Research and policy notes : a review of the Maldivian construction industry

Abstract

The construction sector of Maldives is vital sector of the economy and has been a key driver of economic growth. However, after witnessing a strong period of growth, the construction sector registered a marked turnaround in 2009, and since then the growth of the sector has remained weak and rather volatile. This paper analyses the recent developments in the construction sector of Maldives and examines the key problems and challenges faced by the sector. The analysis indicates that both demand and supply side factors have contributed to the slowdown. On the demand side, the main factor constraining growth has been the scaling down of public infrastructure projects, while sluggish growth in resort construction has also contributed to the recent slowdown. On the supply side, difficulties in access to bank credit, payment delays, shortage of skilled labour and fluctuations in raw material prices have all raised construction costs leading to project delays and cost overruns.