Financial issues, SOP confusion drag construction restart

As of June 13, CIDB says 5,528 construction sites are idle out of the 7,699 it inspected nationwide


FINANCIAL constraints and confusion over new standard operating procedures (SOPs) are causes for the slow restart in the construction sector, Construction Industry Development Board (CIDB) said.

This is despite the government’s billion-ringgit allocation in stimulating the economy, together with comprehensive SOP guidelines produced by ministries to ensure businesses can operate while containing the spread of the virus.

Although it is among the earliest sectors to reopen under the Conditional Movement Control Order (CMCO), 4,000 construction projects have remained stalled as of June 1, according to government numbers.

As of June 13, CIDB said 5,528 construction sites are idle out of the 7,699 it had inspected throughout Malaysia.

CEO Datuk Ahmad Asri Abdul Hamid said CIDB carried out 5,019 construction site enforcement visits from April 20 to May 20. Of the total, 83% have not started operations, while only 864 have resumed.

“CIDB had conducted a survey among contractors to find out why they have not started operations.

“We found that 26% have capital and finance issues, while 21% are confused over the SOPs,” Ahmad Asri told The Malaysian Reserve (TMR).

Among the respondents, 18% are also having issues with the mandatory Covid-19 testing and raw materials supply disruptions (12%), as well as lack of manpower, closure of critical agencies’ counters and police roadblocks (6% each).

The remaining 5% said fear of Covid-19 infections is why they have yet to resume.

The government had eased the initial MCO implemented on March 18 twice — via the CMCO on May 4 and Recovery MCO from June 10 — to allow more businesses and social activities to resume.

The government had also announced the Prihatin Rakyat economic stimulus package, followed by the short-term National Economic Recovery Plan or Penjana, which offers funds and financing facilities for businesses to cushion the impact of the pandemic and economic downturn.

However, contractors are required to comply with stringent SOPs to resume operations, including to bear the costs of the Covid-19 tests for foreign workers.

Malay Economic Action Council CEO Ahmad Yazid Othman said small contractors would continue to struggle to pick up their businesses after months of ceased operation, while having to cope with the strict guidelines.

“It goes with the issue of cashflow. No business can sustain without two months of income, yet burdened with expenses. “Also, the speed of funds distribution is not fast enough even if the amount is sufficient, as most small contractors have smaller reserves.

“This could worsen if they do not qualify for the bank’s financing,” Ahmad Yazid said, referring to the Prihatin package for small and medium enterprises (SMEs).

In March, the Special Relief Facility (SRF) was established under the Prihatin SME package to alleviate short-term cashflow problems faced by SMEs. The RM5 billion SRF is managed by Bank Negara Malaysia.

At 3.5% interest rate, SMEs could apply for a maximum of RM1 million per company until Dec 31, 2020. However, a check at a few banks’ websites revealed that the SRF has been fully utilised, therefore it is no longer available.

Mass Rapid Transit Corp Sdn Bhd Sungai Buloh-Serdang-Putrajaya (SSP) Line project director Datuk Amiruddin Ma’aris said the SOPs for construction sites involve multi-level monitoring, which includes state agencies.

Amiruddin said, for example, some MRT sites received their approvals to resume operations quite late from various local authorities along the SSP Line.

He did not rule out that this will cause a delay in the completion of the 55.2km line.

“We are still assessing the impact since works have yet to reach pre-MCO level and it will be quite some time before we achieve the previous capacity.

“Remobilisations are required, supply chains to be seamless since the contracting eco-system runs into a few thousand companies at all levels, and some talents may have been lost due to furlough or dismissal,” Amiruddin told TMR.

The project reached 70% completion in March. It was earlier set for completion in 2022.

CIDB’s Ahmad Asri said the board and the National Economic Action Council have been in touch with stakeholders from various sectors to understand and get better input.

He said since the CMCO, the government had instructed all key government agencies to open their counters to enable essential transactions like renewal of licences and other related issues.