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Solid plan needed to mitigate rising construction materials cost

KUALA LUMPUR: There should be an intervention by the government to mitigate construction costs against the rise in construction materials prices, Central Global Bhd group managing director Chew Hian Tat said.

Chew said that in the upcoming Budget 2023, the company proposes financial assistance through small and medium enterprise (SME) loans to help mitigate this unusual price hike for the affected contracted projects.

He added that this could ensure that construction companies can deliver the projects on time.

"Prices of major construction materials have increased across the board due to reduced productivity and logistic issues brought on by the Covid-19 pandemic.

"This includes prices of materials such as steel bars and concrete, which have risen nearly 40 per cent compared to a year ago.

"The increase in material costs has affected the contractual profit margins of projects contracted before the price hike," he said in a statement today.

The main market listed Central Global operates in the manufacturing segment, specialising in industrial tapes and label stocks, as well as the construction segment.

Besides that, Chew said the company hopes the authorities will ease the requirements for importing foreign labour.

This is for the construction industry to readjust the demand and supply situation and stabilise the price of labour needed for the projects.

"Foreign labour issues have long plagued Malaysia, and the Covid-19 pandemic outbreak, unfortunately, exacerbated the condition due to the freeze on foreign labour import quota imposed by the government throughout the two years of the movement restriction period.

"This has caused disruptions in businesses all over, resulting in production losses, unmet demand, and the loss of billions in revenue.

"Looking at this, it is now more important than ever to recruit foreign workers to encourage business recovery," he added.

Meanwhile, Chew said Central Global also expects the government to introduce more tax benefits for the construction industry, including capital allowances, to encourage industry players to adopt automation by investing in more machinery and equipment and subsequently reduce reliance on labour.

He said a capital allowance of 150 per cent spanned over five years could be used to deduct against future business income over the next five years.

Chew said the company is also looking forward to a revision or waiver in real property gains tax (RPGT) for the property development industry.

"As with most industries, the pandemic also adversely affected the property development industry.

"A proposed revision or waiver in the RPGT would be a major booster for property development companies, which in turn could spur on much-needed construction projects," he said.