Govt mulls package to boost construction

ISLAMABAD - The government is considering a comprehensive plan to rejuvenate the construction industry, aiming to streamline regulations, draw in investment, and strengthen institutional backing. This plan comprises several steps, such as setting up a Construction Industry Development Board (CIDB), establishing a dedicated Construction Development Bank (CDB), streamlining import and export policies, and implementing specific tax adjustments for the construction field.

A gathering, led by Economic Affairs Minister Ahad Cheema, took place on Saturday to coordinate extensive regulatory, functional, and fiscal reforms within the construction sector. State Minister for Finance Bilal Azhar Kayani and senior officials were among those in attendance. Officials announced that the proposed CIDB would serve a dual purpose, focusing on the sector's overall growth and a regulatory role in maintaining industry standards, contractor conduct, and consulting practices.

Representing both public and private sectors, the board aims to set unified standards nationwide. Cheema highlighted that federal government and the Construction Association of Pakistan (CAP) share the same view on the necessity of this board. The government will present the detailed proposal to the prime minister for final approval.

To tackle financial and policy challenges, the package includes tailored tax benefits and synchronized import/export policies to promote modern technology usage and foster local construction proficiency. Cheema also announced an extension of the Defect Liability Period for public development projects from 1 year to 3 years, with a plan to extend it further to 5 years.

This extension underlines the importance of maintaining high-quality standards in civil infrastructure and prevents premature degradation after completion. Acknowledging existing penalties for contractors who default or perform poorly, Cheema emphasized the absence of legal mechanisms for penalizing consultants. Under the new CIDB regulatory system, consultants will also be subject to direct oversight, ensuring they are legally and financially liable for design defects or technical mistakes.

CAP representatives agreed that holding consultants legally and financially accountable for design errors is crucial for quality assurance and safeguarding public investments. CAP's proposals on banking challenges, such as securing financial and performance guarantees, led the minister to direct State Minister for Finance Bilal to engage in detailed discussions with the State Bank of Pakistan (SBP) and Pakistan Banks Association (PBA) regarding the establishment of a specialized CDB.

The feasibility of the CDB will be assessed based on feedback and financial assessments submitted by the SBP and PBA. The announcement was published in Dawn on August 16th, 2026.