KUALA LUMPUR – Local construction players have attributed the skyrocketing prices of raw materials to the global economic crisis, adversely affecting the industry in Malaysia.
Mohammad Fauzee Mohamad, who chairs the Kedah chapter of the Malaysian Malay Contractors’ Association, said the global economic crisis had caused the price of building materials in the country to rise by up to 30%.
The increase, he said, had been consistent since 2018 involving materials such as cement, iron and sand each year.
“For example, in 2018, the price of cement per pack was around RM13 to RM14, now (2023) it has reached up to RM22.50,” he said when contacted by Scoop.
“As for iron, it was RM2,800 per tonne (in 2018) compared to this year which is RM3,800 – while for sand, for one yard it costs RM40 in 2018 but for this year, the price reaches up to RM50.
“This caused many contractors to ‘raise their hands as a sign of surrender’ and want to return the project they have been awarded because they were unable to survive and will not be able to complete the work according to the contract.”
The price increase is affecting the cost of major projects, including the resumption of the construction of five previously cancelled LRT3 stations, which recently attracted sceptics disputing the project’s RM4.7 billion cost.
PAS MP Khairil Nizam Khirudin during the ongoing Budget 2024 debate reportedly asked if the government would inject additional funds to pay for the project, questioning the financial implications that would follow.
Based on a Statistics Department report, the price per unit of cement between September 2022 and September 2023 recorded an increase of between 2.8% and 26.4% for all areas in Peninsular Malaysia, Sabah and Sarawak, except for Sibu and Miri.
The highest increase in the price index per unit of cement was in Kelantan and Terengganu (26.4%), followed by Penang, Kedah and Perlis (23.5%).
During the tabling of the 2024 budget, Prime Minister Datuk Seri Anwar Ibrahim announced the government had agreed to resume the construction of five LRT3 stations that had been cancelled earlier, namely the planned Tropicana, Raja Muda, Temasya, Bukit Raja and Bandar Botanik stations.
The five stations are expected to complete and improve the Klang Valley’s public transport network, benefiting two million people.
Commenting on the five revived LRT3 stations, Fauzee said Anwar’s approach to resuming their construction is seen as prudent spending from the nation’s coffers.
“It is only RM4.7 billion, in comparison to the expenditure announced during Datuk Seri Najib Razak’s administration of RM9 billion in 2015 and former finance minister Lim Guan Eng (RM16.63 billion) respectively.
“If divided by station, the cost for each would be approximately RM940 million,” he said.
The overall cost for the LRT3 project in 2018 was RM31.65 billion before it was reduced to RM16.63 billion.
Meanwhile, Norazilan Mazahar, from the development and property management department at Universiti Pendidikan Sultan Idris, urged the government to make building materials a controlled item to ensure prices remain stable.
According to him, price hikes have caused construction work to slow down as contractors would be cautious when purchasing main building materials to avoid major losses.
“In this regard, the Construction Industry Development Board or the contractors’ associations need to find ideas to overcome this problem (price increase).
“Although the government introduced various measures such as the implementation of VOP (variation of prices) in the procurement of quotations, conventional tenders and design and build tenders, it is only limited to contracts in 2022 and does not benefit all projects,” he said. – October 30, 2023