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Contractors lobby for fiscal space

Home 9 News 9 Contractors lobby for fiscal space

Construction Industry contractors under the umbrella The Malawi Building and Civil Allied Traders Association (MABCATA), on Thursday 23rd of March 2023, lobbied Parliament through the parliamentary committee on transport and infrastructure to ensure that the fiscal plan currently under deliberation in parliament provides fiscal space for the construction industry to thrive.

Their concerns come in the wake of a recent announcement by the Minister of Finance of an increase in the amount of withholding tax for the industry from 4% to 10%. The contractors highlighted that apart from being labour intensive, the construction industry is also capital intensive. They argued that withholding more than double the existing withholding tax will have a huge impact on cashflows in the industry inevitably leading to loss of quality of infrastructure, loss of employment for many and an eventual extinction of the industry due to unviability of business. The contractors further argued that apart from the proposed increase in withholding tax, there are already many contractual obligations in the industry that impact on cashflows such as late payments by clients, unstable prices of raw materials, unstable currency as well as the obligatory retention fees.

While wondering why these concerns were not taken on board during the budget consultations, members of the parliamentary committee pledged to amplify the voice of the contractors in parliament to ensure that the fiscal plan does not stifle development of the industry. On its part, the National Construction Industry Council (NCIC), which facilitated the meeting, expressed gratitude to the members of parliament for providing the platform for the industry to voice out. Chief Executive Officer for NCIC, Eng. Gerald Khonje, noted that Malawi stands at a critical juncture when it must explore every means possible to recover from the heavy impact of Cyclone Freddy and other weather-related shocks in the recent past. He further noted that the path to recovery will require a significant role by the Construction Industry in rebuilding the infrastructure which has also received the blunt impact of the disaster. He therefore noted that it was only proper to ensure that a conducive environment is created for the industry by, among other things, not drawing the very blood that makes the industry survive which is cashflows.

The Construction Industry is a major contributor to social economic development and translates the national budget into physical products like schools, roads, markets, hospitals, and many other social amenities.  Economic indicators show that GDP from the Construction in Malawi increased to 255119 MWK Million in 2022 from 244782 MWK Million in 2021, effectively placing the industry as a major contributor to national growth.

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