< PreviousCOVER FEATURE toll road, which is located at the Balaraja Interchange east of the TangerangMerak toll road. From that point, the road heads north and turns east in the Rajeg area. The road will then end in the Semanan area. There will be six interchanges and two junctions on this toll road. The interchanges in this toll road are Pasar Kemis 1 Interchange, Pasar Kemis 2 Interchange, Rajeg 2 Interchange, Sepatan Interchange, Lebak Wangi Interchange, and Batu Ceper Interchange. The two junctions are Balaraja Junction and Rajeg 1 junction. Starting from the Lebak Wangi Interchange to Semanan on/ off ramp, this toll road will be an elevated toll road running alongside the Cisadane River and Mookervart River. The objective of the Semanan – Balaraja Toll Road is to support the development and accessibility of Tangerang and the surrounding area west of Jakarta. Land Acquisition plans have been made with a cost of approximately 420.03 million USD. A study has indicated that this project needs government support in terms of the Land Acquisition Process (Land Cost included in Investment Cost) and a government guarantee from PT PII. 2) Cikunir – Karawaci Inner City Elevated Toll Road The Cikunir-Karawaci Toll Road Section (+/- 40 km) is located in Banten Province (Tangerang City and Tangerang District), DKI Jakarta Province, and West Java Province (Bekasi City). The proposed toll road plan will be above the existing toll road section. The starting point of the project is located in Cikunir (at the junction between JORR and the Jakarta-Cikampek toll road), which is the beginning of the Jakarta - Cikampek elevated toll road. The end of the project is located after the Alam Sutera intersection. The business entity awarded shall be responsible to perform the toll road project, including designing, financing, construction, operating, and maintenance (DBFOMT). A study indicates that the Land Acquisition and Resettlement Action Plan needs a total of 82,204 sqm in land acquisition. Government support has been identified for the land acquisition process (Land Cost included in Investment Cost). A government guarantee is needed from PT PII. 3) Bintang Bano Dam Maintenance and the Provision of a Mini Hydro Power Plant in West Nusa Tenggara The Bintang Bano Dam is located on Brang Rea River, West Sumbawa, West Nusa Tenggara. The multipurpose dam provides water for an irrigation scheme covering about 6,695 hectares in West Sumbawa Regency, with a gross water storage volume of 7,620 million cubic metres, and flood control with a capacity of 647 cubic metres/ second, which could generate power of 6.3 MW. Other components of the program include local water supply, recreation, and social infrastructure. Land acquisition of +/- 175 ha will be provided by the Government. The option in this project development is to build a mini hydro power plant using a ‘User Charge’ payment scheme to cover the private investment, risks, and returns. The concession will last for 27 years (2 years for construction and 25 years Take or Pay). Based on the layout review and location of the Bintang Bano Power Plant, the location of the Power Plant is included in the ‘Borrow-to-Use’ forest area of the Bintang Bano Dam, which should mean that no additional new land acquisition is needed. Likewise, resettlement activities and relocation of community settlements are also not required. In accordance with the land acquisition study, the construction of the Bintang Bano Mini hydro Power Plant is located within the Ministry of Public Works and Public Housing land and does not require new land acquisition. Government Support cannot be provided for this Project due to the fact that this project is initiated by a business entity (unsolicited project). This condition is as stipulated under Presidential Regulation 38/2015. However, this project is still eligible to be proposed for government guarantee from PT PII. Malaysia For 2019, Malaysia’s quarterly GDP growth was 4.7% in the first quarter, 4.9% in the second quarter, 4.5% in the third quarter, and 3.6% in the fourth quarter. For 2020, the quarterly GDP growth was only 0.7% in the first quarter, sliding further to -17.1% in the second quarter, -2.5% in the third quarter, and -3.3% in the fourth quarter. For 2021, GDP growth hit -0.5% in the first quarter, before rebounding to 15.9% in the second quarter, slowing down again to -4.5% in the third quarter, and going back up to 3.6% in the fourth quarter. Growth was 5.0% in the first quarter of 2022 and 8.9% in the second quarter. The Construction sector rebounded to 6.1% in the second quarter of 2022 with the value of work done at RM29.9 billion (USD6.64 billion). The Malaysian construction sector is projected to improve with the acceleration of existing infrastructure projects and higher private investment that will increase demand for more commercial and residential buildings. However, the construction sector contracted by 2.1% in the first half of 2022, mainly due to lower construction activities in civil engineering and residential building subsectors. In contrast, non-residential buildings and specialised construction activities subsectors registered growth during the same period, in line with the expansion in business activities, albeit in the face of rising prices of construction- related materials. 