Posted on 03 December 2007

 

Source: The Star, December 3, 2007
THE shortage of supply and rising steel and cement prices could cripple the construction industry and delay the implementation of the Ninth Malaysia Plan if there was no intervention from the authorities, said Building Industry Presidents' Council (BIPC).

In a recent statement, the BIPC said local builders were being forced to buy steel bars at “artificially inflated prices” that were way above the Government control price but this also did not guarantee the availability of steel bars. 

Supply is uncertain and there is shortage in several sizes of steel bars especially those below 10mm range. This would lead to slow down in construction works, the council said.

The BIPC said there was uncertainty in the supply of both materials despite producers charging higher prices than that of the officially approved prices. It said members were being charged between RM400 and RM500 more per tonne for steel bars and between RM2 and RM3 more for a 50kg of cement. 

The industry body said the supply shortage and volatile prices of steel and cement may slow growth in the construction sector, which includes property development, and delay implementation of 9MP projects. It added that price controls on steel bars and cement should be removed, and imports of steel and cement should be allowed.

Contractors have been absorbing price increases of materials as added cost of doing business but with the present price volatility, it could lead to “serious cashflow problems and severely affecting the bottomline ,” BIPC said. 

If this prolongs, BIPC anticipates that a majority of jobs would be stalled or abandoned. 

Cement, on the other hand, is selling at higher prices than the ceiling value set by the Government. Moreover, there was difficulty to obtain supply even if contractors were to pay cash, BIPC said. 

The automated pricing mechanism (APM), which takes effect on Jan 1, would push prices higher and given that APM was a cost plus mechanism, it would encourage “profiteering” among certain parties, it added. 

The council recommended the removal of price control on steel bars and cement, as well as a temporary stoppage on export of steel bars and billets. 

To resolve the supply issue, BIPC has called on the Ministry of Domestic Trade and Consumer Affairs Malaysia to monitor closely production schedules and delivery status of steel bars and cement. 

To overcome the shortage, the Government could allow free importation of cement and steel with priority given to contractors undertaking projects currently, BIPC added. 

The council comprised of Pertubuhan Akitek Malaysia, Real Estate and Housing Developers' Association Malaysia, Master Builders Association Malaysia, Association of Consulting Engineers Malaysia, Institution of Surveyors Malaysia and Malaysian Institute of Planners. 

 

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