Construction-Related Initiatives in Sri Lanka's 2025 Budget

 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