2007年-世界发展银行全球_Purchase_Price_Review_in_the_Infrastructure_Industry_20页_324kb

Pakistan Infrastructure Implementation Capacity Assessment (PIICA) - Technical Note 5: Purchase Price Review in the Infrastructure Industry

Core Content

This technical note provides a comparative analysis of the cost of materials, construction inputs and technical services in Pakistan against regional countries such as Indonesia, Malaysia, Thailand and the UAE. The objective is to understand the competitiveness of the Pakistani construction industry and its implications on professional salaries, material costs and contractor working rates.

Main Findings

Professional Salaries

• Professional salaries in Pakistan are significantly lower than those in regional countries, being 2–3 times less than what is offered in these countries.
• In the UAE, salaries for professionals are up to six times higher than in Pakistan, and for skilled and unskilled labor, they are 5 to 8 times higher.
• In the UAE, professionals receive additional benefits such as paid housing, food and travel, which contribute to higher remittances to Pakistan.
• When adjusted for Purchase Power Parity (PPP), the salary gap remains substantial, with the UAE offering 2.0 times higher salaries, Indonesia 2.42 times, Thailand 2.90 times, and Malaysia 1.22 times.

Material Costs

• Material costs in Pakistan are the highest in the region when adjusted for PPP.
  • Asphalt: Highest in Pakistan ($355/MT), followed by Indonesia ($350/MT), and lowest in Thailand ($267/MT).
  • Ordinary Portland Cement (OPC): Highest in Pakistan ($112/MT), followed by Indonesia ($100/MT), and lowest in Thailand ($67/MT).
  • Steel reinforcement bars: Highest in Pakistan ($675/MT), followed by UAE ($625/MT), and lowest in Malaysia ($536/MT).
  • High Speed Diesel (HSD): Highest in Indonesia ($0.75/lit), followed by Pakistan ($0.65/lit), and lowest in Malaysia ($0.49/lit).

Contractor Working Rates

• Contractor working rates in Pakistan are higher than in most regional countries when measured in US$.
• In US$ (PPP) terms, Pakistan has the highest rates for asphalt ($425/CM) and steel reinforcement ($4,332/MT), while Indonesia has the highest rates for structural concrete and embankment work.
• The UAE is the most cost-efficient in most categories, with rates significantly lower than those in Pakistan.
• Contractor rates in Pakistan are 50–500% higher than in the UAE for various items, including asphalt, structural concrete, and embankment work.

Key Issues and Implications

• Brain drain is a major concern due to the significantly lower salaries and lack of career development opportunities in Pakistan.
• The cost of materials and equipment is a critical factor influencing the competitiveness of the construction industry.
• Professional salaries do not have a significant impact on the total contractor rate, as material and equipment costs are the main contributors.
• Despite seemingly competitive rates, other inefficiencies such as outdated equipment, corruption, and lack of transparency may render these rates unworkable in practice.
• There is a need for policy interventions to address the disparity in salaries and to improve the cost structure of construction materials and equipment to enhance competitiveness.

Methodology

• Comparative analysis was conducted using data from Pakistan and regional countries (Indonesia, Malaysia, Thailand, UAE).
• Market prices for materials and professional salaries were collected based on the prevailing schedule of rates in Pakistan.
• Regional data was obtained through consultants and contractors working in those countries.
• Exchange rates and PPP were used to convert local currency data into US dollars for comparison.
• PPP conversion factors from the World Bank Development Indicators 2005 were applied to ensure fair comparison across different economic levels.

Conclusion

The construction industry in Pakistan is not as competitive as it appears when considering the cost of materials and equipment, which are the primary drivers of contractor rates. While professional salaries are low, they are not the only factor affecting the industry's competitiveness. The high material costs in Pakistan, combined with inefficiencies and corruption, may lead to unworkable rates even if the industry appears competitive on the surface. There is a clear need for reforms in the procurement process, improvement in the business environment, and policy interventions to address the underlying issues and enhance the competitiveness of the Pakistani construction industry.