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Challenges and Prospects of Nepalese Construction Industry

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Nepalese Construction Industry contributed around 10 to 11 percentages to GDP and it uses around 35 percent of government budget. It is estimated that this sector is creating employment opportunities to about one million people so it generate employment next to agricultural sector in the country. Similarly about 60 percentages of the nation’s development budget is spent through the use of contractors. (Federation of Contractors Association of Nepal). From this, it is clearly seen that construction is a major sector and any productivity enhancement activity in this sector will have a positive impact in the overall improvement of the national economy.

In the last two decade, there has been considerable progress in the construction industry. During the period, the Nepalese contractors have been able to develop their management skill, improve working capacity, financial and technical capabilities, and acquire suitable construction equipments. As a result local contractors have been able to compete and participate in mega construction project. There are many companies and brands emerging in Nepali market. Brands like Komatsu, Case, Caterpillar and Tata construction deal with equipment like excavators, loaders, rollers, backhoe loaders, wheel loaders, etc. Likewise, Doosan, Hyundai, Kawasaki, Mahindra and Ashoka also have introduced various construction equipments. The major chunk client for equipment are contractors, while real estate developers, hydropower and mining projects, government departments like the department for road, department of irrigation, brick industrialist etc .

Used Komatsu Dump Truck Dump

Used Komatsu Dump Truck Dump

However, with development work being downsized the business of construction has also dropped down nowadays. The major cause for decrease in business is the budget not being introduced on time this fiscal year. The demand for especially used for big development projects have dipped significantly due to lack of budget. Likewise , challenges face by Nepalese Construction industry are lack of standard pre-qualification criteria under the new Procurement Act, absence of a balanced and standard bidding document, unclear government Rules and Regulations, lack of construction equipment and workshop, Approval of the Lowest Bid, Taxation System, Delay in Payment, Price Change, Brain Drain, Unavailability of Construction Materials etc.

Nepal has entered into the era of building new Nepal. Development activities are increasing day by day which his creating equal opportunity of employment as well. There is relationship between development of construction industry and economic development of a country. Being a developing country, Nepal offers promising employment opportunities for the contractors in Roads and Airports, Irrigation and Hydropower, Real State and Housing and Public Private Partnership in infrastructure development. More importantly, if there is a stable government and it introduces development plans and policies, not only this sector but the whole nation will stand to benefit. Government should also focus on attracting foreign direct investment in the sector. On the other hand, the Nepalese construction industry, which is still regarded as in infant stage, can play a vital role to uplift the economic and socio status of local people by developing such infrastructures.


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