President Message June July 2020

PRESIDENT MESSAGE – JUNE/JULY 2020

As most of us have resume work while still adhering to the SOPs and Guidelines set throughout this RMCO period, I would like to thank members who have participated in the many surveys and provided valuable feedback for our compilation as submissions to the respective Ministries and Government agencies. We have taken into consideration all the suggestions and proposed the solutions in our meetings with the Government.

Following were some of the proposals submitted:

  • Launching of more projects and encourage more private sector to submit proposal based on Private-Public Partnership (PPP).
  • Implement strict control on the construction materials prices. To reintroduce Price Variation Clause in Contract.
  • Project procurement need to be reviewed by having open tenders and more transparent to ensure right, capable and lowest evaluated contractor is awarded for the job.
  • Ministry of Human Resources and CIDB Malaysia should work together to provide and encourage locals to join the industry since many will lose jobs due to present economic condition.
  • Propose that part of training grants be given direct to industry to up skill the existing workers through the recognised training centres run by the construction associations.
  • Government must initiate a special grant solely for construction industry as to help the industry players to overcome high cost of acquiring such software and equipment for adoption of automation and digitalisation.
  • Passing of COVID-19 Bill. Urgently required to avoid contractual disputes and to safe guard the industry.

For sustainability, overall construction supply chain need to relook, re-educated and restructure for better logistic management, usage of innovative construction method and material that reduce cost and wastage and protecting environment. Likewise, employment of foreign workers need to study and restructure.

I would also like to share with members on the following item:

PROVISION UNDER SECTION 17A OF THE MACC ACT 2018 TAKES EFFECT FROM 1ST JUNE 2020

The Malaysian Anti-Corruption Commission’s (MACC) corporate liability law provision under Section 17A of the MACC Act 2018, which was passed by the Parliament in 2018, will enable the prosecution of business entities involved in corruption. This provision takes effect on Monday, 1st June 2020.

Previously, the MACC Act only focuses on the prosecution of individuals involved in corruption. Section 17A was enacted to enable organisations involved in corruption activities to be subjected to legal action and persons associated with the organisations will be deemed to commit the corresponding offence unless it can be proven that adequate measures have been put in place. Section 17A(2) states that the penalty for the offence shall be a fine of not less than 10 times the value of the gratification in question or RM1 million, whichever is higher or imprisonment for not more than 20 years, or both.

The provision will encourage commercial organisations to take appropriate and consistent steps to ensure their businesses do not engage in corrupt activities for their interests. We hope members will take note of the provision and comply accordingly.

 

Feedback to Bank Negara Malaysia

Recently, MBAM has been consulted on the impact of COVID-19 pandemic on the construction industry at a dialogue with Bank Negara on 26 June 2020.

I have conveyed our grave concerns to Bank Negara on several urgent matters as below:

  • The industry faces severe cash flow, potential litigation due to inability to fulfil contractual obligations, salary cuts and retrenchments.
  • Urgent need to extend the Loan Moratorium for another 6 months at least, after September 2020.
  • Delays and abandonment of both private projects vs civil engineering projects are likely to happen as stop-work has stretched to more than three months.
  • Disruptions in supply chain affect project delivery aggravated by conflicting SOPs issued on restarting work and the difficulty to comply with testing foreign workers for COVID-19.
  • Urgent need for new projects to be launched to pump prime the industry.

What contractors urgently need are financial assistance such as bridging loan facilities and waiver of interest rates and the need to extend the current six-month moratorium up to a year.

 

Moving Forward

It is timely for the Government to seize the opportunity to re-look at the ways the construction industry is moving forward. The government should, among others, do the following:

  • Provide assistance to help contractors embark on automation and digitalisation by incorporating Industrialised Building System and Building Information Modelling that will help to reduce the dependence on foreign workers
  • Appoint local contractors to lead all major projects to ensure the transfer of technology
  • Encourage Public-Private Partnership (PPP) with the Government playing an important role as guarantor so that more projects can be implemented in a timely and efficient manner
  • Reduce financing cost for projects through interest subsidy or Government guarantee for project loans to lower the cost and ensure viability.
  • Protect local contractors against unfair competition from international contractors with introducing a strict policy of Buy Malaysia First to ensure the usage of local resources such as local consultants, local contractors, local suppliers and products.

 

Helming ASEAN Constructors’ Federation (ACF)

On 10 June 2020, I took over the chairmanship of this regional organisation for a two-year term from the Indonesian Constructors Association.

As the New Building Materials and Construction World Magazine has estimated, there will be US$250 billion worth of potential construction works in ASEAN which is a huge market potential for industry players. ,

My priority is to position ACF as the “go-to” federation and the voice of contractors by creating competitive advantage through increased visibility with strategic partners within and without ASEAN. I hope to receive the support from our members to make this a reality.

 

Critical Need for COVID-19 Bill

We thank the Government for responding to our call for a bill and now the COVID-19 Act is scheduled to be tabled in the July session of Parliament.

This Act is needed to mitigate potential negative impact to economic activities caused by contractual breaches and enforcement of insolvency actions on companies affected by COVID-19 and the Movement Control Order (MCO) was imposed from March 18. A moratorium on legal actions must be backdated to the start of MCO and ideally extended for at least six months after Recovery MCO fully lifted as a buffer for business to restart and prepare for the uncertain days ahead.

 

12th Malaysia Plan (12MP)

The COVID-19 pandemic has delayed the tabling of the 12th Malaysia Plan (2021-2025) to next year, as announced by the government.

MBAM strongly urges the Government to ensure that the construction sector is placed in the front line to re-stimulate economic growth and it is pertinent to put it back on track because there is always a direct correlation between construction output and national growth.

A robust construction industry that impacts 190 downstream sectors would act as a catalyst and stimulate more employment and more economic activities in the 12MP.

The government should relaunch all high impact projects that have been put on hold such as MRT3, KL – Singapore High Speed Rail, JB – Singapore RTS, and the remaining packages of Pan Borneo Highway to spur rapid economic growth and quickly pump prime the economy.

One approach to speed up the process that is worth considering is to adopt the PPP approach that involves the Government playing an important role as guarantor to enable more projects to be implemented in a timely and efficient manner.

 

Response to Surveys and Feedback Request

Lately MBAM has been asking for response for a number of feedback and survey request. We really hope members will take some time to provide your feedback so that collective we have the right information to be represented as the voice of the industry when we represent members at Government initiated meetings or dialogues.

With that I end with a hopeful note that we will come back stronger as an industry despite the challenging times brought by the COVID-19 pandemic.

Continue to stay safe.

 

FOO CHEK LEE JMW

MBAM President