This article first appeared in The Edge Financial Daily on June 19, 2019

KUALA LUMPUR: Works Minister Baru Bian has expressed concern about the sudden steep rise of 40% in local cement prices, noting the government needs to think it through.

The minister said the price hike would impact the construction industry’s growth. “We are concerned about the sudden proposal to increase cement prices. I believe we have to look into this very carefully,” said Baru Bian.

He said the works ministry will discuss with industry players and the Construction Industry Development Board (CIDB) on strategies to mitigate the adverse impact of higher cement prices if the increment materialises.

The minister was speaking to the media after the signing ceremony for the memorandum of understanding (MoU) among UEM Edgenta Bhd, CIDB and the Malaysian Highway Authority (MHA).

According to CIDB chief executive officer Datuk Ahmad ‘Asri Abdul Hamid, the domestic trade and consumer affairs ministry had a meeting with several parties, including CIDB, concerning the potential cement price hike.

CIDB has forecast construction cost to increase 7% to 8% if there is a 40% jump in cement prices. Ahmad ‘Asri said the board had done simulations based on the maximum reported price increase of 40%.

“The price increase is very sudden and very big at 40%. Concrete is a major part of construction [works]. I am concerned that if prices are raised this high, the [cost] increment will be passed to consumers,” he said.

He pointed out construction players such as property developers had forwarded complaints about the potential price hike. Those complaints tend to be over ongoing or imminent projects.

Last week, construction firms received notices from cement manufacturers that prices would increase by up to 40%.

Separately, on whether the works ministry has any knowledge about the results of the feasibility study on the proposed government takeover of the Lebuhraya Damansara Puchong, Sistem Penyuraian Trafik KL Barat, Lebuhraya Shah Alam and Smart Tunnel highways, Baru Bian said the study was concluded at end-May, with the results to be submitted to the cabinet for a further inspection.

On whether the government’s proposals to lower toll charges would result in a shortfall, thus impacting the said highways’ maintenance, MHA managing director Datuk Seri Aziz Abdullah said regardless of who owns the highways, a priority is maintenance.

He said the authorities had ensured strict maintenance clauses are put in place to ensure the expressways are properly maintained, with RM2 billion spent on maintaining the nation’s highways yearly.

The aforementioned MoU is for the study and research of the human competency gap in highway maintenance; to set replicable standards and benchmarks on safety best practices; and the protection of expressway maintenance workers.