FCAN criticizes government budget as unfriendly to construction sector

KATHMANDU: The Federation of Contractors’ Associations of Nepal (FCAN) has voiced strong concerns about the government’s budget for the upcoming fiscal year, deeming it unfriendly to the construction sector. Speaking at an event organized by the Society of Infrastructure Journalists Nepal in Kathmandu on Monday, FCAN President Ravi Singh criticized the budget for failing to address longstanding payment issues that have plagued the construction industry.

President Singh highlighted that despite repeated attempts by the federation to meet with the Finance Minister to advocate for a construction-friendly budget, their efforts were ignored. “The government neglected the physical infrastructure sector in the budget,” Singh stated, expressing disappointment over the exclusion of the sector from the budget planning process.

One of the critical issues Singh raised was the impact of the 13th Amendment of Public Procurement guidelines, which has resulted in the extension of more than 2,000 projects without adequate budget allocation. He pointed out that the government’s approach to budget formulation lacked the necessary input from the physical infrastructure sector, leading to a budget that fails to address key industry concerns. “The budget has come in the traditional way. This budget will repeat the situation where 30 percent of the budget will be spent for 9 months and 30 percent of the budget will be spent in the last month,” Singh warned.

General Secretary of FCAN, Roshan Dahal, acknowledged some positive aspects of the budget for the construction industry but echoed concerns about its overall effectiveness in stimulating the currently sluggish economy. Dahal emphasized the urgency of resolving payment issues, noting that the construction industry has pending bills amounting to approximately NPR 60 billion. “It is a great pity that the budget remained silent on the solution to the payment problem when the construction industry had already submitted the bill and the state was able to pay,” Dahal lamented.

Contrasting FCAN’s criticisms, Secretary of the Ministry of Physical Infrastructure and Transport, Gopal Prasad Sigdel, defended the budget, asserting that the government has not neglected the construction sector. Sigdel stressed the importance of capacity development among construction professionals, suggesting that the industry’s current challenges are not solely due to government actions but also to the capacity limitations of domestic contractors. “Are we ready to build big infrastructure or not? Because we are currently taking under from many foreign contractors,” Sigdel remarked, urging the industry to focus on enhancing its capabilities.

Sigdel argued that capacity building extends beyond training and should include budgetary provisions to prevent project delays. He urged the construction industry to look at capacity development comprehensively, considering both the government’s and the industry’s roles. “Capacity building is not only through training. Arrangements should be made in the budget so that there will not be too much delay,” he added.

Despite Sigdel’s defense, FCAN’s leadership remains critical of the budget’s approach to infrastructure development. They argue that the budget lacks a strategic vision for completing projects of national pride and fails to incorporate the construction sector’s feedback. The sentiment within FCAN is that the budget’s traditional allocation patterns will continue to result in inefficient spending, with substantial portions of the budget being disbursed late in the fiscal year.

The construction sector’s concerns are further compounded by the current economic environment, which has seen reduced investment and slowed economic activity. The industry’s representatives argue that a more proactive and inclusive budget formulation process could have addressed these challenges more effectively, fostering a more conducive environment for growth and development.

As the government prepares to implement the new budget, the construction sector’s leaders are calling for urgent dialogue and collaboration to address the industry’s pressing issues. They advocate for policies that ensure timely payments, enhance capacity, and promote sustainable infrastructure development, arguing that such measures are crucial for the sector’s health and the broader economy’s growth.

The event highlighted a significant rift between the construction industry and government officials regarding budget priorities and implementation strategies. Moving forward, both sides will need to engage in constructive dialogue to bridge this gap and ensure that the infrastructure sector receives the support it needs to thrive.