MCO 3.0: Construction players risk closing down

Raw material prices spike while contractors face delayed works due to insufficient workers, strict SOPs and huge cost of swab tests


MANY construction players can no longer absorb the impact of the Movement Control Order (MCO), now entering total lockdown (MCO 3.0), and risk closing down despite being allowed to operate minimally during the period.

Master Builders Association Malaysia (MBAM), representing 17,000 members, said many contractors had already been in a dire state due to various additional costs since the Covid-19 outbreak last year.

MBAM said raw material prices have spiked, including for high steel bar and copper prices, while contractors face delayed works due to insufficient workers, strict Covid-19 standard operating procedures (SOPs) and huge cost of swab tests, which have all driven construction companies over the edge.

While critical maintenance, repair works and critical construction works for major public infrastructure are allowed to operate during the total lockdown, she said those costs were not factored into the cost of the project.

“We have been biting the bullet in order to ensure projects can still be completed on time and provide job security to the many workers in the industry.

“With the six weeks’ total lockdown across two phases and potentially longer, many contractors cannot absorb the additional costs anymore and might fold,” the association said in a statement yesterday.

In the short to medium term, she said the industry would face shortages of contractors, leading to overall price escalation.

MBAM has proposed several measures to be included in a new stimulus package expected to be announced by the government to ease the financial burden among contractors.

MBAM added an automatic loan moratorium extension is a must for people and businesses starting from June 1, 2021.

MBAM further said financial assistance and low-interest financing rates must be provided to businesses.

MBAM also requested a tax break for businesses and utilities subsidies throughout the total lockdown period and a wage subsidy programme for all employees with a salary bracket of RM4,000 and below. “The association also proposed a speedy payment for government projects to be made, especially for the month of May 2021, at all tiers to ease cashflow of the construction industry,” Loh said.

MBAM also proposed the extension of the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020, which is viewed as insufficient to protect businesses.

“The Covid-19 Bill must also protect contractors and expressly state the provision for extension of time and cost-sharing between contracting parties. Contractors should also be allowed to ask for compensation from project owners,” she added.

Last Friday, Prime Minister Tan Sri Muhyiddin Yassin said the Finance Ministry would introduce the latest stimulus packages to cushion the MCO impact, following a total lockdown starting today until June 14 for the first phase.