ECONOMYNEXT – Sri Lanka’s residential construction costs are kept artificially high with protectionist taxes creating monopolies and prices of steel, tile and fitting costs have rocketing after rupee collapsed, condominium developers have said.
Protectionist import duties have led to a fall in quality, the Condominium Developers Association ofSri Lanka said said calling for a “review of protectionism and the revisiting of negative lists.”
“Condominium Developers are being held to ransom by suppliers of building materials, fittings, fixtures and even services to an extent that the continuity of this vital sector of the economy is under serious threat,” the association said.
The industry is also facing re-imposition of value added tax, a new social security contribution levy on top of import duties and multiple layers of PAL, CESS and Excise Duty.
There was “needless and unjustified protectionism such as in the case of Tiles, Steel, Cement, Furniture, Kitchen, and Doors, which affect choice, product quality, availability and price and create a monopoly for a few players with dire consequences on an entire industry.”
“…Floor tiles that were Rs 150 sq. ft in 2021 are today Rs 450 to 600 and moreover have a delivery time of 4 months with no guarantee of prices being held.”
President Ranil Wickremesinghe this week allowed property developers to import tiles direct.
Related Sri Lanka property developers allowed to import tiles
Price of steel has shot up 350 percent from 100,000 rupee a tonne in 2021 to 450,000 rupees now.
Price of cement has increased from 800 rupees to 3100 rupees per 50kg bag or about 287 percent.
Prices of some fittings are more than 500 percent the condominium developers association said.
About 600,000 person are employed in the construction industry, the association said, while there were more indirectly dependent.
“It is this vast multitude whose livelihood is being subverted by short-sighted policies of greed and unfettered profiteering.”
The industry has already stopped new developments, and developers are forced to raise prices. Meanwhile developers and buyers who have contracted at fixed prices are in a quandary. (Colombo/Aug26/2022)