18 MASTER BUILDERS JOURNAL #126COVER FEATURE The sector is expected to turn around in the second half, with an expansion rate of 6.9%, supported by positive growth in all subsectors and improvement in private investment and robust domestic economic activities. The current mega projects ongoing in Malaysia include the Mass Rapid Transit Line 2 and 3, Pan Borneo Highway, Johor Bahru - Singapore Rapid Transit System (RTS Link), Merdeka 118 Tower, Central Spine Road, East Coast Rail Link (ECRL), and the Gemas – Johor Bahru Railway Electrified Double Tracking. The Malaysian construction industry still faces some challenges. Amongst them are: Insufficient foreign labour in the industry; the Lack of Variation of Price clause in private projects (at present, there is a Variation of Price provision only in government contracts); Act 829: Temporary Measures for Reducing the Impact of Coronavirus disease 2019 (COVID-19) Act 2020 ending on 22 October 2022 (this Act temporarily suspended each contracting parties’ rights to take action against one another); and lack of digitalisation in the construction economy. Additionally, contractors are not provided with enough subsidies or incentives to aid in digitalisation efforts, to help make up for the lack of foreign construction labour, or for utilising Industrialised Building System (IBS). Without adequate financial support, it would be difficult to persuade developers to utilise IBS in their projects. The construction sector is forecasted to expand by 4.6% in 2023 following a better performance in all subsectors. The civil engineering subsector is anticipated to rebound, buoyed by the implementation of new projects such as the Mass Rapid Transit Line 3 (MRT3) Circle Line, and acceleration of ongoing infrastructure projects like the Rapid Transit System (RTS) Link, East Coast Rail Link (ECRL) and Light Rail Transit Line 3 (LRT3). Additionally, the approved investment projects in the manufacturing sector are anticipated to come onstream and subsequently create a greater demand for industrial buildings. Hence, the non-residential buildings subsector is projected to expand further. Meanwhile, the residential buildings subsector is expected to grow steadily, supported by more construction of affordable houses, in line with the strategy under the country’s ‘Twelfth Malaysia Plan’ (12MP). In addition, incentives offered by the Government to encourage home ownership through the i-MILIKI programme are expected to spur demand for residential buildings while addressing the property overhang issue. Myanmar In Myanmar, the number of permitted projects with foreign investments as of 31 July 2022 are: 66 real estate projects with an approved value of USD6657.914 million; 10 industrial estate projects with an approved value of USD621.782 million; and three construction projects with an approved value of USD102.767 million. On the other hand, the number of permitted projects with local investments as of 31 July 2022 are: 99 real estate projects with an approved value of USD1295.71 million; 12 industrial estate projects with an approved value of USD97.71 million; and 68 construction projects, with an approved value of USD529.317 million. The number of projects funded by Foreign Direct Investment and Myanmar Citizen Investment in real estate, industrial estate and construction sector has decreased due to the COVID-19 pandemic, political crisis and rise in foreign exchange rates in 2022. The challenges faced by the Myanmar construction industry include: Daily cash required to buy building materials and pay labour wages, and increases in building material prices due to the high exchange rate. Cash withdrawals from local banks are also limited, with sanctions from US and Europe causing banks to not be able to issue L/C, making it difficult to import through normal routes. As of August 2022, cash withdrawals have improved, but still lack support from local banks. This has resulted in the cash needed to operate a business being exchanged at a percentage from outside money-changers because it cannot be withdrawn from banks at the full amount. Additionally, for real estate transactions, cash payments are rare, and most are paid by bank transfer. Project highlights for 2022 and 2023 include: Purchasing building materials and rental of machineries for Chin-Dwin Bridge (Hta-man-thi) project and Oo-Yu Bridge; purchasing hydraulic excavators, mini excavators, motor graders for States and Regions road projects under the Department of Rural Road Development; purchasing excavators (crawlers) and vibratory rollers for States and Regions road projects under the Department of Bridges; Constructing 4-storey detached house rental housing in Mawlamyine, Mon State; purchasing building materials and rental of machineries for Taungup-Maei-Kyauk Phyu Road project; purchasing platform trucks to build