Govt mulls comprehensive construction sector package, including CIDB

ISLAMABAD: The federal government is considering a comprehensive package of reforms for the construction sector, including the establishment of a Construction Industry Development Board (CIDB), a dedicated Construction Development Bank (CDB), changes to import and export policies, and targeted tax reforms.

Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema chaired a high-level meeting to oversee major regulatory, operational, and financial reforms within the national construction sector.

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

During the deliberations, Cheema emphasized that the proposed CIDB will 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.

He noted that complete alignment exists between the federal government and CAP on the imperative need for this body, adding that the federal government will formally submit the framework to Prime Minister Shehbaz Sharif for final approval.

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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.

Cheema also announced that the government will 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 observed 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 will also be brought under direct oversight, ensuring they are held legally and financially accountable for design flaws or technical errors, he added.

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

Responding to CAP proposals regarding difficulties in obtaining financial and performance guarantees, as well as the creation of a specialised Construction Development Bank, Cheema directed Minister of State for Finance Bilal Azhar Kayani to hold detailed discussions with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA).

The feasibility of establishing a dedicated CDB will be assessed based on feedback from the SBP and PBA, the meeting was told.