Open or closed? What's the status of the CentAm construction sector amid COVID-19

While Central American governments agree that the construction sector will help counter the economic fallout from the coronavirus pandemic, they have different plans in place for the restart of this industry. 

Panama, Guatemala and Costa Rica have faced setbacks in their economic recovery plans and were forced to suspend construction activity longer than expected – especially private sector projects.

Honduras and El Salvador have on the other hand created a plan to reopen the industry with mandatory health protocols. 

Standing out on the policy front is Nicaragua, which never shut down its construction sector.

BNamericas takes a look at the state of the region’s construction industry.

GUATEMALA

The sector’s status in Guatemala remains unclear as the government has not been able to implement its reopening plan.  

President Alejandro Giammattei said on July 8 that his government was still working on health protocols to reopen the industrial and construction sectors. 

On July 12, Giammattei said in a live address that the government would begin using a four-color alert system – similar to Mexico’s – to monitor the economic reopening. 

The original plan, published in the official gazette on June 3, is based on a four-phase reopening.

To move from phase 0 to phase 2, which would see the restart of construction activity, Guatemala would have to report a decrease in new coronavirus cases during a full month – which did not happen. 

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The government has however presented major plans for the public infrastructure sector. 

Giammattei said on July 9 that the government would build 14 hospitals. 

"We are going to build seven hospitals this year and seven the next, and the director of the government center is preparing the reconstruction of 14 health centers in very important municipalities with laboratories," he said. 

The announcement follows reports that suggest the government will seek to increase the public investment budget next year to reactivate the economy. 

Proposals for the 2021 budget include 22 health infrastructure projects with an investment of 99mn quetzales (US$13mn), 8bn quetzales for highway infrastructure and 335mn quetzales for school buildings, local daily La Prensa reported. 

COSTA RICA

Costa Rica was among the Latin American countries that did not fully close the construction sector but relied on it to support the economic recovery. 

However, a sudden rise of coronavirus cases in at least seven cantons forced the government of President Carlos Alvarado to announce on July 10 restrictions on vehicle movement and public transport, as well as the closure of businesses, in the capital’s greater metropolitan area until July 21. 

The restrictions only allow essential industries to remain open and the construction sector is not on that list. 

The restrictions will result in job losses in the construction industry, said the Costa Rican construction chamber (CCC), which has called for construction to be classified as an essential activity. 

On Sunday, Alvarado presented actions to the national assembly to counter the economic fallout from the coronavirus crisis, including the biggest budget cut in Costa Rican history of 355bn colones (US$609mn).

In his address, Alvarado said the cut would not affect the government’s biggest investments or the infrastructure plan – which includes hospital, highway, school and water projects. 

EL SALVADOR

The administration of President Nayib Bukele began phase one of five of the economic reactivation plan on June 16.

Phase one includes the construction sector, as well as the port, aeronautic, textile and electronic industries. 

Under the original plan the second phase would have started on July 7, but the government said on July 5 that it would extend phase one by 15 days due to a rise in coronavirus cases. 

While the extension does not affect construction and port activities, it delays the full reopening of the international airport until August 21. 

Bukele is among the Latin American presidents who has imposed the toughest restrictions to contain the spread of coronavirus. 

His administration kept the construction sector suspended for 85 days and implemented strict travel restrictions. 

PANAMA

A date for the full restart of Panama’s construction sector has not been announced as the health ministry (Minsa) has the last say on any restart.

The suspension was supposed to last 30 days, but Minsa and President Laurentino Cortizo have extended the period at least four times. The latest decree postponed all construction for 15 days from June 26. 

On June 1, the government launched stage two of the economic reboot, which allows public works ministry MOP to restart projects that are of public priority with Minsa’s approval. 

However, only 13 of the 35 projects that MOP has submitted to Minsa since May 15 have been approved.

The remaining ones, new tenders and a US$3bn portfolio of 15 mobility projects are expected to kick off in August, according to the public works ministry. 

The restart of private sector projects is part of phase three of the economic reactivation for which not yet a launch date exists. 

HONDURAS

The government restarted the construction sector on May 12 as part of a “smart reopening,” after having put on hold its US$2.3bn infrastructure agenda to focus on the fight against COVID-19.

This allowed public works authorities to resume construction on 15 highway projects and a new terminal for the Palmerola international airport in the Comayagua Valley, about 40km from capital Tegucigalpa, according to the construction chamber (CHICO). 

The security ministry said on Monday that phase one of the smart reopening would be extended as the government works on adding more activities to the plan.