bridges under the Department of Bridges; and the purchasing P.C strand wire and accessories for Pyimapin (Nwegwa) Warehouse, Mingalardon Township, New Pearl City, Yangon; design consultancy work for preparation of design & drawing including survey and geotechnical investigation; and bituminous concrete work including cross drainage structure for Palatwa- Zoyampu Road project by Ircon International Ltd, a Government of India undertaking. Lastly is the purchasing and laboratory use of digital balances, lightweight deflectometer with load cells, drilling machines for subsurface investigation, crushing machines, humidity curing and storage chambers, water baths for hydrometer tests, inkjet colour printers, all in-one laser printers and scanners as well as purchasing automation concrete batching plants and generators under the Department of Bridges. 19 MASTER BUILDERS JOURNAL #126COVER FEATURE The Philippines The Philippines’ quarterly GDP growth for 2019 was 5.9% in the first quarter, 5.6% in the second quarter, 6.3% in the third quarter, and 6.6% in the fourth quarter. In 2020, due to OVID-19, growth was -0.7% in the first, sliding further to -16.9% in the second quarter, -11.6% in the third quarter, and -8.2% in the fourth quarter. In 2021, growth was -3.8% in the first quarter, before rebounding to 12.1% in the second quarter, slowing again to 7.0% in the third quarter, and going back up to 7.8% in the fourth quarter. The growth was 8.2% in the first quarter of 2022 and 7.4% in the second quarter. The main contributors to the 2022 second-quarter growth were: Wholesale and retail trade; repair of motor vehicles and motorcycles (9.7%); Construction (19.0%); and Transportation and storage (27.1%). However, the Philippine Statistics Authority also said that inflation sped up to 6.9% in September 2022 – the fastest pace for the year. As per Nicholas Antonio Mapa, Senior Economist at ING Bank, inflation is still likely to accelerate at the end of 2022. The downward trend of the Philippine Peso, which recorded PHP59 to $1 at the end of September, would also impact the way prices are moving. Government infrastructure projects (under the ‘Build, Build, Build’ initiative) have been leading private construction projects in terms of year-on-year growth from the fourth quarter of 2019 till the fourth quarter of 2021. However, this trend was reversed in the first quarter of 2022. The construction industry grew by 19.0% in the second quarter of 2022. The industry forecast is tentatively good, as President Marcos is reportedly pushing infrastructure work to aid economic recovery. With the further opening up of the economy, the construction industry is expected to experience a positive uptick in growth – sans lockdowns. There was, however, a contraction in public construction earlier this year due to the election spending ban. Private construction is well- positioned to ride this growth trajectory. The office and property sectors are seeing an increase in transactions within and outside Metro Manila. The confidence to spend and travel is resulting in improvement in mall space absorption, retail rents, and hotel occupancies – leading to a recovery mode for property and the economy. The previous president signed into law the PHP5.024 trillion (USD88.12 billion) General Appropriations Act for 2022. The National Budget is equivalent to 23.3% of the gross domestic product, and larger by 11.5% than the FY 2021 budget. The national budget will focus on building resilience as it transitions to treating the pandemic as an endemic, sustaining the momentum toward recovery, and infrastructure development. With regards to budget allocation, education is set to receive the largest portion with PHP788.5 billion (USD13.83 billion). The government will continue to implement the “Build, Build, Build” flagship infrastructure program under the banner of the “Build Better More” programme, which shall fund the construction of road networks, flood control systems, hospitals, health centres, school buildings, housing, and other infrastructure projects. In particular, the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr) will receive PHP786.6 billion (USD17.8 billion) and PHP75.8 billion (USD1.33 billion) respectively, to accelerate the Administration’s flagship programmes. This will include the Network Development Programme (PHP127.0 billion), Flood Management Programme (PHP129.0 billion), Rail Transport Programme (PHP23.1 billion), and the Land Public Transportation Programme (PHP16.0 billion), among others. In August 2022, the house of representatives proposed a budget of PHP5.268 trillion (USD92.04 billion) for 2023, exceeding the 2022 budget by 4.9%. Under the proposed 2023 National Budget, the government is programmed to spend PHP718.4 billion (USD12.6 billion) for infrastructure, out of the PHP1.19 trillion (USD27.8 billion) for the Build, Better, More Programme. This will also cover projects across different sectors and departments, such as tourism, agriculture, health, and education. The challenges faced by the Philippines construction industry are: