PRESENTATION BY MR MATTHEW TEE, MBAM PRESIDENT FOR CIOB NOVUS MALAYSIA 2013

MBAM

THE ROLES AND CHALLENGES OF BUILDERS IN THE BUILDING PROCESS 27TH OCTOBER 2013, SUNDAY

MBAM

CONTENT
1)About MBAM 2)Overview of the Malaysian Construction Industry 3)Roles of Builders in the Building Process 4)Key Issues and Challenges of Builders in Malaysia

ABOUT MBAM
MBAM

A prominent national Construction Trade Association in Malaysia, founded in 1954. Being The Prime Mover and The Recognized Voice of The Malaysian Construction Industry, MBAM is actively initiating, supporting and participating in activities that enhance professionalism, productivity, quality and development of the construction industry.

ABOUT MBAM
MBAM

Has earned international recognition and prominence through its affiliation with the International Federation of Asian and Western Pacific Contractors Associations (IFAWPCA) and ASEAN Constructors Federation (ACF). MBAM is currently chairing the Finance Committee of IFAWPCA and is one of the cofounder members of ACF.

MBAM OBJECTIVES
TO PROMOTE AND COORDINATE development of the construction industry. TO PROMOTE measures aimed at securing improvements pertaining to techniques, procedures and methods in the construction industry.
MBAM

MBAM OBJECTIVES
MBAM

TO ORGANIZE training programmes, seminars, symposia, conferences, conventions, exhibitions and expositions related to the construction industry. TO IDENTIFY AND STUDY problems arising in the construction industry, to discuss and explore solutions with the relevant Government authorities and professional institutions.

MBAM OBJECTIVES
TO PROTECT the legitimate interest of members and the construction industry.
MBAM

TO ENCOURAGE AND PROMOTE the practice of professionalism and harmonious working relationships

MBAM MEMBERSHIP

MBAM

Has grown to more than 630 direct and 5000 indirect and affiliated members. 70% - 80% of the construction works in the country are undertaken by MBAM members. 89% of listed construction companies on the Bursa Malaysia are MBAM members.

Members Listed on Bursa Malaysia

AHMAD ZAKI RESOURCES BERHAD BINA PURI BERHAD CAHYA MATA SARAWAK BERHAD CWORKS SYSTEM BERHAD EASTBOURNE CORPORATION BERHAD EMAS KIARA INDUSTRIES BERHAD EVERSENDAI CORPORATION BERHAD FAVELLE FAVCO BERHAD GAMUDA BERHAD GLOMAC BERHAD HUME INDUSTRIES (MALAYSIA) BERHAD IJM CORPORATION BERHAD INDUSTRIAL CONCRETE PRODUCTS BERHAD KEN HOLDINGS BERHAD LION FOREST INDUSTRIES BERHAD LFE CORPORATION BERHAD MAGNA PRIMA BERHAD METRONIC GLOBAL BERHAD BINA GOODYEAR BHD MBAM BREM HOLDINGS BERHAD CREST BUILDER HOLDINGS BERHAD DOLOMITE CORPORATION BERHAD EKOVEST BERHAD ENCORP BERHAD FAJARBARU BUILDER GROUP BERHAD GADANG HOLDINGS BERHAD GEORGE KENT (MALAYSIA) BERHAD HO HUP CONSTRUCTION CO. BERHAD IGB CORPORATION BERHAD IREKA CORPORATION BERHAD JETSON BERHAD KEMAJUAN AMOY BERHAD LOH & LOH CORPORATION BHD LOW KENG HUAT BERHAD MERGE ENERGY BERHAD METRO KAJANG BERHAD

