ABAD flags cartels in construction industry

Chairman claims manufacturers are artificially inflating the price of steel, glass, and tiles

KARACHI:

The Association of Builders and Developers of Pakistan (ABAD) has expressed deep concerns to the Competition Commission of Pakistan (CCP) regarding the formation of cartels in the steel, glass, and tiles industries. ABAD’s Chairman, Muhammad Altaf Tai, led a delegation to the CCP, urging them to take decisive measures against the cartelisation of these industries. The objective is to eliminate cartels and promote fair competition, thereby supporting the construction industry and enabling the general public to benefit from lower prices.

Over the past two years, the price of construction materials in Pakistan have experienced significant hikes, causing distress for both the industry and consumers. Cement bags, for instance, have almost doubled in price, averaging over Rs1,100. Similarly, steel prices surged to a staggering Rs300,000 per tonne, nearly tripling during the same period. Although steel prices have since receded and are currently hovering around Rs260,000, the impact on the construction sector remains significant.

Pakistan’s construction sector has been grappling with a slowdown in activity, which has resulted in adverse implications for job creation. Economic challenges such as high inflation rates, fluctuating exchange rates, and political instability are among the primary factors contributing to this sluggishness. These factors have dampened investor confidence and hindered the flow of both domestic and foreign investments into the construction industry.

Consequently, numerous construction projects have been delayed or put on hold, leading to a decrease in job opportunities within the sector. This slowdown has particularly affected various segments of the construction industry, including architecture, engineering, contracting, and labour-intensive activities. Skilled and unskilled labourers, who heavily rely on the sector for their livelihoods, have been hit hard by the lack of new projects.

The deceleration in construction activities not only directly affects job creation but also sends ripples throughout the broader economy. The construction industry has strong linkages with other sectors such as manufacturing, real-estate, and infrastructure development. When construction activity slows down, it dampens the demand for building materials, reduces the need for auxiliary services, and hinders the growth of related industries. Consequently, the lack of job opportunities in the construction sector creates a chain reaction that affects the livelihoods of numerous individuals and exacerbates unemployment challenges.

According to the ABAD chairman, manufacturers are artificially inflating the prices of steel, glass, and tiles, resulting in a significant increase in construction costs. This places an unreasonable burden on the general public as they have to bear the impact of these exorbitant prices. The rising price of construction materials not only hinder potential investments in the construction industry but also have a negative impact on ongoing projects. Builders and developers are struggling to complete their projects within the expected timeframes and budgets due to the ever-increasing costs of construction materials.

The ABAD chairman appealed to the CCP chairperson to take strong and effective action against cartelisation to protect the interests of the construction industry and the individuals who have been allotted properties. In a previous conversation with the CCP chairperson, Tai discussed these concerns in detail.

Competition Commission of Pakistan (CCP), Chairperson, Rahat Kaunain Hassan assured ABAD that the commission will conduct a thorough investigation into the alleged cartelisation in the steel, glass, and tiles industries and will take action according to relevant laws. During discussions with the ABAD delegation, the CCP chairperson highlighted that promoting fair competition and protecting consumer rights are fundamental responsibilities of the commission. She also urged ABAD to cooperate by providing all relevant facts and data related to cartelisation.

Published in The Express Tribune, June 24^th, 2023.

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