MOHURD Mandates Payment Guarantees to Curb Arrears
The Ministry of Housing and Urban-Rural Development (MOHURD) is rolling out project payment guarantees across the board, pushing toward a "pay on demand" mechanism designed to prevent the chronic late payment of construction funds that has destabilized the sector.
What the Policy Does
- Project payment guarantees to be implemented nationwide
- Objective: realize "pay on demand" settlement for contractors
- Goal: guard against construction payment arrears risk
Why It Matters
For years, contractors and subcontractors have absorbed the brunt of cash-flow stress when developers delayed progress payments. Unpaid bills cascaded down the supply chain, stalling projects and squeezing small builders. A "pay on demand" guarantee means that, upon a valid claim, payment is made promptly — removing the leverage developers once held to withhold funds.
Protecting the Supply Chain
By mandating guarantees, MOHURD shifts payment risk onto backed instruments rather than informal trust. This reduces the likelihood of work stoppages, supports on-time project delivery, and protects the millions of workers and firms in construction's lower tiers.
Part of a Broader Stabilization Push
The guarantee mandate complements the down-payment cuts, mortgage relief, and affordable-housing relending announced in July 2026 — together forming a comprehensive framework to restore both demand and the integrity of project execution.