Contractors crying foul with bleak prospects of total sector re-opening

THE Master Builders Association Malaysia (MBAM) together with 35 associations in the construction industry is lobbying the Government to expedite the vaccination process on construction industry workers and the building materials supply chain under Phase 2 of the National COVID-19 Immunisation Programme (PICK).

The target should be to achieve full vaccination or two doses by 3Q 2021 with the priority of re-opening of the construction industry in stages, according to MBAM’s president Tan Sri Sufri Mhd Zin.

“Following the implementation of the full movement control order (FMCO) through Phase 1 of the National Recovery Plan (NRP), most economic activities are still not allowed with the construction industry being one of the most affected sectors,” Sufri pointed out, noting that it has submitted a joint memorandum to Prime Minister Tan Sri Mahiaddin Yasin.

Tan Sri Sufri Mhd Zin

“Currently, the operating rate of construction sites is low and most of the contractors currently in operation have taken note of the shortage of existing building material stocks and will most likely run out in the near future.

Sufri further stressed that the industry players are of the opinion that the re-opening of the construction industry should start from now and not in Phase 3 of NRP where the use of threshold values collectively at the national level as opposed to the use of specific local situations is not very helpful in our members’ planning.

“The extension of Phase 1 to July 2021 without a clear end date is also a sign that the transition to the next NRP phase remains subjective,” he added.

Meanwhile concerns raised by MBAM is ‘real’ given that UOB Kay Hian Research expects earnings to remain weak in 2H 2021.

“This is due to restrictions imposed on construction activities, ie stop-work orders and a 60% workforce cap for construction sites that are allowed to resume work,” justified analyst Afif Zulkaplly in a construction sector update.

“Should the phase of the National Recovery Plan be extended beyond its expected timeline (to end in July/August), we could expect 2H 2021 earnings to be weaker than 1H 2021.”

According to the research house, the impact of the total lockdown varies across the sector due to the exceptions made by the Government.

Critical construction, maintenance and repair works, construction of key public infrastructure, and construction sites that provide centralised labour quarters are allowed to resume work but with 60% of the workforce activated.

“Despite guidance from the companies, we find it hard to gauge respective companies’ net productivity levels due to inconsistencies of rules imposed across the sector,” added the UOB Kay Hian Research which maintained its “market weight” outlook on the sector. – July 2, 2021

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