Friday 29 Mar 2024
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THE ultimate aim of the 11th Malaysia Plan (2016-2020) is to transform Malaysia into a developed nation with a per capita income surpassing the requisite US$15,000 threshold.

Sceptics are wondering whether this feat, as envisioned in Vision 2020, can be achieved within the next five years, even with a higher development allocation of RM260 billion (RM223 billion in 10th Malaysia Plan).

The 11MP, tabled in Parliament on May 21, provides key indicators of how infrastructure development will drive the economy, which is targeted to expand 5% to 6% yearly.

My take is that the Vision 2020 road map has put in place workable strategic plans and the prospects are attractive, with construction and infrastructure players continuing to enjoy a boom. The new infrastructure projects announced will definitely help sustain the construction sector’s growth, which has been strong in the past decade.

I hereby mention nine of the major projects that have a substantive and strategic impact on the economy. They are:
• The RM27 billion 1,663km Pan-Borneo Highway connecting Sabah and Sarawak;
• The RM1.6 billion Kota Baru-Kuala Krai highway;
• The RM5 billion West Coast Highway;
• The RM8 billion 197km Gemas-Johor Baru double-tracking;
• The RM23 billion Klang Valley Mass Rapid Transit Line 2 (Sungai Buloh-Serdang-Putrajaya);
• The RM9 billion Light Rail Transit Line 3;
• The RM40 billion Kuala Lumpur-Singapore high-speed rail;
• The RM3 billion Air Langat 2 water treatment plant; and
• The RM69 billion Regasification Terminal 2 in Pengerang, Johor.

From past successes, we know we can rely on infrastructure development to spur economic growth. Where infrastructure is in place, there will be demand for residential and commercial properties, which in turn will create jobs, increase domestic spending and generate spill-over benefits.

However, having a good plan and implementing it are two different matters. However lofty the ideals of Vision 2020 may be, it will remain a dream if early preparations and action are not taken to avoid the pitfalls along the way.

Need for transparency

Master Builders Association Malaysia (MBAM) is of the opinion that tenders and awards of infrastructure projects should be carried out in a proper manner. This is because previously, many large highway concessions were announced during the tabling of budgets — ahead of the tender process. To enhance confidence and transparency in the construction sector, projects should be announced in a transparent manner and awarded to companies that are competent, credible and financially sound.

More importantly, the progress of these projects must be monitored closely.

As Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar has pointed out, only 61% of the 11,843 projects under the 10MP have been completed as at March 17, 2015.

The uncompleted projects have been brought forward to the 11MP, including the KL-Singapore high-speed rail, the Klang Valley MRT Lines 2 and 3, the Klang Valley LRT Line 3, the Pan-Borneo Highway, the Penang Transport Master Plan, the Pengerang project and the planned Klang Valley highways.

Level playing field

With a buoyant economy that is expected to grow at least 5% per annum, it is the right time for the government to consider requests for a lower import duty on machinery — a change in policy that will boost safety, mechanisation and productivity in the construction sector.

Since 2006, appeals to the government on this issue have fallen on deaf ears, although the requests were not altogether unreasonable. We are asking for a reduction in duty on machinery that is not made locally. The current import tax is 30% and it should be slashed to 5% to match that set by other Asean countries.

The fear that a lower tax will reduce the government’s revenue is unfounded. Instead, the reverse is true. With a lower import duty, industry players will be encouraged to acquire new machinery. In Singapore, the government gives incentives, such as subsidies, to small and medium enterprises to promote greater mechanisation and automation.

MBAM is seeking a level playing field to compete and the answer to this is to use new machinery that will help reduce the dependence on manual labour, which consists mainly of foreigners.

Our next immediate concern is the availability of skilled labour. The number of professionals and sub-professionals produced by local universities has failed to meet the industry’s needs. Additionally, there is a need to invest in retraining before they can get down to work.

The situation is aggravated by skilled locals opting to work in other countries, such as Singapore and Australia, due to better pay, benefits and working environment.

Relax restrictions

Apart from facing a labour shortage, contractors are constrained by the long recruitment process and limited supply of workers from approved countries.

They also face restrictions in the transfer of skilled foreign workers and expatriates from Peninsular Malaysia to Sabah and Sarawak. The need to re-apply for permits has caused much inconvenience to companies and increased their overhead costs.

The inflexible recruitment process and work permit policy has brought about an increase in the number of illegal workers in the country. It has also caused the exit of skilled foreign workers. The government should take steps to reverse the trend by allowing skilled foreign workers to work beyond 10 years and continue to stay on after the current maximum allowable age of 45 years.

To improve productivity in the construction sector, there must be an adequate supply of skilled workers, and one way to ensure this is by retaining foreign workers who have been trained while working in Malaysia.

Another measure is to reduce duties to encourage the import of heavy machinery for industrialised building systems, which allow on-site installation of prefabricated components.

Allow foreign workers from other countries

Many skilled Indonesian workers are heading home as their country sees stronger economic growth and more infrastructure development and construction of buildings.

As a stopgap measure, the government should allow the entry of workers from China, India and Bangladesh. Because of the shortage of workers, several mega projects under the 10MP were delayed, apart from the impact on their quality of construction. The inability to source workers from these countries is likely to present the same scenario for the 11MP projects.


Matthew Tee is the president of Master Builders Association Malaysia

This article first appeared in Forum, The Edge Malaysia Weekly, on July 6 - 12, 2015.

 

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