By Lee Yan Li lylee@thestar.com.my
From Left Thong Mun Wai, Soam Heng Choon, Matthew Tee and Ng Seing Liong.
PETALING JAYA: While the construction industry has been getting less jobs from private developers due to the softening property market since 2012, contractors have enjoyed good growth due to public projects.
Master Builders Association Malaysia (MBAM) former president Datuk Matthew Tee said while most MBAM members did not have many projects from the private sector, the contractors have been able to benefit from public construction projects.
The recent Budget 2017 announcement also presented a silver lining as more Perumahan Rakyat 1Malaysia (PR1MA) and 1Malaysia Civil Servants Housing (PPA1M) houses are announced, which amounted to more than 60,000 affordable houses.
Big construction projects such as the continuation of MRT2, Pan Borneo Highway project, LRT 3 and High Speed Rail (HSR) project in the next ten years will also be keeping the contractors busy.
However, Tee noted that while contractors are looking forward to these projects, the number of construction jobs did not have a good spillover effect to the industry.
“Rather than smaller jobs given to a multitude of players, only a few players got the big portion in some of the nation-building projects,” he said.
On the other hand, financing has also become a problem for some of the construction jobs.
Tee said while generally it is easy for contractors to get financing from banks for government projects, news of new launches of PR1MA with less than satisfying sales rates have caused some banks to shy away from financing the projects.
However, with the announcement of a new, special “step-up” end-financing scheme for the PR1MA programme to reduce loan rejection rate and the collaboration of Maybank, CIMB, RHB and AmBank with Bank Negara Malaysia and Employees Provident Fund, Tee expected the situation to improve.
In the recent Budget Commentary 2017 held by Rehda Institute, Tee encouraged local developers to give priority to local contractors rather than those from foreign countries, including those from China.
Real estate and housing developers’ association (Rehda) Malaysia deputy president Datuk Soam Heng Choon, who acted as the moderator, suggested that the willingness of Chinese contractors to do contra deal was part of the appeal to the developers to work with them.
Tee responded that there is the advantage of foregoing the middleman when working with local contractors, besides the fact that most local players are able to offer competitive pricing.
He also noted that the tax incentives for companies announce in the Budget was also good news to the construction companies, although a tax reduction of 10% to 15% would probably be more encouraging.
When asked by Soam on the issue of labour shortage, Tee admitted that this is an ongoing problem since the early days of the industry.
He also contested the figures given by Construction Industry Development Board (CIDB) Malaysia, which puts the number of construction workers at 1.37 million, in which 70% are local workers.
“Visit any worksite and you can see if the number holds,” said Tee.
He added that according to a research done by a consultant hired by the industry players, the industry had a total of 2.1 million workers, in which 36% were illegal foreign workers, 19% were local workers and 45% were legitimate foreign workers.
While it is possible to have a construction workforce like Hong Long, in which only approximately 1,000 construction workers were foreigners or mainland Chinese, the result would be skyrocketing house prices, said Tee.
In the panel discussion titled “Construction and Real Estate Development Aspects of Budget 2017” moderated by Soam, other participants included RAM Rating Services’s head of agribusiness, real estate & construction ratings Thong Mun Wai; and Rehda Malaysia GST task force chairman Datuk Ng Seing Liong.
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