Pakistan’s cabinet is weighing a sweeping overhaul of its construction sector, proposing up to two new regulatory bodies and a mandatory three‑year defect‑liability window for major projects. The move, led by Economic Affairs Minister Ahad Cheema, seeks to tighten oversight, boost project delivery and align domestic practice with international FIDIC standards.
Key Structural Proposals
- CIDA Bill may create either a single regulator or split into oversight and promotion arms.
- Industry pushes Rs20 bn defect‑liability threshold; government favors lower caps.
- Retention funds to be held in interest‑earning accounts, with principal and interest returned after the period.
- DAAB mechanism proposed for projects over Rs20 bn, with a push to lower the trigger point.
Historical Context
Pakistan’s construction sector has long battled cost overruns and quality lapses, prompting governance reforms. The new framework adopts FIDIC contract templates and builds on a 2024 package that envisioned a Development Bank and tax incentives to attract investment.
Future Impact
If enacted, the authorities would centralize licensing, enforce standards, and mediate disputes, potentially cutting project timelines by up to 15 %. The defect‑liability rule could lower risk for foreign investors, while phased roll‑outs aim to keep the sector agile and responsive to market demands.