The construction union estimated that $500 million worth of projects are on hold because they have not yet received the water feasibility permits they need.
Although months ago the Salvadoran Chamber of the Construction Industry (Casalco) estimated the value of construction projects halted due to lack of various permits at $700 million, union representatives claim that"... a part of that, which is worth $200 million- they have now started to resolve".
The construction union estimates that if approval is given to the reform bill to streamline and simplify procedures, it will take 30 days to obtain a permit.
The Salvadoran Chamber of the Construction Industry (Casalco) proposes amending the Special Law for Streamlining Procedures for Construction Project Development and improving the current timeframes for obtaining building permits and environmental certificates.
Analysis is being done on the concept of a leasing and a housing trust fund to facilitate greater access to bank financing for the construction industry.
The Salvadoran Construction Chamber believes that its financial capacity to develop more projects could be expanded through the use of trusts.Its president, Jose Antonio Velasquez, told Laprensagrafica.com that"... at the moment banks lend to housing developers'against their balances'. By using the concept of trust loans, the bank takes control of the project and would be able to lend more".
Fourteen projects, valued at $188 million, will start running as soon as they have obtained the permits which had previously been held up due to bureaucratic obstacles.
Elmundo.sv reports that "... The projects will start to be executed after the National Administration of Aqueducts and Sewers (ANDA) and the Ministry of Environment and Natural Resources (MARN) expedite the granting of permits, said the Government, as a result of joint work with private enterprise. "
Office buildings, shopping malls and apartments make up the list of projects that the construction union envisages undertaking in the second half of the year.
Although there are still delays in granting permits and other arrangements which have to be undertaken before launching construction projects, the union for this sector foresees a second half with better results.This year there are plans to implement projects worth between $500 million and $750 million in private works.
Projects are becoming more expensive due to the fact that they increasingly include more security measures and in areas such as La Libertad, Soyapango, Ilopango and Apopa, some lots and homes are even losing value.
In the first two months of the year the total amount of loans granted to build houses fell by 85% compared to the same period in 2015.
Data from the Salvadoran Chamber of Construction (Casalco) indicates that out of the total credit extended by the banking system to productive sectors in the country, only 1% was for construction loans.
A rise has been indicated in commercial, residential and hotel developments in areas of Santa Tecla and Antiguo Cuscatlán thanks to its geographical and topographical advantages.
The proximity to the coast and its topographical features make the southwest area of El Salvador an attractive area for real estate development, particularly for commercial, residential and hotel developments, reports Elsalvador.com. The region includes the entire metropolitan area southwest of the country including Santa Tecla and Antiguo Cuscatlán.
Excessive bureaucracy and high taxation are among the factors behind the zero growth projections of the union of construction for the close of 2015.
More than one year after its entry into force, the law which intended to expedite processes for construction sector has not yielded the expected results, as manifested by the country's construction companies themselves. For the third consecutive year the Salvadoran Chamber of Construction Industry expects to close the year with a growth rate of zero.
Two years after its approval, the law streamlining procedures for construction does not operate, delaying projects which are in process and preventing the onset of new ones.
Added to this is lack of investment in public infrastructure, which is preventing the private construction sector from developing new projects, particularly in areas where there is not adequate road infrastructure.
The state energy company in El Salvador has announced that it is preparing to tender contracts for materials, civil works and machine houses in order to resume work on the hydroelectric station, which was abandoned in 2010.
Comisión Ejecutiva Hidroeléctrica del Río Lempa (CEL) intends to finance the projects with its own funds and a loan from the Central American Bank for Economic Integration (BCIE). The documents have already been prepared for the corresponding tender, which is still pending approval by the BCIE.
The government has yet to make operational the law streamlining procedures for construction approved in late 2013, delaying the start of projects totaling more than $700 million.
Although it seems hard to believe, a law which was approved more than a year ago can not be implemented due to the lack of "real will to make the necessary changes." Meanwhile, construction projects estimated at about $700 million can not advance, having been drowned in excessive state bureaucracy.
The ineffectiveness of the law streamlining procedures for construction, approved in late 2013, is delaying investment of at least $700 million in projects planned for this year.
Bureaucratic obstacles to construction continue and as long as the law streamlining procedures for construction is not operational, around $1,6 billion will remain paralyzed, this being the amount estimated that the private sector would have invested in real estate development projects in the next five years.
With a new system, the authorities promise to reduce the time for granting environmental permits from 70 to 49 days for high-impact projects, and 20-16 for mild impact ones.
According to a statement issued by the Salvadoran authorities, the new System of Environmental Impact Assessment (SEIA) "... will speed up and reduce waiting times for the issuance of Environmental Permits by up to 30%.
Developers claim that the law streamlining procedures adopted in 2013 is not being enforced by state institutions, which continue to impede investment in the sector.
According to representatives of the builder's guild, there are some private and public projects, all medium-term in the area of homes and businesses, which could not be executed because of the amount of bureaucratic processes that are still pending.
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