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Saturday, June 21, 2008

Builders urge govt to set up steel bar stockpile

MASTER Builders Association of Malaysia (MBAM) recommends that the government allocate RM1 billion to stock up on 350,000 tonnes of steel bars, to ease the current supply chain bottleneck in the construction industry.

MBAM, which represents 600 contractors in the country, estimates that the country urgently needs 350,000 tonnes of steel bars in the next three months.

"We're facing a supply chain bottleneck now because government projects were rolled out irregularly.

Wong: Sudden increase in demand is causing artificial shortages in the market

"The sudden increase in demand for steel bars, cement and heavy machinery is causing artificial shortages in the market," said MBAM president Patrick Wong.

Last week, Malaysia's five major steel millers, in a statement, said they are supplying steel bars at between RM3,550 and RM3,750 per tonne, cheaper than in Singapore, Thailand and Indonesia.

"In de-bottlenecking the supply chain in the construction industry, we appeal to all steel millers to (bypass distributors and) directly supply the steel bars to contractors who are capable and willing to buy for cash," he told reporters at a press conference in Kuala Lumpur yesterday.

"We're also recommending that the government, via the National Price Council, Syarikat Perumahan Negara or even Mavtrac Sdn Bhd, to set up a stockpile of 350,000 tonnes of steel bars now," he said.

"If there are no immediate positive measures taken, we can see further delay in infrastructure projects," he said.

Wong said the construction of affordable housing, including low- and medium-cost units, may no longer be feasible.

"Each low-cost unit requires 1.8 tonnes of steel bars. If, by the end of the year, steel bars escalate to RM5,000 per tonne, the ceiling price of RM45,000 on a low-cost unit will no longer reflect its real economic value," he said.

Wong reiterated that the association's appeal to the government is to incorporate price fluctuation clause in all government contracts.

"Right now, only the Public Works Department's Form 203 provides for price fluctuation clause. All other government jobs do not allow for cost pass-through," he added.

By New Straits Times (by Ooi Tee Ching)

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