lack of transparency in Government transactions, the need for clearer guidelines on the long-term vision of infrastructure programmes, right- of-way acquisitions, the extra cost of doing business, price escalation, and productivity and environmental sustainability. The Philippine Development Plan serves as the template of the current administration to achieve the long-term Ambisyon 2040 – where the Philippines is poised to become a prosperous middle-class society and where no one is poor. The goal is for people to live long and healthy lives, being smart and innovative. The Philippines would be a high- trust society where families thrive in vibrant, culturally diverse, and resilient communities. It is anchored upon 3 pillars – Matatag, Maginhawa, at Panatag na Buhay, which is translated as steady, comfortable, and peaceful living. In line with Ambisyon 2040, the Philippine Constructors Association calls for a 30-year master infrastructure development plan that will span five presidential terms. Currently, medium- term plans remain for only six years, then will be reviewed upon the end of each administration. A 30-year master infrastructure development plan will ensure continuity and growth within the construction sector – to develop and advance the country’s infrastructure. The Philippine Construction Industry Roadmap 2020-2030 still serves as the strategic framework of Philippine construction for 2020-2030. It enumerates the overall vision and values of the construction industry that both 20 MASTER BUILDERS JOURNAL #126public and private sectors have declared for the country. Without the roadmap and if the local industry continues doing the same thing over and over, it can only achieve PHP43 trillion (USD754.25 billion) worth of infrastructure projects vis-à-vis PHP130 trillion (USD2,280 billion) by 2030. Currently, there are over 4.7 million workers, as of July 2022. The roadmap envisions that the industry will have 7.1 million in the workforce by 2030, due to emerging new skills along with the incorporation of technology and digitalisation – which will produce PHP23.1 trillion (USD403.44 billion) of construction value. However, due to the ongoing pandemic, the timelines for the action plans would need to be reviewed and adjusted to fit the timelines. The price of construction materials in the Philippines is on the way up, according to statistics from Philippine Statistics Authority. With regards to mega projects, from 2016 to 2022, 8 to 9 trillion pesos (135.5 billion 152.4 billion USD) were committed by the previous administration to address the infrastructure backlog in the country. Today, 12 out of 119 flagship projects have been completed. Among the projects are Cebu Cordova Bridge, New Clark City, and North-South Commuter Railway. The new administration will inherit 88 Build Build Build projects of the previous administration, which are expected to be completed in the next six years. New projects include South Commuter Railway Project (SCRP), MRT Line-7, and New Manila International Airport. Singapore Singapore’s economy grew 1.10% in 2019 and dipped to -4.1% in 2022 due to the COVID-19 pandemic. It bounced COVER FEATURE back to 7.6% in 2021 and moderated to 3.8% in the first quarter of 2022. Based on advanced estimates, the Singapore economy is expected to have grown 4.4% on a year-on-year basis in the second quarter, building on the growth of 3.8% on a year-on-year basis in the first quarter. Given the economic outlook, the government has narrowed Singapore's GDP growth forecast for 2022 to “3.0 to 4.0%”, from “3.0 to 5.0%” For the same period, the Singapore construction industry growth was 0% in 2019 and dipped to -1.4% in 2022 due to the COVID-19 pandemic. It bounced back to 0.5% in 2021, to 2.4% in the first quarter of 2022, and 3.3% in the second quarter. Construction demand was USD23.3 billion in 2019, USD14.6 billion in 2020, USD20.8 billion in 2021 and USD11.1 billion in 2022 (up to the second quarter). The construction industry was expected to achieve a steady recovery of construction demand in 2021, with the total construction demand increased by 42% in 2021 to about USD20.8 billion (SGD29.9 billion), approximately 7% higher than the upper bound of BCA’s earlier forecast of between USD16.0 billion and USD19.4 billion (SGD23 billion and SGD28 billion). The increase was mainly due to the increase in tender prices resulting from manpower and materials cost inflation. For 2022, construction demand is expected to grow to a robust USD18.8 billion to USD22.2 billion (SGD27 billion to SGD32 billion) based on official projections, up from USD20.8 billion (SGD29.9 billion) in 2021. Public projects take up more than half of the construction demand total from 2016 to 2022. Public project contracts awarded were USD13.2 billion in 2019, USD8.5 billion in 2020, USD12.4 billion in 2021, and are estimated to be USD11.1 to 13.2 billion in 2022. Private projects were USD10.1 billion in 2019, USD6.2 billion in 2020, USD8.4 billion in 2021 and estimated to be USD7.6 to 9.0 billion in 2022. The USD12.4 billion that was