Proposed board, construction bank and tax reforms aim to modernise the sector and improve public infrastructure standards
ISLAMABAD: The government is considering a comprehensive development package for Pakistan’s construction industry, including the establishment of a Construction Industry Development Board (CIDB), an evaluation of a dedicated Construction Development Bank (CDB), rationalisation of import and export policies and targeted tax reforms.
Federal Minister for Economic Affairs and Establishment Division Senator Ahad Khan Cheema chaired a high-level meeting to review regulatory, operational and financial reforms for the construction sector.
The meeting was attended by Minister of State for Finance Bilal Azhar Kayani, Federal Secretary for Housing and Works Captain (R) Mahmood, Managing Director of the Public Procurement Regulatory Authority (PPRA), representatives of the Construction Association of Pakistan (CAP) and senior government officials.
Proposed CIDB to regulate construction sector
Senator Ahad Cheema said the proposed CIDB would have a dual mandate covering both the development and regulation of the construction industry.
The board would oversee industry standards, contractors and consultants and include representatives from the public and private sectors.
The proposed institution is intended to provide a unified platform for improving construction standards and strengthening regulation across the sector.
Cheema said there was broad agreement between the federal government and CAP on the need for such an institution. The government will formally submit the proposed framework to the prime minister for final approval.
The wider construction industry package would also seek to address financial and policy constraints through targeted tax incentives and rationalised import and export policies.
The measures are intended to encourage the adoption of modern construction technologies and strengthen domestic construction capacity.
Defect liability period to be extended
The government also plans to increase the standard Defect Liability Period (DLP) for public development projects from the existing one year to three years, with a roadmap to eventually extend it to five years.
Cheema said a longer liability period would encourage contractors and executing agencies to maintain higher construction standards and ensure that public infrastructure remained durable after completion.
He stressed that civil infrastructure should not require major repairs shortly after being completed, particularly where public funds have been used for its construction.
Consultants may face regulatory accountability
The meeting also examined accountability gaps involving construction consultants.
The minister noted that penalties currently exist for contractors in cases of default or poor performance, but there is no comparable legal framework providing direct accountability for consultants.
Under the proposed CIDB framework, consultants would also come under direct regulatory oversight and could potentially be held legally and financially responsible for design flaws and technical errors.
CAP representatives supported the proposal, agreeing that greater regulatory accountability for consultants was necessary to improve design quality and protect public investment.
Construction Development Bank proposal under review
CAP representatives also highlighted difficulties faced by construction companies in obtaining financing and performance guarantees from commercial banks.
They proposed the establishment of a dedicated Construction Development Bank to address the sector’s financing requirements.
Senator Cheema directed Minister of State for Finance Bilal Azhar Kayani to initiate detailed discussions with the State Bank of Pakistan (SBP) and the Pakistan Banks Association (PBA) on the proposal.
The establishment of a dedicated CDB will be evaluated after the government receives detailed feedback from the SBP and PBA, including an assessment of its financial feasibility and potential viability.
Government seeks durable public infrastructure
Senator Ahad Cheema said the government’s primary objective was to ensure that public infrastructure projects were both cost-effective and durable.
He stressed that public funds were a national trust and should not be wasted because of substandard execution, inadequate supervision or flawed technical designs.
The minister said an independent institution combining development and regulatory functions could strengthen accountability, streamline dispute resolution and help raise Pakistan’s construction standards to international levels.
The proposed package, if approved, could introduce significant changes to the regulatory, financial and tax framework governing the construction industry while creating stronger mechanisms for quality control and accountability in public development projects.