Construction Sector

Construction Sector Share PSDP 2010-11 % of GDP % Share in Construction Sector Total PSDP Allocation * 663.00 3.79% Construction Sector Share @ 58.4% 387.19 2.21% Infrastructure Development @ 71% 274.91 1.57% 15.71% Social Development & Other @ 29% 112.29 0.64% 6.42% Housing Sector Share 884.63 5.06% 50.55% Commercial / Industrial Construction 478.18 2.73% 27.32% Total 1,750.00 10% 100.00%

Industry Segments Housing (private and Projects ) 50.55% Commercial Units / Projects 27.32% Public Sector Social Infrastructure/ Offices and other Assets 6.42% Physical Infrastructure 15.71%

Value Chain Labor Equipments Land Materials Marketing Companies 1.2 m skilled, 2.6 m unskilled, 0.03 m Machine operators Value Chain Sub Contractors (25536) Builders/ Constructors (6384) Planning/ Designing (1534) Home owners Public sector organizations (20 Main) Equipments Land Materials Aggregates Allied Industries (40+) Crushed Stone Sand Steel Bricks Wood Sanitary fittings & wares Cement Elec fittings and wires Paints Others Housing (private and Projects ) Foreign Market Real Estate Agents Marketing Companies Direct Marketing Commercial Material Suppliers Commercial Units / Projects Domestic Public Sector Social Infrastructure/ Offices and other Assets Public Sector Housing (private and Projects )

Key Issues Policy and Regulatory Environment Obsolete Housing policy (2001)- weak enforcement Land (identification, acquisitions, information systems, registrations, disposal) (Section 2)- Status poor Housing Finance (mobilization, credit facility, legal framework, incentives) (Section 3)- Status poor Construction Service Sector (incentive to builders, simplification of collection of taxes, duties on machinery imports & materials, Contracting procedure, Standardization of conditions of Contracts) (Section 4)-Status Fair Planning ,Zoning and Building Regulations (Section 6) –Status Poor Standardization of Building Components (Section 7.2.1)- Status Poor Cost Effective Material (Mud Brick (Adobe) and Ferro Cement roofing) (Section 7.2.2) –Status Poor Supporting Infrastructure development (Section 9)- Status Poor Lack of clear vision and planning for the industry Weak enforcement of PEC Guidelines No Special incentive to Private Sector for low cost housing Access to Finance House mortgage services for 3-5 Marla houses not offered by commercial institution Key Issues Source : Stakeholders

Key Issues- Contd Business Development Services HR: Shortage of Skilled/Certified work force Specialized Construction Machinery Operators Other Construction Trades (Masons, plumbers and Ind. electrician etc) Inadequate supply of heavy machinery and equipment operators Market Access International labor and project markets Technology Lack of : Standardization and quality assurance- Construction materials Technological up gradation- steel, sanitary fittings, ceramic and others Energy shortages-high cost of production Research and Development Non effective Research and development- Construction materials Institutional Framework/Coordination No dedicated/ empowered body for the construction industry to address Product Standardization, Skill Development, OHS, Quality Assessment and certification

Key Issues- Allied Industries Cement (Falls under LSM therefore only issues have been highlighted) Under capacity Utilization High Cost of Operations Limestone and Gypsum exported to India. Wood Local wood expensive as compared to imported (75%) and scarce availability Lack of mechanization and product standardization No policy for plantation of trees for wood industry Sanitary fitting and Sanitary ware Lack of Quality assurance Lack of quality material Inefficient heat furnace- losses up to 30% General Issues Unstable cost of raw materials- energy shortages-high cost of production Research and development- low priority Insufficient education and training

Development Interventions Interventions (Priority wise) Activities to be under taken 1 Establishment of Sector Development Council for reviewing and enforcement of Housing Policy (2001) and allied Regulations Establishment of Construction Sector Development Council Hiring of Housing Policy Consultant for Housing Policy Review / Formulation of Regulations Conducting Stakeholders meeting to review Housing Policy Conducting awareness Seminars / Conferences / Workshops of the Program Operationalization of Construction Sector Development Council 2 Construction machinery and skill development Institute at Lahore and Karachi Draft Outline / PC1 for Machinery & Skill Development Institute Consultation with Stakeholders to seek partnerships / collaboration for institutes Advocacy / Coordination with TTI's and VTI's for Establishment of Training Institutes Conducting awareness Seminars / Conferences / Workshops for institution Project implementation of Machinery and Skill Development Institute at Lahore & Karachi Execution of Machinery and Skill Development Institute at Lahore & Karachi Launching Training Programs

Development Interventions Interventions (Priority wise) Activities to be under taken 3 National Program “On Job Training (OJT)” of unskilled workers. Consultative process for project with CAP Establishment of PMU Project initiation by CAP in association with PMU and finalization of TORs for training and selection Identification of Potential Builders as per TORs Program development Placement of unskilled labor with potential Builders Monitoring of “On Job Training” labors OJT certificate by CAP and Builders Formal Trade Certificate/Skill certificate by NAVTTC and subsidy to cover the cost for availing formal certification 4 Energy efficiency program for Ceramics and Sanitary Fittings Industry Engaging Consultants for conducting Energy Efficiency Program for Ceramics & Sanitary Manufacturers ToTs of Consultants Program Announcement for SME Facilitation (Marketing, Advertisement, Awareness, Brochures) Financial subsidy to SMEs for implementation of Energy Efficiency programs Purchase Energy Efficiency training equipment Program Management by SMEDA

Development Interventions Interventions (Priority wise) Activities to be under taken 5 Trade Certification/Registration support to Manpower Export Centre/Companies for certification and export of certified workforce. Establishment of PMU Identification and short listing of Manpower Companies Process of Accreditation/Certification of Manpower Companies Capacity Building of Technical Trade Instructors Up gradation of Centers through Matching Grant Delivery of training programs in all trades at upgraded centers 6 Establishment of Mortgage Finance Company PCII / Feasibility Study for a Mortgage Finance Company (PPP Vs Public Sector) Road show / Consultative process for collaboration with financial institutions Shareholders of Mortgage Finance Company in PPP mode / public sector Establishment of Mortgage Finance Company in Lahore / Karachi Approval of subsidy for small / low cost houses Subsidy in Markup Charges for Houses by Govt. through MFC  

Development Interventions Interventions (Priority wise) Activities to be under taken 7 Establishment of Contributory Fund for Facilitation of the Contractors Consultative process for determination of size and structure Establishment of PMU for Contributory Fund/Draft agreement for fund with major stakeholders Registration of Fund. Contributory Fund share by Govt and CAP. Approval of fund management and lending terms by the BOD Operationalization of Assistance to Constructors

Pakistan Construction Sector Outlook Current GDP: US$ 17.5 B (10.0%) Export: US$ 4.6 B SMEs: 0.06 M Jobs: 3.83 M After 5 Years GDP: US$ 37.2 B (14.4%) Export : US $ 8.9 B SMEs: 0.08 M Jobs: 5.31 M Establishment of Sector Development Council for reviewing and enforcement of Housing Policy (2001) and formulation of allied regulations Source: Economic Survey 2011-12, PEC, SBP, Labor Force Survey 2010-11,BEOE, NAVTTC

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