The construction industry is regarded as the engine of growth for any economy and it plays a significant role in the development of a country. Economists believe the construction industry could have a share of up to 60 percent in gross fixed capital formation if it is fully managed on modern lines. At least 80 industries are directly or indirectly associated with the construction and housing sector. It is very crucial sector which ensures not only economic development, but also employment generation. According to a report of the Economic Survey of Pakistan, the industry has registered a growth of over 9 percent during the financial year 2016-17 and contributed 2.7 percent to the gross domestic product of the country.The sector has great potential to attract foreign direct investment as the construction industry has received a net inflow of $35.7 million in August 2017.BMI Research, a research firm which provides macroeconomic, industry and financial market analysis, covering 24 industries and 200 global markets, has put the growth outlook for the sector at 11.8 percent annually for 2016-20 and 9.1 percent over 2016-25.The construction of China-Pakistan Economic Corridor has boosted the construction industry.
China has emerged as the largest contributor of the foreign direct investment in Pakistan which is mostly in the domain of infrastructure development. The other countries are also taking interest in the infrastructure projects, but the government has to create opportunities for local and foreign investors. The construction industry is safe for foreign investors as it also involves real estate sector which is booming in the country. Though the government has reduced duties and taxes on building materials like steel, construction machinery and equipment, withholding tax on banking transactions has bulldozed everything. The economists believe that with all positive indicators in the industry, the overall political instability and high cost of doing business in Pakistan are keeping the foreign investors at bay. The mega projects could not attract the local and foreign investment which it should have to be in the current situation. The industry can be the largest beneficiary of foreign investment as it happened in Singapore and the United Arab Emirates which attracted investors from around the world. The construction industry is playing a major role in development of infrastructure in Pakistan, but the government needs to fight against corruption to ensure transparency in every step of the business.
