Engineering and construction sector struggling and in need of support

The Institution of Engineers Malaysia (IEM) welcomed the announcement on March 27 of the RM250bil economic stimulus package and the government's commitment to continue the implementation of all projects allocated in Budget 2020, including the Mass Rapid Transit Line 2, East Coast Rail Link and the National Fiberisation and Connectivity Plan.

The institution also greatly appreciates the decision announced by International Trade and Industry (Miti) Minister Datuk Seri Mohamed Azmin Ali on April 10 to allow certain sectors of the engineering and construction industry to resume work during the third phase of the MCO (movement control order) after submission to Miti for approval commencing today. These additional sectors would include professional services by engineers, architects, town-planners, land surveyors, quantity surveyors, project managers, facilities managers, lawyers, accountants and other relevant services.

However, the institution would like to put forward some additional areas that need to be able to resume work to support the engineering and construction industry that is struggling to survive the Covid-19 crisis and the MCO.

The engineering and construction industry has been severely affected, as development projects were suspended and works were affected by the MCO period restrictions. The slowdown of this sector will have significant impact on employment in the engineering profession as well as a recessionary outlook post-Covid-19 before the national and global economy recovers.

IEM would like to request for the government to consider an extension of time (EOT) for both government and private projects hindered by the pandemic. The EOT will need to take into consideration remobilisation time, as infrastructure and construction project re-commencement works will need to be staged progressively to adhere to Covid-19 health and safety requirements. Both the government and private developers should consider waiving the penalty of liquidated and ascertained damages due to unexpected issues beyond reasonable control during the MCO period.

IEM also urges the government to expedite and release the outstanding fee payments to engineering consultancy firms and contractors working on public sector projects without delay after the MCO is lifted to ease the industry’s cash flow.

The government and private developers should also consider a special waiver of the retention sum imposed during this period and release it fully or partially, especially those covered by bank guarantees. This will considerably ease the financial burdens and cash flow of affected contractors.

Engineering consultancy practices and other professional services firms (architectural, quantities surveying, etc) are largely unable to benefit from the wage subsidies introduced in the recently announced stimulus package for small and medium enterprises (SMEs). This is because professional services firms employ mostly professional and skilled technical staff with entry-level salaries that are usually above the RM4,000 ceiling specified in the package.

IEM would like to propose a higher ceiling of up to RM8,000 for professional services related staff including architects, engineers, town-planners, land surveyors, quantity surveyors, as well as other relevant services, which are regulated by the statutory bodies of the respective professions. The higher ceiling is necessary because such employees are usually professionally qualified with technical competencies and earn more than the RM4,000 ceiling specified in the stimulus package.

Therefore, the institution would like to suggest that the government look into special incentives to support and assist the engineering and construction industry to ride out the Covid-19 crisis, as the collapse of this sector would have a huge impact on the country's economy.

IEM is keen to assist the government by providing the necessary advice and input on incentives that can support and serve as a stimulus to the struggling engineering and construction industry during this crisis. As a learned society with over 50,000 members and that is affiliated with several international engineering organisations, IEM is recognised locally and internationally as the professional body representing a wide cross-section of engineering practices, and many of its members are learned and experienced practitioners in their fields who will be able to offer assistance and opinions.

DAVID LAI KONG PHOOI

President, Institution of Engineers Malaysia (IEM)