Contractors in the country are worried about the upcoming government transition period in 2023-2024, as they may face the same issues they did in 2017-2018, when they were not offered capital works due to the government’s transition. While the lack of work did not pose a significant problem then, with the situation having worsened due to the Covid-19 pandemic, contractors are concerned about the impact of a year without any work.
The president of the Construction Association of Bhutan (CAB), Trashi Wangyel, expressed concern about the potential impact on the construction sector, which contributes significantly to the country’s Gross Domestic Product (GDP) and provides employment opportunities.
He said that during the 2017-2018 government transition period, contractors were not offered capital works due to government budget restrictions and the formation of an interim government, which left contractors without work for an extended period.
He also added that the upcoming transition period may be worse if the situation is similar to the past transition period, due to the impact of Covid -19. During the transition period of 2017-2018, although they did not receive any work and were free for almost a year, he said that the current situation is different.
“The sector is now trying to make a comeback in the midst of post-pandemic recovery. If something that happened before were to happen now, it would greatly impact the sector’s recovery,” he said.
Contractors have already faced significant issues during the pandemic, and a lack of work during the transition period could hamper the recovery of the construction sector. Therefore, he has submitted to the government to plan ahead for the contractors to avoid keeping them in a dilemma.
He also mentioned that if there are no capital works for the contractors during the transition period, then many firms will have to release their employees from now onwards. “Paying staff salaries without any work later in the future would be an extra burden on the contractors who are already facing financial difficulties due to non-performing loans resulting from the pandemic,” CAB’s President said.
Furthermore, the release of staff would contribute to the unemployment rate, which is already a concern for the country.
Trashi Wangyel suggested that the government could provide status updates on the capital works and other aspects of the construction sector to alleviate contractors’ concerns. He also emphasized the need for resilience in the wake of the post Covid-19 pandemic, as it has taught that assumptions about how the world works can change overnight.
Additionally, the Executive Director (ED) of CAB, Tshering Yonten said, “In 2022, contractors were informed that there would be plenty of construction work in cities like Thimphu.” However, there has been no update on these projects since then. The lack of communication has left contractors uncertain about the status of the projects and whether they will be offered the work.
The ED also mentioned that large-scale contractors with at least ten employees are unsure whether to release their staff or retain them, as they do not want to pay salaries for a year without any work.
With the construction sector’s significant contribution to the country’s economy and employment opportunities, a lack of work during the transition period could have severe consequences. Therefore, the sector is expecting the government to communicate with contractors and provide updates on capital works and other aspects of the construction sector to avoid leaving them in a dilemma.
Tshering Pelden from Thimphu