KUALA LUMPUR: The Master Builders Association Malaysia (MBAM) is urgently seeking the government's immediate intervention to help the Malaysian construction industry cope with the impact arising from the steep increase in the prices of building materials.
The association said much-needed assistance by the government would help contractors complete projects in a timely manner and avoid the termination or abandonment of projects.
It noted that some contractors have been considering halting the bidding for projects tendered by local authorities because the contracts shifted too much risk onto contractors already stretched by the lag in the price tendered and the actual current prices.
"This disparity between actual prices tendered and actual current prices needs to be corrected. They are inaccurate and do not reliably reflect market volatility," MBAM said in a statement today.
Rising material prices sent skyward by the pandemic and the increasing material and energy costs are negatively impacting contractors handling both government and private projects, it noted.
Hence, MBAM has proposed that manufacturers and suppliers should lock in a price for all orders placed, otherwise it would defeat the purpose of the lock-in price for projects while additional new orders or new supplies should be negotiated at that price.
"We also hope manufacturers of building materials could provide a detailed breakdown of raw materials cost, energy cost such as pegging the price of building materials with international prices and allow it to be up and down accordingly," it said.
MBAM also appealed to the government to temporarily exempt import duties of raw materials and also to provide subsidies or grants to manufacturers to mitigate the increase in production costs and is also seeking for the government to subsidise the rising cost of raw materials for prices to stabilise.
The association also urged a review of the variation of price (VOP) rate in government contract projects, adding that the VOP should be extended to Dec 31, 2022, and beyond if necessary.
MBAM also suggested that price increases should be staggered over a period of three to six months instead of a "sudden big increase in price in one go" as "this will not only prevent extreme price fluctuations but also help contractors to mitigate their cash flow and losses."