Construction uplift package being studied

Govt mulls over setting up development bank, rationalising import and export policies

ISLAMABAD:

Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema chaired a high-level meeting to oversee major regulatory, operational and financial reforms within the construction sector.

The meeting was attended by Minister of State for Finance Bilal Azhar Kayani, Federal Secretary for Housing and Works Captain (Retd) Mahmood, the Public Procurement Regulatory Authority (PPRA) managing director, the leadership and representatives of the Construction Association of Pakistan and senior relevant officials. As part of a broader vision to revamp the industry, the government is considering a comprehensive construction sector development package that includes the establishment of a Construction Industry Development Board (CIDB), evaluation of a dedicated Construction Development Bank (CDB), rationalisation of import and export policies, and targeted tax reforms.

During deliberations, Ahad Cheema emphasised that the proposed CIDB would play a dual role encompassing the overall development of the sector and regulatory functions to oversee industry standards, contractors and consultants. Composed of representatives from both the public and private sectors, the board will serve as a unified platform to elevate national standards.

The minister noted complete alignment between the federal government and CAP on the critical needs of the association, adding that the federal government would formally submit the framework to the prime minister for final approval.

Furthermore, the broader development package under consideration aims to address financial and policy bottlenecks through tailoured tax incentives and aligned import and export policies that encourage adoption of modern technology and build local construction capacity.

Focusing on the long-term durability and structural integrity of public infrastructure, the federal minister announced that the government would soon extend the standard Defect Liability Period (DLP) for public development projects from the current one year to three years, with a clear roadmap to further expand it to five years in the future.

He observed that civil infrastructure must not deteriorate shortly after completion, asserting that extending the liability period would compel contractors and executing agencies to uphold high quality standards and prevent premature decay. Addressing the critical gaps in accountability, Ahad Cheema pointed out that while penalties currently existed for contractors in cases of default or poor performance, no legal framework or penalty mechanism was in place for consultants. Under the new regulatory framework of CIDB, the consultants will also be brought under direct oversight, ensuring they are held legally and financially accountable for design flaws or technical errors.

CAP representatives endorsed the stance, saying that the regulatory accountability of consultants was essential to ensure design precision and protect public investments.

In response to the proposals put forward by CAP regarding banking hurdles in securing financial and performance guarantees as well as their request for a specialised Construction Development Bank, Ahad Cheema asked Minister of State for Finance Bilal Azhar Kayani to initiate formal, detailed discussions with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA). Any decision regarding the establishment of CDB will be evaluated based on the detailed feedback and financial feasibility provided by the SBP and PBA.

Cheema reiterated that the principal focus of the government was to ensure every public infrastructure project was both cost-effective and highly durable. Emphasising that public funds were a national trust that could not be allowed to go to waste due to substandard project execution or flawed technical designs, he affirmed that an independent board playing both developmental and regulatory roles would enforce accountability, streamline dispute resolution and raise national construction standards to international levels.