Members Listed on Bursa Malaysia

MBAM
MINETECH RESOURCES BERHAD MUDAJAYA GROUP BERHAD MTD ACPI ENGINEERING BERHAD NAM FATT CORPORATION BERHAD PASUKHAS GROUP BERHAD PKNS INFRA BERHAD PUTRA PERDANA BERHAD PRINSIPTEK CORPORATION BERHAD SALCON ENGINEERING BERHAD SPK BERHAD SUNWAY BERHAD TRC SYNERGY BERHAD UEM BUILDERS BERHAD VTI VINTAGE BERHAD YNH PROPERTY BERHAD WOODLANDOR HOLDINGS BERHAD ZEKON BERHAD MITRAJAYA HOLDINGS BERHAD MUHIBBAH ENGINEERING BERHAD NAIM HOLDINGS BERHAD PARAMOUNT CORPORATION BERHAD PILECON ENGINEERING BERHAD PLB ENGINEERING BERHAD PJ DEVELOPMENT HOLDINGS BERHAD PROTASCO BERHAD SENTORIA GROUP BERHAD SP SETIA BERHAD SYCAL BERHAD TRI PLC BERHAD UMW HOLDINGS BERHAD WCT BERHAD YTL CORPORATION BERHAD ZELAN BERHAD

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Affiliate Members
MBAM MBAM Affiliate Members consists of our counterpart from various states in Malaysia and other related trade organizations in Malaysia.
Contractor Associations:Indian Contractors Association Malaysia Johor Master Builders Association Selangor & Federal Territory of Kuala Lumpur Kin Cho Hong Terengganu Kin Cho Hong Malacca Building Contractors Association Penang Master Builders & Building Materials Dealer Association Persatuan Pemborong & Pembekal Barang-Barang Bangunan Kedah Port Dickson Builders Association Selangor & Federal Territory Builders Association Segamat Builders Association Sabah Builders Association Sarawak Building & Civil Engineering Contractors Association Sarawak Sibu Division Building & Civil Engineering Contractors Association Other Related Trade Associations:Malaysian Mobile Crane Owners Association Malaysia Quarry Association National Ready-Mixed Concrete Association The Lighthouse Club The Malaysian Lift and Escalator Association

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MBAM INVOLVEMENT
MBAM

Building Industry Presidents Council (BIPC)

MBAM is one of the founding members of BIPC which provides a forum for Presidents of professional institutions and associations to discuss and formulate solutions on industry related issues. BIPC consists leaders from the contractors (MBAM), developers (REHDA), engineers (IEM), architects (PAM), surveyors (RISM), consultants (ACEM) and planners (MPI).

12

MBAM

Overview of the Malaysian Construction Industry

13

Overview of Malaysian Construction Industry

Sustainable Construction Growth

First Quarter, 2013

MBAM

Year

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Second Quarter, 2013

Real GDP

0.3

4.1

5.3

7.1

5.2

5.9

6.3

4.6

-1.7

7.4

5.1

5.6

4.1

4.3

Manufacturing

-5.8

4.0

8.2

8.8

5.1

7.8

3.1

1.3

-0.3

11.9

4.7

4.8

0.3

3.3

Services

5.8

4.1

4.1

6.7

6.5

6.4

9.6

7.3

2.6

7.4

7.0

6.4

5.9

4.8

Agriculture

-0.9

3.0

5.5

5.0

2.5

6.4

2.2

3.8

0.4

2.4

5.8

1.0

6.0

0.4

Mining

-0.8

3.7

4.8

4.1

-0.8

-0.9

4.2

-0.8

-3.8

-0.3

-5.5

1.4

-1.9

4.1

Construction

2.1

2.3

1.9

-1.9

-1.6

-0.5

5.5

2.1

5.7

11.4

4.7

18.1

14.2

9.9

Source: BNM Yearly Reports

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Overview of Malaysian Construction Industry MBAM

Total Projects Value Year (RM mil) 2001 2002 2003 51,432.78 48,312.55 49,559.88 (%) 0.3 4.1 5.3 GDP

