Construction sector's massive potential - I

The construction sector has great potential to uplift the entire economy, as it generates an impressive chain of activity in more than 40 industries. Roughly 30-35% of employment is directly or indirectly affiliated with this sector. Although formally, the construction sector has contributed nearly 2.85% to Pakistan's GDPin the last five fiscal years, most economists estimate its value to stand between 10 and 12% of the total GDP. This is because it provides stimulus to over 42 ancillary sectors including aluminum, brick, cables, cement, fixtures, glass, kitchen and bathroom fittings, marble, paint, steel, tiles, transportation, warehousing and wood.

Renowned Lahore architect Abrar A. Siddiqui has pointed out that the sector employs a large proportion of Pakistan's unskilled labor force, while the main impediment to the sector remains the lack of a market for pre-fabricated steel and other parts. The pre-fabricated sector is the force behind countries such as China as well as in the West having immensely shorter lead times for the construction of buildings. Furthermore, Pakistan does not produce its own steel, so the import of steel adds to costs and slows the process down further.

Advanced technology and techniques for project management in the construction and preconstruction phases have made the industry far more efficient across the globe: a major construction project takes up to 7 years to complete in Pakistan while it can be completed in half the time in the US and maybe in a matter of months in China. Pakistan's industries have yet to implement new technologies in the construction realm that have greatly reduced project completion times in developed countries. In conversation with Mr. Khawaja Rizwan Qadeer, a civil engineer and leading builder who restored the Governor's House in Lahore, we learned that when western countries make high rise steel structures, they utilize pre-fabricated girders and beams.With these resources, theskeleton for a 60-70 story building is completed in a matter of 6 months. However, Pakistan does not have a good steel fabrication setup. There is very less steel construction, and nor is there a market for it. Our workforce also lacks the skills to adjust to these techniques, thereby remaining comfortable with the traditional way of doing things.

The cement industry has faced an unprecedented increase in demand despite the pandemic, leading to a significant increase in employment. It is important to note that each of the allied sectors relevant to construction has a major industry behind it - steel, cement, transport - each create jobs thatin turn contribute to the growth of the construction sector, which is itself further supported by a large workforce ranging from laborers to craftsmen. Qadeer pointed out that oftentimes when the US economy faces a period of slowing growth, they look to the revival of their construction sector as a catalyst for the revival of the economy.

The country has a large demand for housing, and this sector has the capacity to absorb a substantial number of skilled and un-skilled workers. Furthermore, for every one house constructed two jobs of permanent nature are created either directly or through allied industries. Projects such as high rise residential and commercial buildings, public schools, parks, hospitals, colleges, libraries and universities are helpful in producing multiplier effects in the economy, reducing unemployment, alleviating poverty, improving socio-economic indicators and theinfrastructure of the country. Take Centaurus as an example - the shopping mall in Islamabad that employs roughly 3000 young Pakistanis and a total of about 10,000 workers.

The government announced a Rs. 100 billion relief package for the construction industry in April 2020 in order to spur economic recovery. This package was designed to bridge the affordable housing gap through the Naya Pakistan Housing Programme (NPHP) which was initiated in April 2019 with the goal of building five million houses in five years. It is also intended to jumpstart the economy by creating employment. To ensure these goals are met, the government has set up the National Committee on Housing Construction and Development (NCHCD). The Committee's objectives include monitoring the construction sector and ensuring that any hurdles that arise are overcome to ensure that construction activities continue to increase rapidly. Although the packages have led to a significant rise in activity and workload in the construction sector, it will take some time to see their results and effects on the economy. Projects that had been left on hold are being taken up once again and novel designs are being introduced.

However, there objective of boosting productive market activity requires more than what this package has to offer. The package does not address issues of over-regulation, poor policy formulation and thoughtless planning. City development, regeneration and innovation require linkages to a dedicated economic growth strategy. This should ideally incorporate fuel, energyand time efficiency, include mechanisms to reduce travel time, improve connectivity as well as inter-city linkages - all while remaining cognizant of the impacts on climate and striving to ensure a low-carbon footprint.

In many countries, the construction sector is considered the backbone of the economy: Brazil, China and India are countries that improved their economies by means of increased construction activity. Almost half of the world's population lives in cities, producing more than 80% of global GDP. Dense high-rise cities are more productive, more inclusive and more economically viable.

(To be continued tomorrow)

Copyright Business Recorder, 2020