Construction entrepreneurs hope that things will take a turn for the better in the realty sector this fiscal year.

Stakeholders state that introduction of a full budget on time is a good sign for the sector. The government has allocated Rs 85 billion — 16 per cent of the total budget — for infrastructure development. “Unlike the last fiscal year, this year circulation of budget will create the environment for approving development plans, bidding and handover of projects on time,” says Jaya Ram Lamichhane, president of the Federation of Contractors Association of Nepal.

Lamichhane says if all goes well, there will be a bidding process in September and contractors will be able to get new projects by November in the pipe line.

“Unlike earlier, we need not work in the 11th hour, which will assure quality work in development. Hopefully we can get contracts by November,” he says.

Although a full budget cheered the sector, Lamichhane complains
about the lack of amendments and new policies from the government for the sector. “We were expecting some amendments in the Construction Policy but there was nothing,” he says in disappointment. Stakeholders point to political instability as the main hurdle for economic growth and development activities.

“Unless there is political stability and economic growth, infrastructure development and construction work won’t pick up pace. However, we are optimistic,” articulates Binod Keshari Upadhyay, president of the Federation of Construction Material Business Association.

Upadhyay informs that Nepal has to rely upon import for almost everything, while export is nil. He says that primarily there should be political stability before the country will witness economic growth. Only then, infrastructure development will take pace. Stating that the Money Laundering Act hinders investment in property, he opines that for the development of the real estate sector, the government should remove the cap; along with the compulsion to disclose income source to invest in property.

Upadhyay says, “Construction materials like sand, bricks, pebbles, tiles, PVC pipes, zinc plates, cement are manufactured locally. For cement, local companies fulfil 80 per cent of the demand.” According to him, there are altogether almost 45 cement manufacturing factories in Nepal and five more will soon be added to the list, which will be sufficient to fulfil the demand in the market.

However, Nepal has to totally rely upon imports for materials such as steel rods, lifts, elevators, generators, construction machinery, quality-testing equipment, engineering equipment, parqueting, aluminium composite panels and other products.

Stating that the government’s decision to close sand mines is not appropriate, Upadhyay says, “The closure of sand mines results in scarcity of products in the market which ultimately halts development activities.” He suggests introducing proper guidelines to follow
for all parties. “Here no one is disciplined -neither the government can monitor and check the quality nor are businessmen accountable towards the environment. In such a case, the government should introduce guidelines and a proper way out. Otherwise, with increasing demand, restriction on such mines will invite illegal excavation of sand,” he warns.

Talking about the problem of raw material, Lamichhane says, “The mining of sand, pebbles, gravel, et cetera has been halted by the government owing to the environment aspect. If sand mining is hampering the environment, the government should work on that and implement it properly rather than shutting down all mines and adversely affecting the construction work.” Upadhyay informs that the required quality sand can be acquired from Balekhu.

Tara Bahadur Kunwar, president of Nepal Heavy Equipments
Business Association, says that timely budget has cheered them up and gives a positive signal that things will improve by November.

Sharing the past fiscal year’s experience, Kunwar says, “It was the worst year as we were obliged to work on credit because of
the untimely budget. We had to work on Rs four billion credit for housing developers, contractors, builders, et cetera.” He also informs that 40 per cent of entrepreneurs were forced to leave the heavy equipment trade. Being optimistic about this current fiscal year, he says, “We are hopeful that this year we’ll get to work on cash and won’t have to face an unfavourable situation.” Entrepreneurs import heavy equipment such as dozers, elevators, loaders, rollers, cranes, graders, et cetera from Japan and India. November to March is an ideal time for material handling, stock and construction work.

source: the himalayan times, 17 August 2013