2004
2005 2006 2007 2008 2009 2010 2011 2012 1st Q, 2013 2nd Q, 2013 3rd Q, 2013

52,694.36
54,277.08 60,926.99 94,416.83 85,837.08 74,913.65 91,008.48 99,739.11 122,720.59 31,601.49 24,644.38 10,541.75

7.1
5.2 5.9 6.3 4.6 -1.7 7.4 5.1 5.6 4.1 4.3 Nil

15
Source: CIDB Quarterly Statistical Bulletin

Overview of Malaysian Construction Industry MBAM

TOTAL CONSTRUCTION PROJECTS VALUE VS GDP
140,000 120,000
Total Projects Value (RM mil)

8.0

6.0

100,000 4.0 80,000 2.0 60,000 0.0 40,000 20,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1st Q, 2nd Q, 3rd Q, 2013 2013 2013 -2.0
GDP (%)

-4.0

Year / Quarter Total Projects Value (RM mil)

GDP (%)

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Overview of Malaysian Construction Industry

Number of Projects Awarded from Year 2000~3rd Q, 2013
Status of Contractors Year Total Number of Projects Total Project Value (RM m) No
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4,412 5,162 5,404 4,541 4,881 5,565 5,854 7,386 6,522 7,018 7,302 50,186.50 51,432.78 48,312.55 49,559.88 52,694.36 54,277.08 60,926.99 94,416.83 85,837.08 74,091.75 91,008.48 1,650 2,574 2,643 1,473 1,202 1,424 1,643 2,948 2,702 3,013 1,877

Local Contractors Government Projects Value (RM' M)

22,235.94 26,423.51 22,866.47 17,537.37 14,080.69 16,830.63 21,377.16 44,775.29 33,964.26 31,934.20 19,154.69

Foreign Contractors Private Projects Government Projects No

6 1 3 3 1 3 4 5 1 1

Private Projects No
83 49 30 54 60 57 71 90 70 51 109

No
2,673 2,538 2,728 3,011 3,618 4,084 4,137 4,316 3,745 3,953 5,315

Value (RM' M)
19,599.85 22,842.93 23,177.04 21,964.91 30,227.40 32,872.10 35,592.06 42,592.67 44,152.99 38,973.89 60,980.18

Value (RM' M)
1,984.93 19.50 1,914.94 2,541.35 54.60 1,077.81 3,475.32 4,851.83 1,313.99 316.22

Value (RM' M)
6,365.78 2,146.84 354.10 7,516.25 8,331.99 4,574.35 2,879.96 2,450.93 2,867.99 1,869.67 10,557.39

2011 1Q 2011 2Q 2011 3Q 2011 4Q 2011

7,585 1,724 1,982 2,015 1,864

99,739.11 24,246.28 22,757.08 28,356.97 24,378.78

1,906 352 501 653 400

21,439.91 3,640.15 5,211.28 8,315.69 4,272.79

5,556 1,349 1,444 1,331 1,432

59,767.71 13,919.34 13,458.54 15,886.80 16,503.03

6 1 1 4 -

1,610.74 16.54 607.00 987.20 -

117 22 36 27 32

16,920.75 6,670.25 3,480.26 3,167.28 3,602.96

2012 1Q 2012 2Q 2012 3Q 2012 4Q 2012

7,542 1,807 2,036 1,916 1,783

122,720.59 38,338.38 28,540.38 26,559.18 29,282.65

1,933 404 494 591 444

17,901.71 5,203.40 5,075.05 3,449.53 4,173.73

5,468 1,378 1,497 1,292 1,301

90,685.72 27,334.24 22,109.03 21,289.02 19,953.43

1 1 -

144.86 144.86 -

140 24 45 33 38

13,988.30 5,655.88 1,356.30 1,820.63 5,155.49

2013 1Q 2013 2Q 2013 3Q 2013

4,253 1,792 1,632 829

66,787.62 31,601.49 24,644.38 10,541.75

1,017 440 387 190

14,025.49 7,416.34 4,627.38 1,981.77

3,188 1,330 1,227 631

43,779.99 17,051.69 18,646.02 8,082.28

48 22 18 8

8,982.11 7,133.46 1,370.97 477.68

(Source: CIDBs Construction Quarterly Statistical Bulletin 3rd Quarter 2013)

