Both the Real Estate and Housing Developers’ Association (Rehda) and the Master Builders Association Malaysia (MBAM) said the construction industry is under a lot of pressure as a strong US dollar means imported key materials like steel and cement cost more, compounded by a scarcity of building materials.

“Even though the ringgit has strengthened a bit recently, the possible changes in the exchange rate are still making it tough to keep prices steady,” Rehda president Ho Hon Sang said.

The cost of building materials was also affected by the increase in sales and services tax to 8% from 6%, he said.

MBAM president Oliver Wee said disruptions to shipping routes and shortages in raw materials are still having a big impact. “We can’t predict how global prices for materials will change,” Wee said.

Wee said prices of quarry products and ready-mix concrete have gone up, while steel, copper, and aluminium cost more because of high global demand.

Wee said those working under fixed-price contracts find it more difficult to absorb the extra costs and many developers were either delaying projects or passing on higher costs to home buyers.

Wholesale pricing

The impact of rising costs is being met through a wholesale-pricing initiative since December by the government’s Construction Industry Development Board and the Malaysian Building Material Distributors Association.

G1 to G4 contractors are being encouraged to buy materials directly from the association at wholesale prices. The initiative helps smaller contractors with lower cost of materials while maintaining quality to meet the strict standards imposed on government projects.

Works minister Alexander Nanta Linggi has stated he was keeping a close watch on rising costs in response to complaints by small contractors. He told the Dewan Rakyat that efforts were being made to strengthen the construction industry by monitoring the rising prices of building materials.

Both Rehda and MBAM have called for long term solutions, with Rehda asking for a review of compliance-related costs, while MBAM has asked for materials to be included in the government’s price variation system.