THE construction industry must reject poor governance practices like proxy bidding, price-fixing and ‘Ali Baba’ contracting when competing for government tenders, says Deputy Works Minister Datuk Seri Dr Ahmad Maslan.
He said such practices, where companies which are awarded contracts hand over the projects to third parties, undermined efforts to develop capable bumiputra contractors.
Calling on contractors to build their own expertise and capacity to deliver projects, Ahmad said the widespread practice of “Ali Baba” contracting must be eliminated.
He said this at the CIDB Northern Region Contractor Convention at the Picca Convention Centre @ Butterworth Arena in Penang.
He also said that about 75% of delayed and sick construction projects nationwide were caused by weak management, operational oversight and financial shortfalls, while the remaining 25% were due to technical problems at project sites.
“This shows the need for contractors to strengthen their financial position, internal management and ability to deliver projects.”
Ahmad said contractors could no longer rely solely on technical expertise, but must also have good governance, healthy cash flow, skilled workers, technology adoption and a strong track record.
“This is particularly important to develop more capable bumiputra contractors, whose participation remains concentrated in the lower grades,” he said.
Citing Malaysian Construction Industry Development Board (CIDB) data, he said bumiputra contractors made up 72% of registered G1 contractors, with 47,064 out of 65,446 companies.
However, bumiputra share fell to just 28% at G7 level, with only 3,097 of 10,837.
“Do not remain at G1. You need to upgrade,” he said.
Ahmad said the challenge was not the lack of bumiputra contractors, but their ability to build capacity, strengthen financial management and take on bigger, more complex projects.
He urged contractors to adopt Building Information Modelling (BIM) and other digital tools.
“China has integrated BIM into project life cycles for more than seven years.
“If local contractors refuse to adopt BIM and digital technology, they will be left behind globally,” he added.
The fourth edition of the Contractors Convention served as a platform for CIDB to bring together more than 400 contractors, industry players, government agencies and strategic partners to exchange knowledge, explore opportunities and build networks to support the growth of the construction industry.
It was held in conjunction with International Construction Week.
During the two-day convention, 11 speakers took part in seven sessions covering various projects and developments in the construction industry, including the Construction Action Plan 2026-2030, Perlis Inland Port, Mutiara Light Rail Transit project, Citra Solar project, sustainable construction and facilities management.
Representatives from CIDB Malaysia, Northern Corridor Implementation Authority (NCIA), SRS Consortium, Gading Kencana and Medivest also gave presentations, while a financial literacy forum titled “Empowering Contractors: Smart Financing, Strong Growth”, focused on financing, credit and business sustainability for contractors.
The forum featured speakers from Credit Guarantee Corporation, SME Bank, Tekun and Credit Counselling and Management Agency.