17

Overview of Malaysian Construction Industry

Number of Projects Awarded from Year 2000~3rd Q,2013
Project Category Residential Total Number of Projects 4,412 5,162 5,404 4,541 4,881 5,565 5,854 7,386 6,522 7,018 7,196 Value Total Project Value (RM m) 50,186.50 51,432.78 48,312.55 49,559.88 52,694.36 54,277.08 60,926.99 94,416.83 85,837.08 74,091.75 87,917.04 No 1,214 1,277 1,212 1,425 1,729 1,899 1,778 1,853 1,476 1,697 2,097 (RM' Million) 10,099.37 11,485.66 10,770.09 12,539.78 15,258.71 16,641.14 16,554.58 16,878.44 16,868.97 14,226.35 20,694.78 No 1,198 1,001 1,650 1,228 1,307 1,635 1,968 2,291 2,138 2,085 2,525 Non Residential Value (RM' Million) 10,773.83 10,316.03 11,516.26 9,071.83 10,452.38 15,574.42 17,703.43 26,422.67 23,690.04 22,709.32 30,332.25 No 74 54 93 82 84 86 11 10 16 Mix Development Value (RM' Million) 1,270.84 865.81 2,084.75 928.81 981.73 738.72 454.80 97.10 919.21 No 845 1,494 1,075 524 392 566 557 1,380 1,258 1,498 840 Social Amenities Value (RM' Million) 10,037.84 9,897.10 9,470.07 5,006.35 3,272.35 4,614.04 3,989.29 12,097.55 19,113.73 15,197.48 8,642.81 No 1,047 1,319 1,348 1,275 1,239 1,346 1,524 1,787 1,570 1,738 1,734 Infrastructure Value (RM' Million) 15,146.48 18,816.48 14,151.81 21,967.99 21,403.52 16,229.12 21,627.30 37,611.14 24,783.73 21,958.60 26,247.21 No 34 17 26 7 40 33 16 37 40 41 52 Others Value (RM' Million) 2,858.14 51.70 319.57 45.12 325.67 479.64 597.59 187.31 273.13 156.75 359.98

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2011 1Q11 2Q11 3Q11 4Q11

7,585 1,724 1,982 2,015 1,864

99,739.11 24,246.28 22,757.08 28,356.97 24,378.78

2,245 525 634 518 568

24,599.61 4,842.07 6,691.85 5,621.05 7,444.64

2,561 597 670 664 630

36,046.96 7,635.29 7,940.97 10,666.35 9,804.35

838 247 168 214 209

6,901.10 2,322.80 1,044.59 1,432.92 2,100.79

1,941 355 510 619 457

32,191.43 9,446.10 7,079.66 10,636.66 5,029.01

2012 1Q12 2Q12 3Q12 4Q12

7,542 1807 2036 1916 1783

122,720.59 38,338.38 28,540.38 26,559.18 29,282.65

2,202 532 560 592 518

32,325.89 7,049.76 8,857.97 7,617.74 8,800.42

2,531 637 686 593 615

38,515.20 9,135.03 8,604.94 8,813.64 11,961.59

891 209 237 209 236

7,419.17 1,491.82 2,483.40 1,739.25 1,704.70

1,918 429 553 522 414

44,460.29 20,661.75 8,594.06 8,388.54 6,815.94

2013 1Q13 2Q13 3Q13

4,253 1,792 1,632 829

66,787.62 31,601.49 24,644.38 10,541.75

2,522 454 1,838 230

18,194.90 6,599.89 7,344.29 4,250.72

1,563 637 602 324

28,850.50 17,011.22 8,263.69 3,575.59

405 188 155 62

5,079.52 1,979.93 1,977.66 1,121.93

1,139 513 413 213

14,662.70 6,010.45 7,058.74 1,593.51

(Source: CIDBs Construction Quarterly Statistical Bulletin 3rd Quarter 2013)

