Suspension, cancellation of projects behind construction sector slump, say traders

The country's construction sector has been going through a fallow period in recent months, with traders today (24 January) attributing it to recent political changes, which have led to the suspension of several government projects, the cancellation of some, and delays in starting new development initiatives.

They also noted that construction projects from the private sector have also decreased significantly.

However, they believe that new investments are likely to resume once political stability is restored.

The remarks came from traders participating in the ongoing "Building and Construction, Woodworking, and Electrical Expo", currently taking place at the International Convention City Bashundhara (ICCB) in the capital.

Visiting the exhibition today, the second day of the three-day event, the sluggish situation of the sector was witnessed as footfall was notably lower than in previous years. The number of stalls also dropped to nearly half.

Talking to The Business Standard on the matter, Md Aminul Islam, general manager of Fujian Qunfeng Machinery Co Ltd, said, "Many projects have been stalled since the political change in August. Additionally, new projects are not being initiated, which has slowed down our business." 

"The construction sector has faced multiple challenges in recent years, including the pandemic, dollar crisis, and currency devaluation," he added.

Aminul further highlighted that the Chinese company, with around 60 factories in Bangladesh, is mostly reliant on government projects.

He said, "Around 50% of our work is tied to Local Government Engineering Department (LGED) projects, where concrete blocks are prioritised over traditional bricks due to environmental concerns. We have also contributed to mega projects and also worked on projects like the Padma Bridge river training works."

According to the organisers, around 150 companies have participated in this year's exhibition, with nearly half being local businesses. The international companies include those from China, India, Taiwan, Germany, and Turkey. 

However, last year, Indian companies made up nearly half of the participants at the expo. This year, only 4–5 Indian companies have joined. The number of stalls has also come down as last year there were about 250 stalls.

Representatives from other local and international companies shared similar concerns.

Md Yeakub Ali, senior engineer of Cathweld Construction Co Ltd, said, "Many government projects have been halted, and some private clients have paused construction work following the government change.

"There are even cases where tender submissions were made, but the projects got cancelled, leaving our security money tied up." 

Bangladeshi company Construction Solution, which collaborates with Chinese firm Xinda Machinery Ltd, highlighted the impact of political uncertainty on the construction sector. 

Mostofa Kamal, COO of Construction Solution, said, "Due to the political crisis, people are investing less in projects, and government projects are also stagnant. Fridays usually bring in large crowds, but this time the turnout is significantly lower."

"Things will improve, though. Once political stability returns, investors will regain interest. Right now, there's a sense of uncertainty," he added.

Abdus Salam, senior sales officer at Indian company Schwing Stetter,  said, "We have worked on major projects like metro rail, elevated expressways, and Rampal Power Plant. Currently, sales are down due to the lack of new projects. However, once projects restart, sales will pick up again."

The exhibition saw participation from construction solution providers, machinery manufacturers, and electric companies. 

Industry representatives from these sectors have noted that market activity may remain somewhat stagnant until the upcoming elections.