contributed by the public sector in 2021 was due to the strong demand for public residential and infrastructure projects. Private sector construction demand also increased to USD8.4 billion in 2021, exceeding the official forecasts of between USD5.6 billion and USD7 billion. The strong recovery of construction demand in 2021 was attributable to the strong demand for public residential and infrastructure projects. The pick-up was underpinned by more residential, commercial and industrial building projects on the back of strong en-bloc residential development, major retrofitting of commercial properties as well as the construction of high- specification industrial buildings to meet business needs. In terms of figures by construction types, construction demand for civil engineering in 2021 was USD6.67 billion, USD2.33 billion for institutional and others, USD3.47 billion for industrial, USD1.92 billion for commercial, USD2.70 billion for private residential, and USD3.80 billion for public residential. For 2022, construction demand for both the public and private sectors is expected to grow as well. The construction demand in 2022 is expected to continue the strong comeback in 2021 to strong demand for institutional, industrial and commercial projects. In terms of figures by construction types, the expected construction demand for civil engineering in 2022 was USD6.25 to 6.94 billion, USD2.50 to 3.06 billion for institutional and others, USD2.57 to 3.06 billion for industrial, USD1.74 to 2.15 billion for commercial, USD2.43 to 2.78 billion for private residential, and USD3.33 to 3.75 billion for public residential. Major projects by the Singapore construction industry in 2021 to 2022 include: Jurong East Integrated Transport Hub (expected to be completed in 2027 with a contract sum of USD331.52 million); Tuas Water Reclamation Plant (expected to be completed in 2025 with a contract sum of USD138.89 million for the first module); Redevelopment of former Fuji Xerox Towers at 80 Anson Road; and the development of new Globalfoundries advanced semi-manufacturing facility. Employment in the construction industry was 456,000 in 2019, down to 404,000 in 2020 and stayed at 408,000 in 2021. As of the second quarter 21COVER FEATURE of 2022, the figures are back up to 455,000 people. The ratio of residents to non-residents was about 1:3. The total number of residents and non-residents employment increased from 408,000 in 2021 to 455,000 as of the second quarter of 2022, due to the easing of border restrictions at the beginning of 2022. Despite the total number of workers being close to the pre-covid level, the industry is still experiencing a shortage of manpower with companies trying to catch up with the progress of existing projects while managing new projects in 2021/2022. Manpower remains one of the key challenges for the construction industry. Due to the easing of border restrictions, many skilled workers from traditional sources (India, Bangladesh and PRC) have chosen to go back to their home countries. Some of these skilled workers have chosen to work in their home countries and/or other regions, creating a constant gap of skilled workers in Singapore. On this front, the Singapore construction industry is looking to diversify the source of foreign workers by exploring workers from Myanmar and Vietnam. The number of foreign workers that could be employed by a company is governed by a stipulated ratio of Singaporean employees to foreign employees, or the foreign worker dependency ratio ceiling (DRC). With the general policy direction to reduce the reliance on manpower in construction, the DRC ratio will be reduced from 1:7 to 1:5 from Jan 2024. Government grants have been rolled out to encourage companies to adopt technology to reduce their reliance on manpower. Also, companies are looking inwards to hire local mid-career entrants from other sectors through career conversion programmes (e.g. BIM modeller). Like many other countries, the construction industry is facing a shortage of talent due to the inherent impression of job roles in the construction industry as “blue collar” and it being dirty, dangerous and demanding. To uplift the image of these job roles in the construction industry, the government together with associations have developed a skilled framework for personnel in the industry to have a clear career progression through professional accreditation of their skills and competencies. SCAL has its very own Construction Professional Accreditation Scheme to accredit construction project managers. Despite the challenges that are ahead, BCA expects the total construction demand to reach between (USD17.4) S$25 billion and (USD22.2) S$32 billion per year from 2023 to 2026. The public sector is expected to lead the demand and contribute S$14 billion to S$18 billion per year from 2023 to 2026. About half of the demand will come from building projects, and the other half from civil engineering works. Besides public housing developments, there are also various major developments in the pipeline, such as MRT projects including the