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Schematic structure of cost and taxes can help grow construction activities

Schematic structure of cost and taxes can help grow construction activities

Interview with Mr Ahmed Owais Thanvi — Managing Director, Kings Group of Builders & Developers

PAGE: Kindly tell me about yourself and your organization:

Ahmed Owais Thanvi: I am Managing Director of Kings Group of Builders & Developers. The Kings Group of Builders & Developers is a construction company with a nationwide operation in Pakistan since 1977. The Kings Group of Builders & Developers provides high quality services to their valued clients, across all sectors and has set a strong benchmark for the industry. Based in Karachi, Kings Group provides a comprehensive range of services to a wide range of clients, which includes construction of high quality houses as well as high rise buildings at the rate of approximately 1000 property units per year in Karachi.

PAGE: How would you comment on the construction activities in Pakistan at present?

Ahmed Owais Thanvi: The construction industry is playing an important role in the economic growth of Pakistan. Construction plays a crucial role in the economy of any country. The construction industry is in a developing stage in Pakistan. There is an urgent need to eliminate bottlenecks such as corrupt practices in the industry, carry out extensive computerization of land ownership records for greater transparency, improve land regulation and building control, standardize and implement building laws across the board and impart latest skills to students for the future of the industry.

The signing of the China-Pakistan Economic Corridor (CPEC) agreement and improvement in the country’s security situation have been the key to giving boost to not only the construction industry, but also Pakistan’s image abroad. With China having the first-mover advantage in injecting foreign investment into the country, other countries have followed suit.

PAGE: What is your take about the increase in the input cost?

Ahmed Owais Thanvi: Like the price hike in every other item, there has been a continuous and fast rise in the cost of building materials, which in-turn has elevated the total labor and per square construction rate in Pakistan. This year, you can observe a considerable difference in the overall rates of construction sector as compared to the previous years which includes – the cost of building materials, labor cost and overall cost of construction. Before planning to construct a residential or commercial building, you must be aware of the approximate cost of construction materials as it would help you drawing a rough estimation of the total charges. While taking a personal round of your nearby market, you should also consult a modern architect in Pakistan. The overall construction cost per square ft. is divided into two categories – the one is grey construction cost and the other is turnkey construction cost, which includes complete construction work. The lowest construction rate for per square ft. is Rs.1800; whereas the maximum cost goes up-to Rs.3400 per square ft.


PAGE: What must the government do to facilitate the sector?

Ahmed Owais Thanvi: The real estate sector is playing a key role in the economic development of the country. Construction industry is facing problems due to imposition of heavy taxes and it has urged the government to rationalize them to facilitate the growth of business activities. The construction sector is providing jobs to millions of people, while more than hundred allied industries depend on it, therefore, the taxes on steel, cement, coal and other commodities should be reconsidered. The government increased the federal excise duty on cement and regularity duty on coal in the last recent two budgets, which is set to damage the construction sector. That decision increased the construction cost and increased in the rent for domestic and commercial property.

PAGE: What is your opinion about the big groups in the construction sector?

Ahmed Owais Thanvi: Pakistan real estate sector was used to park the black money. Few big groups have played their role in rolling this money. However, still few big groups are considerate enough to build homes for the nation for a lesser profit return and they are performing their roles well. I would not name them, but we wish the latter ones best of luck.

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