Slowdown in construction sector mainly due to stagnant real estate market and weakening of local currency vis-à-vis US dollar have affected the market of construction materials.

According to people involved in the trade, demand for construction materials has gone down drastically. “The weakening of Nepali currency has made major construction materials, which are imported from foreign countries, dearer. Because of this, many people have postponed their construction plans,” Jayaram Lamichhane, president of Federation of Contractors´ Associations of Nepal (FCAN), told Republica. He further added that price of construction materials have increased by around 15 percent compared to last fiscal year.

According to Lamichhane, rise in minimum wage of workers is another factor behind slowdown in construction business. “Though the government has increased minimum daily wage to Rs 318, workers deny working for anything less than Rs 500 per day,” he added.

Price of bricks has also increased lately. “Due to depreciation of local currency, we have to pay higher prices for coal. This raises our production cost and ultimately makes our products dearer,” Mahendra Bahadur Chitrakar, president of Federation of Nepal Brick Industry, said. He further added that demand for bricks has come down by as much as 40 percent in this fiscal year.

Dhurba Thapa, president of Cement Manufacturers´ Association, echoed Chitrakar and said slowdown in real estate sector and weakening of local currency have hit cement producers hard. “On normal times, demand for cement hovers over 3.5 million tons. The demand has gone down drastically in this fiscal year,” Thapa said. “We, however, are yet to calculate by what margin the demand has fallen.”

Construction entrepreneurs like Thapa are hopeful that the construction sector will gain pace once the new budget is unveiled.
“The construction industry was badly in this fiscal year due to issuance of partial budget,” Lamichhane said, adding, “We hope a full-fledged budget will be issued in the coming fiscal year.”

source:republica, 9 july 2013