ABAD flags cartels in construction industry
ABAD The Association of Builders and Developers of Pakistan (ABAD) has expressed to the Competition Commission of Pakistan (CCP) its deep concern over the new cartels in the steel, glass and tile industries. ABAD President Muhammad Altaf Tai led a delegation to the CCP and urged them to take strong action against the cartelization of these industries. The aim is to eliminate cartels and promote fair competition, thereby supporting the construction industry and allowing the public to benefit from lower prices.
Over the past two years, the price of construction materials in Pakistan has increased significantly, affecting both the industry and consumers. The price of bags of cement, for example, has almost doubled to over Rs 1,100 on average. Similarly, the price of steel rose to a staggering Rs 300,000 per tonne, almost tripling during the same period. Although steel prices have since come down and are currently hovering around Rs 260,000, the impact on the construction industry remains significant.
Pakistan’s construction industry is struggling with a slowdown in activity, which is negatively affecting job creation. Economic challenges such as high inflation, fluctuating exchange rates and political instability are among the main factors contributing to this slowness. These factors limited investor confidence and hindered the flow of both domestic and foreign investment into the construction industry.
As a result, many construction projects have been delayed or suspended, leading to reduced job opportunities within the sector. This slowdown has particularly affected various segments of the construction industry, including architecture, engineering, contracting and labour-intensive activities. Skilled and unskilled workers, whose livelihoods largely depend on the sector, have been hit hard by the lack of new projects.
The slowdown in construction activity not only affects job creation directly, but also causes ripples in the wider economy. The construction industry has strong links with other sectors such as manufacturing, real estate and infrastructure development. A slowdown in construction activity moderates the demand for building materials, reduces the need for utility services and inhibits growth in related industries. Consequently, the lack of job opportunities in the construction industry creates a chain reaction that affects the livelihood of many and exacerbates unemployment challenges.
According to ABAD’s president, manufacturers are artificially raising the prices of steel, glass and tiles, resulting in a significant increase in construction costs. This puts an undue burden on the public, as they have to bear the brunt of the exorbitant prices. The increase in the price of construction materials not only inhibits potential construction industry investment, but also has a negative effect on ongoing projects. Builders and developers struggle to complete their projects within expected time frames and budgets due to the ever-increasing cost of building materials.
The president of ABAD appealed to the president of the CCP to take decisive and effective measures against cartelization to protect the interests of the construction industry and the people who were allocated real estate. In an earlier conversation with the CCP chairman, Tai discussed these concerns in detail.
Chairman Competition Commission of Pakistan (CCP) Rahat Kaunain Hassan assured ABAD that the commission will conduct a thorough investigation into the alleged cartelization in the steel, glass and tile industry and take action in accordance with relevant laws. During the discussions with the ABAD delegation, the chairman of the CCP emphasized that the promotion of fair competition and the protection of consumer rights are the committee’s fundamental tasks. He also urged ABAD to cooperate by providing all relevant facts and data related to cartelization.
Published in EDP BLOGS on June 24,2023