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Overview of Malaysian Construction Industry

GOING GLOBAL
MBAM
Overseas Projects Awarded to Malaysian Contractors By Country Year 1986 ~ 3rd Quarter 2013
20,000 18,000 16,000 14,000

12 ,2 99 .1 5 11 ,6 83 .1 3

18 ,0 80 .2 5

RM Million

12,000 10,000 8,000 6,000 4,000 2,000 -

Bosnia Herzegovina

Indonesia

Thailand

South Africa

Philippines

India

Bahrain

Sudan

China

Iran

Brunei

3, 48 9. 00 2, 90 9. 00 2, 69 9. 44 2, 57 9. 32 2, 42 0. 98 1, 90 5. 59 1, 81 9. 00 1, 23 4. 14 1, 10 7. 81

6, 55 9. 27 5, 72 9. 89 5, 27 7. 75 4, 20 5. 89

9, 80 0. 51

Saudi Arabia

Vietnam

Qatar

Country

Cambodia

(Source: CIDBs Construction Quarterly Statistical Bulletin as of 30th September 2013)

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Other

Libya

UAE

9, 85 9. 94

Overview of Malaysian Construction Industry

GOING GLOBAL
MBAM
Overseas Projects Awarded To Malaysian Contractors By Year 2000~ 3Q, 2012
25,000

Value (RM Million)

20,000

18,507.17

19,514.19 15,384.99

15,000 9,554.22 6,145.05 5,000 2,105.69 2,443.04 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Until 3Q,2013 3,733.98 2,950.27 3,963.87 3,974.26 1,644.00 1,360.00

10,000

9,467.37

Year
20
(Source: CIDBs Construction Quarterly Statistical Bulletin as of 30th September 2013)

Overview of Malaysian Construction Industry

INVESTMENT ENVIRONMENT World Bank Ranking For Malaysia DOING BUSINESS 2013 (% POINTS) 79.1 MBAM IMPROVEMENT IN (% POINTS) 0.7

DOING BUSINESS 2012 (% POINTS) 78.4

DOING BUSINESS 2013 DOING BUSINESS 2012 CHANGE IN RANK RANK RANK 12 14 2

21

Overview of Malaysian Construction Industry INVESTMENT ENVIRONMENT World Bank Ranking For Malaysia

MBAM
TOPIC RANKINGS Starting a Business Dealing with Construction Permits Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders DB 2013 Rank 54 96 DB 2012 Rank 42 116 Change in Rank -12 20

28 33 1 4 15 11

27 62 1 4 25 12

-1 29 No change No change 10 1

Enforcing Contracts

33

31

-2

Resolving Insolvency

49

48

-1

22

MBAM

Roles of Builders in the Building Process

23

Roles of Builders in the Building Process

MBAM

Definition of a Builder A builder is usually a contractor or an individual who engages in the planning, developing and coordinating of activities which coincide with the building of structures. The builder is the individual or company who oversees the construction and ensures that all necessary measures are taken to result in the completed finished product.

24

Roles of Builders in the Building Process

MBAM

The general responsibilities of a building contractor entail the individual planning and carrying through any and all pertinent activities relating to the construction of a dwelling, building or other structure. The building contractor carries out his/her duties by supervising employees, planning how the project will be carried out and completing the project in a manner which coincides with all laws, rules and regulations which may be in existence and correlate with construction.

25

What Are the Specific Duties of a Builder?

