PETALING JAYA: The organisation representing Bumiputera contractors in the country has warned that government projects will be the first to suffer if any drastic increase in cement prices forces them to suspend their projects.
Azman Yusoff, president of the Bumiputra Contractors Association Malaysia, said Bumiputera contractors depend largely on fixed-price government contracts for the construction of schools, hospitals, health clinics, police stations, and fire stations.
He said a drastic increase in the price of cement would cause massive losses. “This will result in some contractors having to suspend the projects.”
The association said drastic government intervention was needed and called for discussions through the domestic trade and consumer affairs ministry and the finance ministry.
The secretary-general of the association, Jamaludin Non, said small-scale Bumiputera contractors may end up struggling the most as they often purchase individual bags of cement instead of large batches of ready-mixed concrete.
Jamaludin said some companies which have already finalised their tenders for their projects may have difficulty proceeding, as they would have to absorb the extra costs.
“When we tender, our profit margin is very low – 3% to 5%. Any increase in cement price will affect our margin and we might lose out.”
Ng Seing Leong, a former president of the Real Estate and Housing Developers Association, said there was now “an oligopoly in the cement industry as one company controls nearly 85% of the market. What happened to our Competition Act and the Malaysian Competition Commission?” he said.
Ng predicted an increase in construction costs by 5% to 10%, which may lead to higher prices of property.
“This will eventually pass to consumers,” he added.