Govt considers overhauling of construction sector

ISLAMABAD: Federal Minister for Economic Affairs and Establishment Division Senator Ahad Khan Cheema on Saturday chaired a meeting to oversee major regulatory, operational, and financial reforms within the national construction sector aimed at strengthening Pakistan’s construction sector and improving national standards.

The meeting was attended by Minister of State for Finance Bilal Azhar Kayani, Federal Secretary for Housing and Works Captain Mahmood (R), Managing Director Public Procurement Regulatory Authority (PPRA), leadership and representatives of the Construction Association of Pakistan (CAP), and senior relevant officials, said a news release.

As part of a broader vision to revamp the industry, the government is considering a comprehensive construction industry development package that includes the establishment of a Construction Industry Development Board (CIDB), the evaluation of a dedicated Construction Development Bank (CDB), rationalization of import and export policies, and targeted tax reforms for the construction sector.

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During the deliberations, Ahad Cheema emphasized that the proposed CIDB would play a dual role encompassing both the overall development of the construction sector and regulatory function 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 that complete alignment exists between the federal government and CAP on the need for this body, adding that the federal government would submit the framework to the prime minister for approval.

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

Focusing on the long-term durability and structural integrity of public infrastructure, the 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 said that civil infrastructure must not deteriorate shortly after completion, asserting that extending the liability period will compel contractors and executing agencies to uphold high quality standards and prevent premature decay.

Addressing critical gaps in accountability, Senator Ahad Cheema pointed out that while penalties currently exist for contractors in cases of default or poor performance, no legal framework or penalty mechanism exists for consultants.

Under the new regulatory framework of the CIDB, consultants would also be brought under direct oversight, ensuring they were held legally and financially accountable for design flaws or technical errors.

Representatives of CAP fully endorsed this stance, agreeing that establishing regulatory accountability for consultants was essential to ensure design precision and protect public investments.

In response to proposals put forward by CAP representatives regarding banking hurdles in securing financial and performance guarantees as well as their request for a specialized Construction Development Bank, Ahad Cheema directed the minister of state for finance to initiate discussions with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA). Any decision regarding the establishment of a dedicated CDB would be evaluated based on the detailed feedback and financial feasibility provided by the SBP and PBA.

Ahad Cheema reiterated that the principal focus of the government was on ensuring that every public infrastructure project was both cost-effective and highly durable.