MBAM There are many duties which a builder must complete on a daily basis in order to ensure that the construction project is completed in a timely and correct manner. The first duty of the builder is to implement a plan in which to carry out the construction project. This extends anywhere from hiring workers to developing a step-by-step timeline that the project will follow from start to finish. In addition to implementing the construction plan, the builder is responsible for hiring, supervising and, at times, firing employees who work on the specific project with the contractor. Along those same lines of supervising the employees, the builder must also take care of payroll with regard to the workers and engage in payroll functions or hire someone to do so for the contractor. The builder is also responsible for obtaining materials for the project. Since construction projects cannot be completed without the necessary building materials, it is up to the contractor to acquire goods to build the structures. This involves various forms of correspondence with necessary material suppliers.
26

What Are the Specific Duties of a Builder?

MBAM Another specific duty of the builder is to acquire all necessary licenses and permits from relevant entities so that the building project can begin. These range anywhere from building licenses to zoning permits and there are many regulations that relate to these documents which each building contractor must follow in order to engage in construction. The building must also do his/her research regarding relevant regulations and laws akin to the construction process. There are many laws which state when, where and how a building contractor and his crew should build in certain areas. These must be recognized and followed by building contractors in order to complete the project in a law-abiding manner. Budget issues are another item which relate to the duties of a building contractor. The builder must establish a budget for the construction project and follow that budget as closely as possible. This will allow the building contractor to obtain supplies, hire workers and finish the construction in a cost-efficient manner. Instituting and following budgets is a serious matter which building contractors should be concerned with as they ensure that the project will be completed as was earlier envisioned.
27

What Are the Specific Duties of a Builder?

Throughout the construction process, the builder is also responsible for reviewing the progress and implementing any changes along the way. The building contractor needs to follow the specific building project closely and make changes when he/she deems it necessary to do so. Lastly, the builder contractor deals with all emergencies and surprises which relate to the project and occur on-site and sometimes off-site as well.

MBAM

28

What Traits Make a Good Building Contractor?

MBAM Although each and every building contractor is a little bit different from others, there are certain positive traits which comprise a good building contractor. The first trait which all builders should possess is decisiveness. Due to the fact that important decisions need to be made on a daily basis, it is best to have a builder that knows what he/she wants and acts on it. Another good trait for building contractors to have is experience. Experience may not be necessary in all circumstances, it does aid the builder in getting the job done in a quick and efficient manner. This is simply a beneficial trait but not necessary in all cases as everyone has to start somewhere and not every builder will have years of experience behind them. Builders should also be good leaders. There are many individuals who are counting on the builder to show them the way and this is why good leadership skills are a beneficial trait for builder to have. If the employees and supply companies know exactly what is needed of them, they will do a better job in the long run due to this guidance.
29

What Traits Make a Good Building Contractor?

MBAM

Lastly, building contractors should be individuals who can resolve issues in a quick and speedy fashion. Since a delay in one portion of the construction project can hold up the entire process, it is important that the building contractor knows how to resolve issues which may arise during the construction process. A building contractor who knows how to troubleshoot will see beneficial results in the end. Building contractors are individuals with demanding and multi-faceted duties and responsibilities. Those building contractors who are determined, steadfast and seek quick resolutions are ones who may prosper greatly in their occupation. In order to be the best building contractor one can be, acquired experience and decisiveness may be helpful qualities for an individual of this type to possess.

30

MBAM

Challenges of the Builders in The Building Process

31

Challenges
MBAM

HIGH NUMBER OF CONTRACTORS

There is a high percentage of contractors but only about 16% are actually running construction business. There is an urgent need to regulate the number of contractors.

