The Malaysian Insight

FACED with continued labour shortage, soaring building material costs, the construction industry say it could be another two to three years for them to get back to where they were before the Covid-19 pandemic.

They said financial institutions were adding to the difficulty by being cautious in giving out loans to the still unsteady industry.

Chua Hang Long, chairman of the Selangor and Federal Territory of Kuala Lumpur Kin Cho Hong, said developers have to dispose of their unsold properties to raise cash to build new ones.

“We have to sell to revive our recovery,” he told The Malaysian Insight.

“Unfortunately, some developers have difficulties disposing of their properties. Properties that have been completed could not be sold.”

One of the main reasons for this is that buyers have difficulties in getting bank loans, Chua said.

“Even if there is an interested buyer, he would most likely not get his application approved at this moment in time. Ultimately our properties could not be sold.”

Chua said the country’s economic slump has a bearing on their quandary.

“Not many investors and therefore a lack of interest to buy or rent properties.”

The business cycle, he said, had turned vicious with lots of fear and mistrust where no property developers are willing, nor brave enough, to fork out large sums of their own money to finance any new projects.

“If we want to start construction, we must first cough up a large sum of money, but the economy has only just recovered.

“Some of us are afraid to take risks and would rather just wait and see what’s going to happen. I know that will slow the pace of recovery.”

Chua said labour shortages and the soaring cost of building materials are also key factors affecting the industry’s recovery.

“After the pandemic, prices have all doubled. Workers’ salaries have increased 100% and building materials have gone up between 50% to 75%.”

He said due to increased costs, some developers took the decision not to restart work on projects started before the pandemic.

He said it is better for them to give up than be saddled with new problems that could drag their company down under.

Malaysian Builders Association (MBAM) president Oliver Wee Hiang Chyn), agreed with Chua and said it could take the industry two to three years to recover.

Wee said that was a reasonable estimate.

“We are still relying on the 12th Malaysia Plan (12MP) projects to achieve balance.”

To Wee, the biggest obstacle to recovery of the industry is the lack of new projects.

Loss of young professionals to other industries or that opted to work overseas, and the growing number of disputes involving legal and administrative costs are also major factors, he added.

“We find these disputes are on the rise, and it’s reflected in the Asian International Arbitration Center (AIAC) report.”

Wee said while the developers wait for the recovery, it is also important for them to complete their unfinished work.

“In short, developers must solidify themselves, especially in terms of funding and resources to prepare for new work. “ –  June 19, 2023.