On February 17, 2025, the President of Sri Lanka presented the proposed national budget for the year 2025 to Parliament. The following is a summary of key provisions related to the construction industry.
While the budget introduces limited initiatives specifically
aimed at fostering growth in the construction sector compared to the 2020 budget or 2016 budget, several proposed measures support its development:
Key Policy Initiatives Benefiting the Construction
Industry
·
Establishment of a Development Bank –
Aimed at facilitating financial support for various sectors, including
construction.
·
Introduction of a Public Procurement Law
– Expected to enhance transparency, minimize corruption, and effectively utilise public funds.
·
VAT Arrears Relief for Construction
Contractors – Value Added Tax (VAT) arrears on projects carried out by
construction contractors under the Tsunami reconstruction initiative will be
written off.
·
Public-Private Partnership (PPP) Bill –
Intended to encourage more PPP projects, including those in the construction
sector, by providing a legal framework for collaboration between the public and
private sectors.
Proposed Infrastructure Projects Supporting Industry
Growth
The government has announced several large-scale
infrastructure projects that will create opportunities for the construction
industry:
·
Port and Terminal Developments:
o Colombo
West Terminal 2 & Colombo North Port.
o Kerawalapitiya
Custom Inspection Yard, Bloemendhal Logistics Park, and a Container Dry Port
(ICD) in Veyangoda.
·
Airport Expansion:
o Bandaranaike
International Airport Terminal 2 expansion.
Budget Allocations for Construction and Development
Projects
Significant budgetary allocations have been made for various
infrastructure developments, which will directly contribute to industry growth:
·
Water Sector Projects (LKR 3 billion):
o Rehabilitation
of downstream development in Galoya, Rajanganaya, Minneriya, and Hurulu Wewa
schemes.
o Community
water supply schemes.
o Resumption
of the Giribawa-Eppawala Water Supply Scheme.
·
Railway Projects (LKR 350 million):
o Extension
of the Kelani Valley Railway Line.
o Upgrading
the Thambuththegama Railway Station.
·
Road Infrastructure (LKR 10 billion):
o Improvement
and rehabilitation of rural roads.
o Rehabilitation
of rural bridges.
o Construction
of the Vadduvakal Bridge.
·
Housing and Building Development:
o Estate
housing and infrastructure development.
o Construction
of a treatment center for children with neurodevelopmental disabilities.
o Development
of a model daycare center.
o School
improvement programs.
o Establishment
of chemical product manufacturing industrial parks.
These initiatives highlight the government's continued
investment in infrastructure, creating potential opportunities for the
construction industry despite the absence of a dedicated sector-specific
stimulus.
For construction professionals, the proposed new projects
and budgets represent a positive shift, with an indication of increased
job prospects, especially in road construction.
Source: https://www.treasury.gov.lk/api/file/016f7fff-9659-49ba-ac59-2fed25030671
