THE government must intervene to address the rising cost of building materials, which has driven up business costs and could ultimately result in higher property prices, developers and contractors’ groups said today.

“The increase has directly impacted the cost of doing business, which has resulted in a 13-20% hike in construction cost.

“Some items that have shown drastic price increases include mild steel prices (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,” seven industry groups said in a joint statement today.

“If left unattended, the matter would prolong and it can easily lead to loss-making projects and cash flow crunch. 

“Developers may have no choice but to pass the extra cost to the rakyat, while contractors who are not able to absorb the extra cost may have to halt their work,” they added.

The groups are the Master Builders Association Malaysia, Real Estate and Housing Developers’ Association Malaysia, Persatuan Kontraktor Melayu Malaysia, Persatuan Kontraktor Bumiputera Malaysia, Guild of Bumiputera Contractors Wibawa, The United Malaysia Contractors Association and Persatuan Kontraktor India Malaysia.

They said key factors affecting the price increase for building materials include the cost of raw materials, shortage of foreign workers and rising prices all round in logistics, crude oil and energy costs. 

To ease the situation, the groups urged the government to take up their proposals, which include enforcement against profiteering and anti-competition practices along the whole supply chain.

The government should also expedite the entry of foreign workers, and extend the Variation of Price (VOP) clause on contracts for government projects.

Owners of private projects should also be encouraged to introduce the VOP clause in their contracts.

An extension on the VOP clause is important at this time as price volatility is expected to remain beyond the end of this year, the groups said.

“We are very worried that if these issues are not given urgent attention, the industry will suffer further and subsequently would adversely impact our sector and the country’s economic growth.” – December 13, 2021.