Cross Island Line (Phases 2 & 3) and its Punggol Extension, the Toa Payoh Integrated Development and the redevelopment of Alexandra hospital. The private sector construction demand is projected to remain steady over the medium term, reaching about S$11 billion to S$14 billion per year from 2023 to 2026, in view of the healthy investment appetite amid Singapore’s strong economic fundamentals. Thailand Thailand’s GDP growth for 2020 was -6.2% and 1.5% for 2021. For 2022, the forecasted growth is 3.1%. Economic activity has improved on easing containment measures but has been limited by some global issues. Stronger domestic spending and recovering tourism activity contributed to 2022 growth. The construction investment value saw limited growth due to rising costs and delayed infrastructure projects. The value of public-sector construction should expand by 4% in 2022, as per progress from mega projects. Progress continues to be made on ongoing construction projects. Bidding on some new projects has been delayed, including Map Ta Put Phase 2 (Part 2), and the expansion of Suvannabhumi Airport. Spending allocations made under the 2022 budget dropped by THB27 billion (USD0.80 billion) (-6% YOY), though these had a higher disbursement potential than was the case for 2021. In real teams, the value for the public sector construction projects was THB726 billion (USD21.48 billion) in 2019, THB756 billion (USD22.37 billion) in 2020, THB804 billion (USD23.79 billion) in 2021, and forecasted to be THB833 billion (USD24.65 billion) in 2022. Meanwhile, the value for private sector construction projects was THB571 billion (USD16.90 billion) in 2019, THB555 billion (USD16.42 billion) in 2020, THB560 billion (USD16.57 billion) in 2021, and forecasted to be THB578 billion (USD17.10 billion) in 2022. Private-sector construction is predicted to expand by 3% in 2022. On human resources issues, the minimum wage has increased due to the higher cost of living, from USD8.65 in 2019 to USD9.48 in 2022. The wage gap between Thailand and the countries of Cambodia, Laos, Myanmar and Vietnam is narrowing in 2021, with Myanmar at the bottom at USD95.1 per month, then Laos at USD112.8 per month, then Cambodia (USD192 per month) and Vietnam (USD193 per month). Thailand is at USD308.8 per month. Among the challenges faced by the Thai construction industry is the revising of the Government Procurement and Supplies Management Act. Research done by TDRI (Thailand Development & Research Institute) is looking to shape public procurement to be more pragmatic while maintaining transparency and fairness to induce sustainable growth in the industry. TDRI and TCA planned for a joint public presentation about the study 22 MASTER BUILDERS JOURNAL #126COVER FEATURE in early October 2022 and are looking to propose the recommendations to the government after that. Another challenge that is common among all countries is the shortage of labour due to the lesser number of migrant workers from Cambodia, Laos, Myanmar and Vietnam. There are a number of mega projects planned in the future. One is the Thai-Chinese High-Speed Train, with USD12 billion investment from the Thai Government. The project will connect Thailand to Laos by 2028, and is planned to be completed in two phases. Phase One is Bangkok to Korat, at 253 km in length, which is now 12% completed. Phase Two will connect Korat to the border of Laos (then to Vientiane), at a length of 356 km. Another project is One Bangkok, a mixed-use project on Rama 4 and Wireless Road. The project involves USD3.5 billion in investments from the TCC Group and Fraser Property (Thailand). The first phase is set to be completed in 2023 and the second phase by 2026. Phuket-Patong Expressway Project is a USD388 million investment for the land and construction. It is a 4km long four-lane traffic expressway with tunnels. Bidding will be by March 2023, and construction is to begin by the end of 2023. The next phase will connect Phuket International Airport. Vietnam Vietnam's economy rebounded in the first half of 2022. The economy grew 5.2% in the fourth quarter of 2021, 5.1% in the first quarter of 2022, and 7.7% in the second quarter of 2022. This growth is driven by a robust growth in manufacturing exports to the US, European Union and China; as well as the strong recovery of domestic demand, especially for services; and a revival of the tourism sector thanks to the reopening of the country in March 2022. Looking ahead, GDP is projected to grow 7.5% in 2022 and 6.7% in 2023. However, Vietnam's economic prospects face heightened risks. These include labour shortages, inflation, slowdown among trade partners, and geopolitical tensions. Despite this, the Asian Development Bank and World Bank evaluates Vietnam as the country with the fastest economic recovery in Asia. The Vietnam construction market size was valued at USD76.1 billion in 2021. The expected contribution of the construction industry to 2022’s GDP is estimated to reach 7.5%. The construction industry in Vietnam is expected to expand by 10.4% in real terms in 2022 (9.6% year-on-year