WITH soaring prices hitting the economy and the public at large, several developers and contractors’ groups urged the Government to intervene enact several drastic measures to address the issue.
“We urge the Government to extend the Variation of Price (VOP) clause in contracts for Government projects to be extended for at least another twelve months, as we expect price volatility to remain beyond Dec 31.
“For private projects, we hope the Government could encourage project owners to introduce VOP in their contracts as well,” the groups said in a joint statement.
The statement was signed by 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).
Touching on the matter, the groups said that among the major factors causing prices to spike are surge in the costing of raw material, shortage of migrant workers and increase in logistics cost.
They added that the upward trend in crude oil prices and the overall rise of energy costs were also making things worse for the industry.
“We’re worried that if these issues are not given urgent attention, the industry will suffer further and adversely impact our sector and the country’ economic growth.
“And to stress our point, the increase has directly impacted the cost of doing business, resulting in between 13% and 20 % hike in construction cost.
“Other items that have also shown drastic price increase include mild steel, up to 41%, and sand, up to 20% since Oct last year. Such situation has put companies’ already dwindling profit margins (if any) under pressure,” they stressed.
With that said, the groups also urged the Government to expedite the entry of migrant workers to ease shortage of manpower, in order to bring down prices.
“The Government should also monitor and increase enforcement to ensure there is no excessive profiteering and curb anti-competition practises in the industry’s supply chain.
“If the situation becomes worse, developers may have no choice but to pass the extra cost into house prices, which will ultimately burden the people, while contractors who are not able to absorb the extra cost may have to halt their work,” they concluded. – Dec 13, 2021
