According to the International Iranian Stone Exhibition, the construction industry in many countries, including Iran, has an undeniable role in generating investment opportunities and generating wealth and added value in the economy. Due to the close relationship between construction and its upstream and downstream sectors such as base metals and non-metallic minerals and real estate services, the importance of this industry in the country's economy can be understood.

Many experts believe that value-added growth, development budget allocation and the effective presence of the private sector in the construction industry can affect the course of the country's economic cycle. Today, in developing countries, more than thirty-five percent of job opportunities are directly or indirectly in the construction industry.

The role of sanctions in the construction industry

The Parliamentary Research Center estimated the economic growth outlook for the year 1990 at negative 4.5 percent at best and 5.5 percent at worst. Although the oil sector has been hit hardest by the sanctions, the experience of previous sanctions and the study of their impact on the Iranian economy show that the construction industry suffered the most from the sanctions after the oil. Given the relatively similar nature of the new economic sanctions to previous ones, rising prices for producers and consumers, and the relative stability of government construction budgets and private sector investment, real growth in the construction industry was also expected to be affected; So that if the current situation of the building sector continues in the most optimistic state, it will have a negative growth of 15% in the year ninety-eight.

The role of investment in the construction industry

Investment in the construction industry can only lead to economic growth and economic achievement if capital injection and housing production are targeted and ultimately lead to housing consumption; Because if the investment is not directed to the construction sector, the final price of housing will increase and will reduce the ability of real consumers to buy housing. Therefore, the inflow of liquidity into the construction industry requires the formulation of strategies and policies to increase the growth rate of housing.

Impact of consumer uncertainty in the construction industry

According to Dr. Ajaghi, a housing expert, there are two important points regarding the issue of investing in the construction industry. First, the amount of investment depends on the expectations and outlook for the overall performance of the economy, and if the overall outlook of the economy is ambiguous for various reasons, including sanctions and Iran's response, investors will prefer to delay the investment decision. The second point is the negative growth of investment in the past few years and the amount of depreciation of existing capital, which can mean a slowdown in the long run. This challenge could be a long-term problem for the Iranian economy, which will not be easy to solve.

Due to the role of economic sanctions, reduction of public and private spending in the construction industry, rising prices and high levels of uncertainty in the economy, the Iranian construction industry is not having a good day. Rising housing prices in recent months and their important role in the entire construction sector, on the other hand, have made us not expect unconventional growth from construction this year.

 The building industry is the driving force of Sri Lanka's economy

Sri Lanka should be considered a developing country, which after the end of the civil war and political stability based on democracy is trying to develop and rebuild the country, especially the economy.

The country's GDP is estimated at $ 92 billion, with an average growth of 2%. Most of this revenue comes from exports (mainly tea, spices, rubber, coconut and related products), remittances from Sri Lankan workers working abroad and tourism.

But in 2019, due to the terrorist attacks of Easter, the tourism industry in this country faced serious losses. In 2020, the outbreak of the corona virus also posed serious challenges to the country's top three sources of revenue. For this reason, this year is expected to be a difficult year for the Sri Lankan economy.

However, after the end of the civil war, the country has taken the path of economic growth and development, and in this direction, reconstruction plays a significant role. On the other hand, with the steady increase in tourist arrivals since the end of the conflict in 2009, the Sri Lankan government has sought to develop economic growth infrastructure in line with major infrastructure projects such as freeways, airports and ports. Due to the great interest of international tourists in Sri Lanka, there are suitable investment opportunities in the hotel, resort, villa, restaurant, leisure complexes, conference and exhibition halls, and tourist air and sea transportation.

The ongoing extensive infrastructure development is expected to contribute to the country's high and sustainable growth in the medium and long term. Timely development of economic infrastructure while increasing economic efficiency increases economic production capacity, facilitates productivity growth and reduces regional disparities. The government's economic infrastructure development program in 2012 focused on all areas of infrastructure, road development, water supply and sanitation, ports and airports, transportation, housing and urban development, the establishment of industrial zones, hospitals, warehouses and procurement centers, and so on.

The construction industry in Sri Lanka has become one of the main drivers of the economy, and the government has paid special attention to it, so that the share of this sector in Sri Lankan GDP is nine percent and has created about six hundred thousand jobs. In recent years, the total annual construction turnover of the construction company has been about eight hundred billion rupees (more than four billion dollars), which is expected to increase if the planned investments by the government are realized.

Sri Lankan construction industry economists say high construction costs have forced domestic contractors to outsource construction tenders to foreign contractors due to problems such as a shortage of skilled workers.

Of course, the country has specific plans to attract foreign direct investment in this sector, but the high cost of construction, which increases the cost of an industrial investment, can be a disappointing factor in attracting foreign direct investment needed for economic growth. Comparing the construction costs of a housing with medium characteristics, it is clear that the cost of construction in Sri Lanka is the highest in the region and is second only to Singapore as a developed country with a per capita GDP much higher than Sri Lanka.

Of course, there are clear reasons for the rising cost of housing in Sri Lanka, including a variety of taxes, including the national building tax.

On the other hand, the high cost of imported materials due to five different types of taxes has also increased the cost of manufacturing in Sri Lanka. For example, the tax on ceramic tiles is one hundred and seven percent of the CIF value, and the rest of the building materials and supplies have similar costs.

Of course, the government is removing obstacles, such as reducing the complexity of taxes and reducing VAT, which have reduced costs, but the cost of construction is still high.

Regardless of construction costs, given the country's development trend, considerable political stability after the end of the civil war and the need for reconstruction, building construction such as accommodation centers (due to the expansion of the tourism industry) is growing rapidly. For this reason, investing in the construction of a building or the production of related products such as cement, ceramic tiles, concrete, etc., or the export of the mentioned products can be accompanied by a good return. In addition, the Sri Lankan Investment Board will benefit from very good support for investment in the production of these products. This has led many companies, especially Chinese and Indian companies, to enter Sri Lanka.

* IRNA