ISLAMABAD: The federal government is working on a proposed reform package aimed at reviving and modernising Pakistan’s construction industry by addressing regulatory, financial and policy-related challenges.
The proposed package includes the establishment of a Construction Industry Development Board (CIDB), consideration of a dedicated Construction Development Bank (CDB), rationalisation of import and export policies and targeted tax reforms.
The proposals emerged during a high-level meeting chaired by Federal Minister for Economic Affairs and Establishment Division Senator Ahad Khan Cheema to examine reforms needed to improve the construction sector’s performance.
The meeting was attended by Minister of State for Finance Bilal Azhar Kayani, Federal Secretary for Housing and Works Captain (retd) Mahmood, Public Procurement Regulatory Authority (PPRA) officials, representatives of the Construction Association of Pakistan (CAP) and other senior officials.
Proposed Construction Development Board
One of the central proposals is the creation of the Construction Industry Development Board, which would have both development and regulatory responsibilities.
Under the proposed framework, the board would work to promote the growth of the construction industry while also regulating industry standards, contractors and consultants.
The proposed institution would include representatives from both the public and private sectors and would provide a central platform for improving construction standards across the country.
Senator Cheema said the federal government and CAP were aligned on the need for such an institution. He added that the proposed framework would be submitted to Prime Minister Shehbaz Sharif for final approval.
If approved, the board could play a role in establishing clearer industry standards, improving accountability and helping resolve disputes between stakeholders.
Tax and Import Policy Reforms
The wider reform package is also expected to address financial and policy obstacles faced by the construction industry.
Officials are considering targeted tax incentives and changes to import and export policies to encourage the adoption of modern construction technologies and strengthen domestic capacity.
The government believes that improving access to modern technology and equipment could help increase efficiency while also supporting the development of local construction capabilities.
However, the exact scope and implementation mechanism of the proposed tax measures will depend on further consultations and government approval.
Defect Liability Period to Be Extended
Another significant proposal concerns the Defect Liability Period (DLP) for public development projects.
Senator Cheema said the standard liability period would soon be increased from the existing one year to three years, with a longer-term roadmap to eventually extend it to five years.
The objective is to ensure that public infrastructure remains durable after completion.
According to the minister, infrastructure projects should not begin deteriorating shortly after they are completed. A longer liability period would place greater responsibility on contractors and executing agencies to maintain construction quality and address defects.
The move could also encourage contractors to use better materials and construction practices because they would remain responsible for defects for a longer period.
Consultants Could Face Greater Accountability
The proposed reforms would also address what officials described as a regulatory gap involving construction consultants.
At present, contractors can face penalties for poor performance or failure to meet contractual obligations. However, consultants may not face an equivalent level of legal accountability for design-related problems.
Under the proposed CIDB framework, consultants would come under direct regulatory oversight.
They could potentially be held legally and financially responsible for design flaws, technical mistakes and other professional shortcomings.
Representatives of the Construction Association of Pakistan supported the proposal, saying greater accountability would encourage stronger designs and help protect public investment.
Proposal for Construction Development Bank
The construction industry has also raised concerns about difficulties in obtaining financial and performance guarantees.
In response, Senator Cheema directed Minister of State for Finance Bilal Azhar Kayani to begin consultations with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA) regarding the proposal for a specialised Construction Development Bank.
The proposed institution could potentially provide financing tailored to the needs of the construction industry. However, the government will first assess feedback from financial regulators and banks as well as the feasibility of establishing such a bank.
No final decision has yet been announced regarding its creation.
Focus on Quality and Public Investment
Senator Cheema said the government’s broader objective was to ensure that public infrastructure projects provide value for money, remain durable and meet appropriate quality standards.
He stressed that public funds should be treated as a national trust and should not be wasted because of poor construction, inadequate supervision or flawed technical designs.
The proposed reforms, if approved, could therefore introduce a more structured approach to regulating Pakistan’s construction industry.
By combining development support with stronger oversight, the government hopes to improve construction quality, increase accountability, facilitate investment and bring domestic industry practices closer to international standards.