in September 2022), with a forecast annual average growth of 8% from 2023 to 2026. The industry’s growth is supported by the government’s focus on infrastructure investment, rising Foreign Direct Investment, and investment in transport, utilities, logistics, and manufacturing projects. In the first quarter of 2022, the government approved a VND341.2 trillion (USD15.2 billion) stimulus package, which includes an allocation of approximately VND176 trillion (USD7.8 billion) in infrastructure in 2022 and 2023. Among the projects are the North-South Expressway system and inter-state highways, Long Thanh International Airport and the provincial airport system. The Vietnam construction industry is currently trying to solve issues like construction price quotas and unit prices in works not yet mastered by Vietnamese contractors (cable stayed bridges, sheet piles, casing) as well as completing regulations on Green projects. Lower steel prices and public investment disbursement are expected to provide growth momentum for the construction industry over the second half of 2022. The price of construction steel has cooled down to the same levels as last year. The price of coils and rebars declined to VND16,000-16,500 per kilo, about 8-9% lower than that in early May, and down 13-15% compared to the beginning of March. The prices of cement, however, still inched higher to VND1.65-1.7 million per tonne due to the higher costs of input materials such as coal, electricity, gasoline, gypsum, additives, packaging, freight rates and labour. Mirea Asset Vietnam Securities assesses that the profit margins of the construction industry are under pressure due to the high costs of input materials and the dip in supply of the housing market. However, in the long term, Mirea has positive expectations for the growth of construction stocks as the demand for investment in infrastructure and residential real estate in Vietnam remains high. Among the top trends in the Vietnam construction industry right now are: eco-friendly materials, data analytics from the Internet of Things for construction, automation and digitalisation of processes. Based on the challenges faced by the Vietnam construction industry, the Vietnam Association of Construction Contractors has a few policy recommendations. Real estate, construction, and building material (RECBM) activities are the fields most affected by laws. The legal overlap has created a great obstacle to the development of business in the industry recently. The Vietnam Report survey has identified five top policy recommendations that enterprises in the industry expect, which are: to Improve infrastructure; to continue to lower credit interest rates and expand credit limits for real estate loans; to support the connective ecosystems of our RECBM circular economy development; to strengthen market management in the direction of sustainability; and to complete the legal corridor. Note: Readers are advised to practice due- diligence in verifying any of the information contained in this article. Master Builders Journal is not responsible for any factual errors, and the information provided is as it was reported and transcribed at the time of the event. 23 MASTER BUILDERS JOURNAL #126QLASSIC Assessment for a project has to be registered in the QLASSIC Portal managed by CIDB and done after the issuance of Certificate of Project Completion (CPC) or at any time that the project is ready to conduct QLASSIC which must be declared by the consultant but before the vacant possession stage of the project. Results of the assessment must be registered in the same portal and a rating of the project issued to the contractor in a form of a QLASSIC Certificate. CIDB QLASSIC Assessment is not intended for single units, due to the need to set sampling parameters according to the Gross Floor Area (GFA) of the project. Can homeowners apply QLASSIC (CIS 7) methods for defects checking during vacant possession? Is the developer or contractor legally or contractually bound to rectify non-compliances based on the CIS 7 checklist? Homeowners may apply the CIS 7 methods to conduct defects checking during vacant possession, as the standard is a public document, and can be freely downloaded from CIDB website. The checklist of defects is applicable as a contract between homeowners and the developer. The applicability of the checklist, whether done using CIS 7 methods or otherwise, is entirely up to what is stated in the contract between the developer and the homeowners. Mohammad Farid A. Hamid General Manager in Safety & Health, Environment and Quality Department (SHEQ) CIDB Malaysia Q: What is QLASSIC? Is this a tool developed for house unit vacant possession inspection? A: QLASSIC is a tool developed by the Construction Industry Development Board Malaysia (CIDB) using the Construction Industry Standard (CIS) 7:2021, enabling users to achieve any, or a combination, of the following objectives: a. To establish a standard assessment system for the quality of workmanship of building projects b. To assess the quality of workmanship of building projects