Friday 29 Mar 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on October 22, 2018 - October 28, 2018

On Nov 2, the government will table the Budget 2019 estimates in parliament at a challenging time after being bequeathed a legacy of financial woes and high national debt.

Master Builders Association Malaysia (MBAM) is concerned over the expected slowdown of the construction industry now that several high-profile infrastructure projects have been shelved or deferred for review.

Small and medium-enterprise (SME) project contractors and heavy machinery and equipment suppliers have been seriously impacted as they had invested heavily over the years in anticipation of the projects continuing. They now have to think of downsizing their operations and staff.

Many are facing cash flow and financial problems while banks scrutinise the viability of their business and their capacity to repay the loans taken.

More certainty on the part of the government would help to ensure optimum use of the industry’s current available capacity. Any slowdown will hinder the growth of about 140 downstream industries.

The construction growth rate dropped by 3.6 percentage points to 4.7% in 2Q2018, from 8.3% in 2Q2017.

The confidence level in the construction industry has dropped and that may affect future investments.

The government could spur economic growth by embarking on the construction of more affordable homes and increasing the allocation for public infrastructure projects that would benefit the rakyat.


Bright note on foreign workers employment muddle
MBAM recently submitted a report on foreign worker employment issues to the Institute of Labour Market Information and Analysis (ILMIA). ILMIA, which comes under the Ministry of Human Resources, has been entrusted to find a solution on how best to manage foreign worker recruitment.

The report listed 35 pending issues, including calling on the government to consider allowing Construction Labour Exchange Centre Bhd to handle foreign worker recruitment for SMEs in the construction industry.

MBAM appreciates the government’s proactive action in setting up an independent committee to study labour issues in the hope of resolving them quickly.

We hope to see integrated and comprehensive policies covering the entire employment process, beginning from when employers obtain approval for recruitment quotas up to the repatriation of foreign workers to resolve the current challenges faced by the industry.


Sales and Services Tax
MBAM has formed a special committee to study the impact of transitional issues due to the expiry of the Goods and Services Tax (GST) on June 30 and the enforcement of the Sales and Services Tax (SST) on Sept 1.

The committee met on Oct 1 and identified several matters it wants the Customs Department to clarify.

The first relates to the norm in the construction industry to accept variation work orders and carry them out. However, quite often it is impossible to determine the final variation amount until price negotiation has been carried out and project accounts are finalised 1½ to two years later.

The other uncertainty is about those facing difficulty in accounting for the output tax of the retention sum after receiving the sum on or after Sept 1, but are required by the government to settle the GST fee before year end.

Another problem is the difficulty in calculating the GST sum when the services of a nominated subcontractor (NSC) were engaged by a client (a subcontractor) and paid for by the client without going through the main contractor. The full details will only be known by the main contractor upon the completion of a project.

MBAM wants the government to allow a grace period of two years for contractors to settle the full GST fees in view of these uncertainties.

We hope the government will implement a workable solution for the construction industry to ease the cash flow burden and clarify these uncertainties.


VVIP @ 44th IFAWPCA Convention in Kuala Lumpur
Prime Minister Tun Dr Mahathir Mohamad is no stranger to the conventions organised by the International Federation of Asian and Western Pacific Contractors’ Associations (IFAWPCA). He officiated the opening of the 20th IFAWPCA Convention in Kuala Lumpur in 1983, when the late Tan Sri Yeoh Tiong Lay was the federation’s president. Barely two years into his tenure as prime minister in 1981, his photograph was on the front cover of the convention’s handbook.

In 1998, Mahathir was conferred the IFAWPCA-Atsumi Award, which honours an individual who has played a significant role in the national development of the construction industry in member countries.

Now, he has agreed to attend the farewell dinner of the upcoming 44th IFAWPCA Convention to be held in Kuala Lumpur from Nov 12 to 16 and to address the over 1,000 foreign delegates from 19 member countries who will gather in the capital city.


Foo Chek Lee is MBAM president and managing director of Pembinaan Mitrajaya Sdn Bhd

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