There is a need to limit number of contractors, raise standards of registration and pre-qualification of contractors to ensure quality delivery from capable and committed contractors fewer but stronger players

32

Challenges
Number of Registered Contractors as of 3rd Quarter, 2013 MBAM
State End of Period Johor Kedah Kelantan Melaka Negeri Sembilan Total Contractors Registered 6,647 3,647 3,397 2,308 3,438 Contractors Registered By Contractor Registration Grade

G1
3,229 2,303 2,301 1,156 2,113

G2
1,141 499 382 364 550

G3
1,088 326 266 360 344

G4
343 100 90 135 128

G5
346 157 155 121 145

G6
127 64 72 41 55

G7
373 198 131 131 103

Pahang
Perak Perlis Pulau Pinang Sabah Sarawak Selangor Terengganu Wilayah Persekutuan 3rd Quarter of Year 2013

3,898
4,566 1,204 3,499 9,800 3,468 10,932 3,789 7,448 68,041

2,304
2,740 948 1,456 6,758 1,669 4,506 2,372 1,686 35,541

582
682 116 493 1,251 603 1,319 425 693 9,100

429
504 56 701 850 364 1,939 317 1,532 9,076

212
195 20 176 148 149 703 160 520 3,079

164
212 32 247 232 174 931 226 1,097 4,239

62
89 9 100 86 97 328 106 390 1,626

145
144 23 326 475 412 1,206 183 1,530 5,380

(Source: CIDBs Construction Quarterly Statistical Bulletin as of 30th September 2013) Note: Figures are subject to change due to late notification

Challenges
MBAM

TOO MANY RULES AND REGULATIONS Still many rules and regulations, Government agencies and local Government to deal with when it comes to getting approvals and permits for compliance.

34

Challenges
HUMAN RESOURCES AND MANPOWER ISSUES

MBAM

Generally it is hard to attract workers to the industry as it is labeled as Dirty, Dangerous and Demanding

There is a need on providing quality construction industry based training and strive to tailor the training provided to meet the construction industrys needs especially for the up skilling of the current local construction workforce.
The Government to train local workers to replace foreign workers as well as to reduce the total number of foreign construction labour to 200,000 by 2015 as per the Governments long term policy on reducing the reliance on foreign workers.

35

Challenges
MBAM Need to stop the flow of competent human resources out of the country, especially in the professional, managerial, supervisory and skilled labour segments of the construction job markets. Need to avoid continuous pressure resulting from future foreign construction labour and construction skills shortages. Need to revive the system of apprenticeship to encourage proper transfer of skilled workers to unskilled workers such as in the trade of brickworks, plastering, pipe works and tiling works. In this way, real life and useful experience can be imparted to these new construction workers. Raids on construction sites disrupting flow of work. Need to promote interest in construction related careers and to do this Government should continue to teach construction related skills in schools and also vocational schools. IBS, Mechanisation and other labour saving substitutes must be encouraged in order to drive yield of construction workers to achieve a higher income economy.
36

Challenges
Up-skilling of Construction Workers and Attracting Construction Personnel
The industry has problems attracting skilled construction personnel to the industry. Image of the industry - Dirty, Dangerous, Demanding MBAM is doing its best to improve skills of construction personnel with the Construction Occupational Competency Development Programme (COCD) for Construction Trade Foreman. MBAM is also training Site Safety Supervisors (SSS) for the industry since 2011. Initially for SSS we had 28 candidates, now we have more than 1,000 personnel trained. MBAM

37

Challenges
Raids To Flush Out Illegal Construction Workers
MBAM MBAM members have been seriously affected by raids on illegal construction workers and most of the workers whether legal and illegal have fled the work site to avoid arrest. It is our understanding that all the workers including the legal ones will be detained unless they can prove that they have proper document which sometimes can be quite difficult as their document can still be with their employer or immigration pending visa stickers to be affixed by the authorities.

38

MBAM MBAM have urged the authorities to exercise constraint and to review procedures involved in carrying out such raids. There have been instances where legitimate immigration papers of foreign workers have not been acceptable to enforcement personnel due to the lack of co-ordination between immigration enforcement personnel, the police and RELA members. This has caused hardship to individuals and disrupted construction activities as very often legal as well as illegal would tend to run away when such raids occur at construction sites.

