MBAM APRIL 2026 WEBSITE MESSAGE
The second quarter of 2026 has begun with significant challenges that test the very resilience of our industry. While the Malaysian economy continues its growth trajectory under the 13th Malaysia Plan, we cannot ignore the “cost-push” inflation and supply chain instability triggered by the escalating geopolitical tensions in the Middle East.
In response to these mounting pressures, your Association has intensified its advocacy efforts to ensure the survival and sustainability of our members. On 18 March 2026, I led an MBAM delegation for a high-level strategic engagement with the Deputy Finance Minister, YB Mr. Liew Chin Tong, in Putrajaya. This meeting was a vital platform to voice the industry’s concerns directly to the Ministry of Finance and to propose structural reforms that protect the construction ecosystem from external shocks.
MBAM urged a review of the government’s “lowest bidder” procurement system, citing rising material prices, regulatory costs, and increased contract disputes. To mitigate these risks, MBAM proposed:
Contractual Reforms: Adopting the CIDB Form of Contract 2022 for a collaborative approach and implementing Variation of Prices (VOP) clauses across all projects.
Technology Incentives: Introducing double tax deductions or exemptions for companies adopting BIM and IBS, noting that current incentives primarily benefit manufacturers.
YB Mr. Liew expressed interest in guiding MBAM on labour-saving methods, energy conservation, and reducing foreign labour dependency. Discussions also touched on structuring contracts to better support local firms against foreign competition.
For international growth, the Deputy Minister suggested forming a multidisciplinary consortium (architects, engineers, and contractors) to bid for major global projects, such as World Expo 2030 and the 2034 FIFA World Cup in Saudi Arabia.
The meeting ended with a commemorative gift presentation, signalling a mutual commitment to addressing industry crises through long-term structural reforms and closer engagement with the Ministry of Finance Malaysia.
Construction Industry Seeks Urgent Support
The Malaysian construction industry is currently grappling with an unprecedented crisis fuelled by geopolitical tensions in the Middle East, which have triggered severe supply chain disruptions and a spike in material and energy costs. These escalating pressures threaten the financial stability of contractors across all scales, leading to constrained cash flows and uncertain project timelines. To prevent a broader economic downturn, the industry is calling for urgent, coordinated intervention from both the government and the private sector to ensure the sustainability of national development projects.
The industry’s appeal to the Government of Malaysia emphasizes the need for immediate financial relief and structural policy shifts. Proposed measures include temporary tax deferments, targeted diesel subsidies, and the provision of soft loans to alleviate liquidity issues. Furthermore, the sector advocates for a more balanced contractual framework, specifically the introduction of mandatory price fluctuation mechanisms (VOP) for essential materials like steel and cement, and the assurance that new fiscal policies will not be applied retrospectively. To maintain project momentum, the industry also seeks the recognition of Extension of Time (EOT) entitlements and a moderation of Liquidated Ascertained Damages (LAD) in light of these external shocks.
Parallel to government action, the industry urges private sector developers and stakeholders to move away from rigid contractual positions in favour of collaborative risk-sharing. This involves revisiting contract terms to reflect current market realities and ensuring timely payments to prevent contractors from bearing the full weight of financing escalating costs. Ultimately, the industry stresses that these requests are not for mere protectionism but for a strategic partnership. By recalibrating risk allocation and fostering open dialogue, all stakeholders can safeguard project viability, protect employment, and ensure that the construction sector continues its vital role in the nation’s growth and infrastructure delivery.
We urge our members to remain proactive in documenting the impacts of cost volatility. To our private sector partners: the era of one-sided contracts must end. A collaborative risk-sharing approach is the only sustainable way to safeguard our national infrastructure and the livelihoods of those who build it. MBAM remains your steadfast voice. Together, we will navigate these turbulent times to build a fairer, more resilient industry for the future.
Oliver HC Wee KMN AMN
MBAM President