Over the past two years, Pakistan has seen significant growth in its construction sector that has experienced a growth of 9% and 14% in fiscal years 2017 and 2016, respectively.
This growth has been on the back of population growth, increase in public development spending, and the China-Pakistan Economic Corridor (CPEC). And the future of construction sector for now also looks bright with BMI Research, indicating a growth rate of 11.8% and 9.1% annually from 2016-2020 and 2016-2025 respectively.
China with the start of CPEC is now benefitting from the construction industry. It is expected that with the completion of power and transportation projects, Beijing will start focusing more on housing, industrial, and commercial construction. Other countries are also following China’s footsteps and are injecting capital investments in the sector.
According to the data shared by the State Bank of Pakistan, foreign investment in the construction sector during the months of July and August of FY 18 stood at $55.7 million as opposed to $1.6 million in the same period last year. The construction industry received a net inflow of $35.7 million in the month of August 2017 alone.
Sika Pakistan, a subsidiary of Sika Switzerland AG, saw an opportunity in the construction sector and invested seven million Swiss Franc to construct its chemical manufacturing facility in Lahore at the Sundar Industrial area. The increase in investment has also been due to government reforms of reducing taxes and levies on construction machinery and equipment, and building materials. This reduces the cost of production and attracts foreign investors in Pakistan.
The industry, after showing substantial growth, needs to maintain its standard. To achieve that purpose, government should remove all hurdles that can come in the way of its growth. Regularizing land and building control should be mandatory and construction skill set should be given to the students so that they can implement them in the future.