c. To evaluate the performance of contractors on the quality of workmanship d. To benchmark the level of quality of the construction industry in Malaysia e. To compile data for statistical analysis The CIDB QLASSIC Rating Scheme is intended to rate the conformance of the project according to standards and specifications. However, the responsibility of conformance to the contract is still the responsibility of the qualified persons. There has been some concern that 3rd party inspection reports are “weaponised” by certain stakeholders beyond the specifications in the building contract, what are your recommendations? If the 3rd party in this context are not a party as described in the contract between the developer and buyer, the developer may challenge the validity of the inspection report. It is recommended that in the cases where the buyer intends to appoint another party to act as the buyer’s agent in conducting the inspection, the developer must agree to the appointment, as the developer may be affected by the findings of the inspection done by another party. The 3rd party inspection report must be accepted in the first place by the developer, because it is an official submission for defects during vacant possession, provided that all submission is in the proper manner as stated by the developer. However, it is still entirely up to what is stated in the contract between the developer and the homeowners, and it is recommended that the developer set and define in the Sales and Purchase Agreement on what is categorised as defects, or they may want to focus on more relevant issues such as leakage or malfunction. The developer or consultant may also use CIS 7 as a reference to set tolerances based on the level of defect acceptance of their project. The Quality Assessment System for Building Construction Works (QLASSIC) is a quality system to objectively assess the standards of building construction work in Malaysia. There are however, some contentious issues on its scope and usage of late. MBJ held a Q&A with several key industry players to help provide further clarity for all stakeholders. Q&A—On QLASSIC, Defect Inspectors and Vacant Possession SPECIAL FEATURE 26 MASTER BUILDERS JOURNAL #126Can a QLASSIC certified assessor work for homeowners to check for defects during vacant possession? Who is the best person (or rightful authority) to determine the defects of a project? A QLASSIC certified assessor may conduct QLASSIC assessments when appointed to do so by CIDB and its appointed certification body. The assessed project has to also be registered in the QLASSIC Portal. Other than in these circumstances, the assessor is not recognised to conduct a QLASSIC assessment. It is up to the homeowner to engage anyone on their behalf to check for defects, but the best person to determine the defects of a project is the person who designed the project in accordance with the specifications and as determined by the designer’s clients. If the vacant possession has already been handed over to the buyer, then it is up to the contract between the developer and the buyer to state the tolerances and thresholds of what are deemed to be defects. Non-conformance to existing building laws and by-laws would be determined by the local authority. Should the developer/contractor register the project to be assessed by QLASSIC, then CIDB or its appointed agents will conduct the QLASSIC assessment within the prescribed time frame agreed between CIDB and the developer/ contractor. The QLASSIC Guidelines for Homebuyers 2018 – we understand this guideline has been pulled from the CIDB website. Why is that? The QLASSIC Guidelines for Homebuyers 2018 document is no longer valid or applicable under the reviewed CIS 7:2021. Datuk Ho Hon Sang Chief Executive Officer of Mah Sing Group and Deputy President of Real Estate and Housing Developers’ Association (REHDA) Malaysia Can homeowners apply for QLASSIC (CIS 7) methods for defect checking during vacant possession? Is the developer or contractor legally or contractually bound to rectify non- compliances based on CIS 7 checklist? For CIDB, the use of the Construction Industry Standard (CIS 7), better known as QLASSIC, is solely for building workmanship rating purposes and is not intended to be used as specifications or compliance requirements. However, if parties to a construction contract agree to adopt CIS 7, then it would be binding. It should be noted that there is no mention of the requirement for QLASSIC in the standard Sales and Purchase Agreement (SPA) between developers and purchasers under Act 118, and its adoption is voluntary. There has been some concern that 3rd party inspection reports are “weaponised” by certain stakeholders beyond the specifications in the building contract, what are your recommendations? Additionally, can QLASSIC assessors work for homeowners to check for defects during vacant possession? It is the responsibility of the qualified person (Superintending Officer) to determine the quality of work in accordance with the standard SPECIAL FEATURE 27 MASTER BUILDERS JOURNAL #126Next >