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Contractors warn of sector collapse over unpaid gov't dues
By Omar Obeidat - Dec 15,2012 - Last updated at Dec 15,2012
AMMAN – Contractors on Saturday warned that the construction sector may collapse due to unpaid government dues and the sharp drop in output.
President of the Jordan Construction Contractors Association (JCCA) Ahmad Tarawneh said at a press conference yesterday that the government owes local construction companies around JD120 million, noting that the government has pledged to pay its debts, but has not kept its promise.
The Jordan Times tried to contact officials at the Ministry of Finance but they were not available to comment on the issue.
Tarawneh blamed the sharp contraction in the sector on financial difficulties caused by the government’s delay in paying its financial obligations to developers.
Elaborating on the sharp drop in the sector’s activity, the JCCA head said that the value of construction projects this year was down by 96 per cent compared to 2009.
The value of projects carried out by local contractors this year stood at JD150 million, while in 2009 it reached JD3.6 billion, he noted.
“These factors may push many firms to lay off their employees,” Tarawneh warned, noting that there were 2,223 registered contractors in the Kingdom employing over 100,000 people.
Over the past three years, construction firms have been critical of budget planners for allocating less than JD1 billion in capital spending each fiscal year, a figure they say is not enough to revive the industry and the economy.
Contractors are considering taking certain measures to pressure authorities into paying their debts, Tarawneh said, adding that among these steps is to demonstrate outside the finance ministry until their demands are met.
“The association has exhausted all efforts to push the government to pay its debts but to no avail,” he noted, criticising the government for not allocating any funds in the JD807 million budget supplement that was added to the 2012 state spending bill in late October.
“The government did not make allocations for the sector in the supplement in order to show fake figures and unreal surpluses,” Tarawneh charged.
The JD120 million government dues to contractors include JD60 million owed by the Ministry of Public Works and Housing, JD50 million by the Ministry of Water and Irrigation and JD10 million owed by several other ministries and departments.
Delays in the payment of the government’s outstanding dues to local contractors is causing financial problems for several firms, which are considering laying off staff, according to the construction sector’s top representative.
The government’s 2013 budget which envisages a 76 per cent increase in capital expenditure has failed to cheer up contractors.
The government will pay all outstanding dues for local contractors after the endorsement of the 2011 budget supplement, a senior official said on Thursday.
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