Mr. Eshwar Raj Joshi
District Commissioner, Kathmandu Valley Development Authority
As the Covid-19 pandemic grips Nepal, the nation’s economy is severely affected by the current crisis. With businesses shut down or their modus operandi changed, the future looks uncertain as the lockdown continues. Similarly, the construction sector, which is an important part of the economy, has also directly taken a hit due to the pandemic and the prolonging lockdown.
To understand the impact of the current situation on the construction sector, NEF gained perspective from Mr. Eshwar Raj Joshi, District Commissioner, Kathmandu Valley Development Authority, District Commissioner’s office- Bhaktapur and prepared a brief excerpt as below.
Impact of the crisis and subsequent lockdown on operations within the sector:
All the ongoing construction projects have come to a standstill due to the current lockdown and hence, the progress of the construction projects been severely affected. Additionally, the construction sector is also facing critical issues in terms of the status of the capital expenditure and as the lockdown continues the situation is worsening. The overall capital expenditure progress has been only 30% up to the second trimester with only 3 months remaining. If the lockdown extends for a month, then there would be just 2 months for the completion of the current fiscal year. Therefore, the total expenditure of the country will be limited to only 50%.
In addition, the current crisis has also affected the process of revenue and remittance collection that is affecting the payments of major projects and subsequently their progress. The operations now are in a locked state due to the lack of construction workers and the scarcity of construction material. Additionally, things such as inflation and unemployment will gravely affect the nation’s development rate limiting growth to 2-3%.
The future of the construction sector:
The pace of development will decrease in the coming years. Therefore, the flow of capital in the market is what is needed. It is also necessary to accelerate the development activities in the short run and increase the capital expenditure.
Key areas to be addressed immediately for the sector to pick up momentum:
Despite the lockdown, the major infrastructure projects should be allowed to continue with efficient and proper management of resources and security. The availability of construction materials and transportation should be made easy. Efforts have to be made to decrease the current expenditure and accelerate the capital expenditure, as the flow of money in the market will have a rolling effect in maintaining the nation’s economy.
The above Expert Speak edition is based on the conversation with Mr. Eshwar Raj Joshi. He is the District Commissioner at Kathmandu Valley Development Authority, District Commissioner’s office- Bhaktapur.