
“Over the recent past, Fentons has developed large scale solar projects for MAS, Brandix, Coca Cola, Laugfs, and Load Star, and we have many more large scale projects in the pipeline.”
0 comments: