Rehab spurs growth

WITH the spur in construction activities around the country, the Fijian construction sector is anticipated to grow by 14.6 per cent this year.

According to the Fijian Macroeconomic Committee’s May 2017 forecast, the construction sector will contribute 0.44 percentage points towards the projected 3.8 per cent growth in 2017.

This is after an estimated growth of 11.0 per cent in 2016.

The Macroeconomic Committee comprises representatives from the Ministry of Economy, Ministry of Industry and Trade, Fiji Revenue and Customs Authority, Investment Fiji, Prime Minister’s Office, Reserve Bank of Fiji (RBF), Fiji Bureau of Statistics and the Ministry of Infrastructure and Transport.

Responding to queries from this newspaper, committee chairperson and RBF acting governor Ariff Ali said the continuation of rehabilitation works post-tropical cyclone (TC) Winston was driving the increased construction activity this year.

This, he said, was supported with the increased capital expenditure allocation of $1,779 million in the 2017-2018 National Budget and the rollover of capital expenditure from the 2016-2017 fiscal year.

Mr Ali said this was anticipated to provide further impetus for construction activity this year and going into 2018.

“Partial indicators that the RBF monitors, point towards increased activity in the construction sector so far this year,” he said.

“Domestic cement sales, a direct input for local construction activity, grew by an annual 14.0 per cent in the year to June which compares with a growth of 10.6 per cent in the same period in 2016.

“Similarly, new commercial banks’ lending to the building and construction sector increased by 28.6 per cent (+$27.7m, to total $124.4m) cumulative to June.

“This compares to a decline of 13.7 per cent (-$15.3m, to total $96.7m) noted in the same period last year.”

Some of the major construction projects so far include the Airport Fiji Ltd’s Nadi Airport modernisation upgrade, Motibhai Group of Companies’ business park, Pullman Nadi Bay Resort and Spa and developments at Naisoso Island, Vunabaka Tourism Development.

These also include the major development project at MacGregor Rd and the reconstruction of 182 schools damaged by TC Winston valued at about $200m as well as the ongoing road and bridge maintenance works.

“While some projects have been completed, others are expected to continue into the medium term,” Mr Ali said.

A number of incentives have also been introduced to further boost construction in the country. With the formulation of tax policies taking note of the rapid growth in Fiji’s construction sector, partly attributed to the widespread effort to improve resilience to the effects of climate change, the new incentives are anticipated to reduce costs.

Data provided by the RBF indicate that the value of building permits issued in 2016 registered a growth of 11.2 per cent (to $252.1m) which is also a forward looking indicator for construction works. The number of permits issued, however, declined by a marginal 0.4 per cent (to 1605), the central bank states. In the same period, the value of work put-in-place increased by 10.1 per cent (to $513.9m), underpinned by both private (12.7 per cent, to $299.3m) and public (6.7 per cent, to $214.6m) sector construction activities. Based on the RBF’s job advertisements survey, Mr Ali said recruitment intentions particularly for the construction sector remained firm so far in the first half of 2017.

“Cumulative to June, 1496 vacant jobs were advertised for the construction sector, representing a 5.4 per cent increase in vacancies compared to the same period in 2016 and a significant 56.3 per cent increase compared to the first half of 2015,” he said. “This increased demand for labour in the construction sector is consistent with the favourable construction and investment-related activities and continued rehabilitation efforts post-TC Winston.”

Mr Ali said employment prospects were also expected to strengthen further in the months ahead, supported by the expansionary fiscal policy announced in the 2017-2018 National Budget and buoyant investment activity.

Meanwhile, the central bank meets and visits various industry groups/representatives on a regular basis to gauge sentiments and receive first-hand updates on the latest industry developments.

This, Mr Ali said, was where industry stakeholders raised pertinent issues and challenges which the RBF shared with relevant parties for necessary actions.

“One of the issues raised by the construction industry was with regards to the shortage of skilled labourers that leads to delays in construction works,” he said.

“The RBF has discussed this issue with the Fiji National University (FNU), which has committed to considering these in future discussion of the FNU’s curriculum. It is also important to highlight that Government has also established a number of technical colleges, which are also assisting in upgrading of skills in the area of carpentry.”

Mr Ali added that the central bank would continue to work closely with the relevant stakeholders in fulfilling its mission of “leading Fiji to economic success”.

More Stories