Curb rising cost of construction materials, builders’ groups urge govt

  • Nation
  • Monday, 13 Dec 2021

PETALING JAYA: The government should intervene and manage the increase in prices of building materials in Kuala Lumpur, say several building and construction associations.

They also appealed to the government to monitor the situation to ensure there are no profiteering or anti-competitive practices in the construction industry supply chain and to step in with enforcement when necessary.

“The government should also expedite the entry of foreign workers to ease the current shortage,” they said in a joint statement on Monday (Dec 13).

The statement was signed by the Master Builders Association Malaysia (MBAM), Real Estate and Housing Developers’ Association Malaysia (Rehda), Persatuan Kontraktor Melayu Malaysia (PKMM), Persatuan Kontraktor Bumiputera Malaysia (PKBM), Guild of Bumiputera Contractors Wibawa (GBC Wibawa), The United Malaysia Contractors Association (UMCA) and Persatuan Kontraktor India Malaysia (PKIM).

“The variation of price (VOP) clause in contracts for government projects needs to be extended for at least 12 more months, as we expect price volatility to remain beyond Dec 31 this year.

“For private projects, the government should encourage the project owners to introduce VOP in their contracts,” it added.

The associations hoped that immediate measures to overcome these pressing issues could be taken to address the rising costs of building materials.

“If left unattended, the matter would be prolonged and this can easily lead to loss-making projects and a cash flow crunch.

“Developers may have no choice but to pass the extra cost on as higher house prices which will ultimately burden the rakyat while contractors who are not able to absorb the extra cost may have to halt their work.

“Based on data from the Construction Industry Development Board and Malaysia Statistics Department, private sector projects comprised 65% of the total projects awarded up to October this year.

“With such huge numbers undertaken by the private sector, it is imperative to give the same priority accorded to other sectors to the building and construction sector, otherwise efforts towards economic recovery would be derailed prematurely,” the statement read.

The associations acknowledged that the cost of building materials has been on a steep rising trend in recent months.

“The increase has directly impacted the cost of doing business which has resulted in a 13% to 20% hike in construction cost. Some items which have shown drastic increases include mild steel price, up to 41%, and sand, up to 20%, since October last year.

“Such a situation has put companies’ already dwindling profit margins (if any) under pressure.

“Based on observations, among the major factors affecting the price increase are the surge in the cost of raw material, acute shortage of foreign workers in the country, increase in logistics cost, the upward trend in prices of crude oil, and the rise in energy costs.

“We are worried that if these issues are not given urgent attention, the industry will suffer further and this subsequently would adversely impact our sector and the country’s economic growth,” it read.

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