39

Challenges Increased Price of Fuel

MBAM

The construction costs at all levels of the value chain, from building materials such as cement, concrete and sand to logistics, will go up as the direct result of the increase in fuel cost. The prices of many construction-related materials, machinery and transportation costs will have to be increased as well. To transport sand, cement, stones and steel bars from ports and plants to construction sites require large number of trucks and heavy machineries, which uses large amounts of diesel to operate. This increase in fuel cost will impact on the construction costs as contractors (such as transporters and material suppliers) will have to demand higher price for their products and services, to avoid further squeezing of their profit margins to the point of insolvency.

40

Challenges

Increased Price of Fuel

MBAM

The overall increase in cost will be passed on to developers and eventually, homeowners. In addition, costs of living in everyday life of the rakyat will also increase. All in all, this inevitably will cause further delay in the nations development programmes and infrastructure projects. The construction industry is linked to more than 140 downstream activities, so the eventual effect of the increase will be felt both in the short-term and long-term.

41

Challenges Delayed Implementation of CIPAA

MBAM

It has been a long way since the Construction Industry Development Board (CIDB) and Master Builders Association Malaysia (MBAM) and other related promoters first started to advocate the government to enact the Construction Industry Payment and Adjudication Act (CIPAA). On 22nd June 2012 the act was finally gazetted after it was approved in Cabinet in 2009. CIPAA's main objectives are to provide a medium for speedy dispute resolution through adjudication and provide remedies for the recovery of payment in the construction industry. CIPAA also function to facilitate timely and regular payment. The enactment of CIPAA is fundamental to protect the interest of all the construction industry players in Malaysia. CIPAA will also provide an assurance to the construction players as they are supported by adjudication if they were involved in a payment related issue.

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Challenges Delayed Implementation of CIPAA

MBAM

However, up to this date the enforcement of CIPAA is still ambiguous. The government should realize that CIPAA is crucial for the construction industry as it will minimize unnecessary disputes that can affect ongoing projects with delays due to supply shortage, operational slowdown and escalating costs because every party are well aware of their rights and responsibilities.

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Challenges Machinery high import duties

MBAM

To encourage the construction industry to bring in new machineries, the present lack of incentives must be addressed. The cost of doing business is high. At present the duties and sales tax for construction machineries such as Hydraulic Truck Mobile Cranes amount up to 40%. This results in high cost of construction machinery and overall cost of running a business in Malaysia. MBAM has been appealing for duty reduction for construction machineries since 2006. The reduction requested is for Vibratory Rollers (Custom Code: 8429.40.110) with a current duty of 25% and Sales Tax of 10% which is considered high. MBAM hopes the Ministry will consider the reduction of duties to 15% as the current static rollers are less efficient. The latest equipment used are actually vibratory rollers and it would be good to encourage usage of new machineries that are more productive and cost lesser to maintain. If the duties are lowered, this would help to encourage the construction industry players to upgrade their machineries. MBAM also would like to appeal for the Government to consider Crane Lorries (Hydraulic Truck Mobile Cranes (Custom Code: 8705.10.000) currently with 30% duty and 10% sales tax be reduced to 10% if possible.
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Challenges
Negative Image of the Construction Industry
MBAM

Construction industry is usually associated as a third class occupation that offers dirty, dangerous and demanding task. People believe that working in the construction industry will require them to work more than 12 hour per day under the scorching hot sun as well as during the rainy days. Local manpower are not interested to join the industry due to the working conditions and relatively low wages than any other industries. The negative image of the construction industry is marred also by the increasing number of fatal accidents that occurred in the construction site lately.

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Challenges Lack of Industrialised Building System (IBS) Implementation

MBAM

The Government and the industry must continue to be more aggressive in leading the promotion of the Industrialised Building System (IBS) model by creating economies of scale property developments in order to attract investments into the building system. All parties must work towards standardisation and modularisation of the system. Standard design would enable IBS components to be produced on a large scale, thus bringing down cost, while modularising the dimension of the components would provide flexibility to the house design.

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MBAM

THANK YOU

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