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Saturday, February 4, 2012

MBAM bullish on construction sector

DESPITE the global economic uncertainty, the Master Builders Association Malaysia (MBAM) is bullish about the growth of the local construction industry in 2012.

The Malaysian construction industry is expected to grow to RM92bil this year from RM85bil last year,” says MBAM president Kwan Foh Kwai.

“However, with the uncertainty of the global economy and the expectation that the property sector may be less robust, MBAM is cautiously optimistic that the construction industry outlook for 2012 will be relatively stable, backed by the continued implementation of projects under the 10th Malaysia Plan (10MP) and the Entry Point Projects (EPP) under the Economic Transformation Programme (ETP),” he adds.

Kwan says the timely awards and implementation of projects under the 10MP and ETP will contribute positively to the growth in 2012, as the projects requires a gestation period to generate impact to the economy.

“A continued conducive environment for doing business in the country, clear guidelines and timelines for approval processes and a level playing field will definitely help spur growth and investment in Malaysia.

“This planned and progressive awarding of projects will reduce any abrupt increase in demand for building materials and manpower, which may jeopardise the targeted growth due to temporary shortages in supply. This will also prevent unnecessary price increases which will add burden to contractors,” he says.

Analysts, meanwhile, are pretty upbeat about the outlook for the construction sector, in light of the call for tenders of the Klang Valley My Rapid Transit (MRT) jobs by MRT Co.

Last month, it was reported that MRT Co is expected to call for tenders of MRT jobs that comprise 18 elevated civil, station and depot work packages under Phase 1 worth RM15bil. Phase 1 involves 20 km between Maluri and Kajang.

Meanwhile, tenders for Phase 2 of the MRT project will be called in the second half of 2012, which the market values at RM15bil.

“The positive news from MRT Co reinforces our view on the construction sector as we expect a lot of sizeable projects to be awarded this year, especially in the second half of 2012,” says MIDF Research in a report.

An analyst from a local bank-backed brokerage says the new MRT jobs will bode well for the construction industry this year.

“It will create some excitement for the industry and spur spin-off jobs, which will benefit the local construction sector,” he says.

Kwan notes that the Government has targeted a 7% growth for the construction industry this year.

“The kind of growth we hope as envisioned in the 10MP (which covers the period from 2011 to 2015) is to have an annual growth of at least 3.7% per year as compared with 6% per annum gross domestic product growth for the country.”

Kwan believes that the Government’s public-private partnership business model will play an integral role in the development of the local construction industry.

“There is also a need to bring in foreign direct investments (FDIs) which will definitely play an important part to promote construction growth in 2012.

“MBAM opines that boosting investors’ confidence and sentiment with measures aimed at enhancing economic efficiency through market liberalisation and lowering business costs will help add to the country’s FDI growth momentum in 2012,” he adds.

Kwan says the MBAM has urged the Government to speed up the award of new projects, especially those with that would have a high impact to the economy in 2012.

“For projects involving FDI and domestic investors, the timely issue of construction permits will further improve confidence of investors.

“Timely awards and implementation of projects as per the 10MP and ETP from now will contribute positively to construction growth in 2012, as the projects require a gestation period in order to generate impact to the economy.”

Other issues the MBAM feels could present challenges to the local construction industry, says Kwan, include the stability of building material prices, policy and law related matters, aside from high import duties for construction heavy machinery.

The MBAM has suggested the Government reduce the import duty and sales tax for heavy machinery on a systematic basis within two years, until it is reduced to 5% to 10% for import duty and 5% for sales tax, from the 20% and 10% currently. “With the use of new and bigger capacity machinery, productivity will increase and less foreign workers will be employed.”

Kwan says having sufficient and skilled workforce for the sector is also vital. The MBAM has appealed to the Government to lift the temporary suspension for workers’ quota application, saying that the construction industry is currently facing a shortage of manpower.

“The MBAM has written to the Government to allow construction workers above the age of 45 who have been trained as skilled workers to be legalised so as to remain working in Malaysia. This will save both labour cost and reduce the number of new unskilled foreign workers to be brought in.”

Kwan says there is currently a critical need to replenish the pool of skilled construction manpower.

“It is estimated that 35.1% of local construction personnel would reach the age of 50 and above, in seven years from now. Therefore, MBAM is taking steps by collaborating with Open University Malaysia to develop and design industrial based programmes for working adults. The courses developed will incorporate knowledge and entrepreneurship skills which would be industry oriented.”

Kwan says MBAM is also collaborating with the KLIA Professional and Management College and conduct the MBAM Site Safety and Health Supervisors (SSS) training course, which is accredited by the Department of Safety and Health and help address the shortage of SSS in the construction industry.

“The SSS courses are currently conducted in Kuala Lumpur and will be extended to other areas such as Penang, Sabah and Sarawak as per request from the construction industry.”

By The Star

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