Local contractors losing out to foreign rivals

Local construction industry hit by several pertinent issues including safety and health, low productivity and stiff competition


Local contractors risk becoming subcontractors on many of the infrastructure projects in the pipeline in Malaysia as international peers are chosen as the main contractors for the jobs, unless they increase their competitiveness.

Construction Industry Development Board (CIDB) chairman Tan Sri Dr Ahmad Tajuddin Ali has echoed this sentiment, citing local contractors are plagued with various issues that impact their competitiveness against foreign counterparts.

“We are not winning enough — we do not want our contractors to be just subcontractors. They should be the main contractors,” he said at a press conference at the Master Builders Association Malaysia (MBAM) Building and Construction Conference 2017 in Kuala Lumpur yesterday.

According to the Construction Industry Transformation Programme (CITP) 2016-2020, the local construction industry has been afflicted by several pertinent issues including safety and health, low productivity and stiff competition, among others.

Data notes local contractors’ market share in value had consistently fallen year-on-year from 94% to 78% from 2006 to 2014.

Local contractors are losing their competitive edge partly due to the shortage of labour, including skilled talent in the industry.

The CITP noted Chinese and Japanese contractors were the top two foreign players in the country in terms of number of contractors involved and value of projects awarded, with 153 and 189 projects bagged respectively between the years 2008 and 2015.

China, which is Malaysia’s largest trading partner, has become a key player due to its overarching global ambitions under the One Belt, One Road initiative.

Notable Chinese investments include the RM43 billion Melaka Gateway project, the RM100 billion Forest City development in Johor and

the RM55 billion East Coast Rail Link, which will be led by Beijing-based China Communications Construction Co Ltd.

The increasing presence of foreign contractors on local contracts is set to continue in the future as the government is driving foreign direct investments into the country.

MBAM is projecting over RM350 billion worth of projects will be created in the next two years on the back of projects such as the Mass Rapid Transit (MRT) Line 2, MRT Line 3, Kuala Lumpur-Singapore high-speed rail, the Pan-Borneo Highway and many more.

The construction industry is expected to grow 7.5% next year and as such, more labourers are needed for these projects, including foreign workers.

As at end-August 2017, total registered foreign workers fell to 1.8 million from 1.9 million a year ago, of which 19.5% worked in the construction industry.

The Industrialised Building System (IBS) techniques are seen as a solution to reduce the reliance on foreign workers in the construction site, but adoption of IBS among local contractors is still slow.

MBAM president Foo Chek Lee said the industry lacks trained workers, even to embrace IBS.

“IBS needs design and trained capabilities. The consultants, the workers who instal the components on the construction site, especially the heavy-lifting machine operators, need to be trained first. We find it difficult to find suitable workers,” he said.

“Today, we are not talking about 2020 anymore. Instead, we are looking at 2050 and the various infrastructure projects leading up to that.

“Either we step up our game, or lose out to the international contractors in our own home,” Ahmad Tajuddin concluded in his speech, addressing contractors and architects alike who attended the conference yesterday.


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