Foo Chek Lee, president of the Master Builders Association Malaysia, gave his views on the outlook of the construction sector at a forum during the REHDA Institute CEO Series 2018 (Annual Property Developers Conference) on 24 September 2018. Construction+ was a media partner for the event.
The forum, titled ‘Economic Outlook 2019: How can Stakeholders Work Together to Rebuild the Economy of New Malaysia Post GE-14″ was moderated by REHDA Institute chairman, Dato’ Jeffrey Ng Tiong Lip.
What are some of the low-hanging fruit activities or opportunities in the construction industry that can significantly boost more employment, new businesses and new investments in the country?
Foo: Although there are some changes in government policy, there are still some projects ongoing—especially those undertaken by local contractors, such as roads, water pipes, schools etc—although they are not at such a big scale.
But the question now is: how long would these sustain us? That is something that we want to put to the government because the construction industry is very important—it involves 140 downstream industries, and it is building the economy of the country.
There are some ongoing projects—such as the LRT3, MRT2 and West Coast Expressway—and some new launches—such as the Sarawak coastal road project, worth RM11 billion, and other property projects by the private sector. However, we can’t rely on these so much.
We expect the new Budget by the government to stimulate the economy. Likewise, those projects that have been suspended by the government, I think the government will resolve it soon after they have resolved the Budget and the conditions of the contracts. I believe the government knows that without construction, the economy can’t be moved forward.
Since there are so many stakeholders involved in the construction industry, who do you think will be the most important stakeholders that we will like the government to incentivise so that the industry can grow along with it?
Foo: As far as the construction industry is concerned, we employ about 15 per cent of the workforce of the country. Being a labour-intensive industry, we need to look into the labour aspect of our workforce. We need a lot of trained skilled workers, and the government needs to provide more incentives so that more people are trained, so that they have higher income, and the quality and efficiency of the construction will increase.
Likewise, we also need a lot of mechanization and adopting of the latest technologies, such as IBS, BIM etc, which can be a very costly affair, and the government should seriously look into it to encourage mechanisation and use of local skilled workers. In some other countries, if someone can prove that by adopting this new technology or using this new equipment, they can reduce the amount of workforce and increase the efficiency, then the government will subsidise.
Even with the upgrading of workers’ skills and mechanisation, which takes time, the government should not shut the door of foreign workers as the industry still needs them. The government should seriously look into making the employment of foreign workers easy and cheaper, so the cost of business will be reasonable.
Major infrastructure works have a significant spillover effect onto the real estate industry. Given that the big-ticket transportation infrastructure projects are now deferred or cancelled, what other forms of investments can the government or private sector or through public-private partnerships take to expand the economy or the industry?
Foo: The government cannot rely on the construction of infrastructure by one country alone. The government needs to diversify to other countries or to attract more direct investment from other countries by activating the existing trade relationships, especially with Japan and Korea or even European countries and UK. I think what the government is doing currently is the correct way, with the PM going to Japan and UK to attract more foreign direct investments into the country to stimulate the growth of the economy.
Of course, as what I’ve said, the construction industry is very important as there are 140 downstream industries, from factory, transporter, quarry operator to the mamak stall or makcik selling nasi lemak outside the construction site. The government has no choice but to push for infrastructure or other projects to stimulate economic growth.
The government has to look into our banking system. Where we need the bank to review the conditions of giving out loans. They must make it easy so that business can move easily and not costly.
One important aspect of it is that the government should not award big projects to foreigners. If possible, award to the locals. Or if locals cannot do it, parcel it into packages that is manageable for locals. Of course some foreign expertise may be required, but allow the local contractor to appoint or hire the foreign expert or JV with the foreign contractors, so that our Malaysian resources can be fully utilised — our consultancy services, contractors, equipment suppliers, human resources.
If you award the contract direct to the foreign contractors, I think they will use their own resources. Without controlling these resources, we’ll kill our own resource industry. For example, some big projects that are going on now, they simply refuse to hire our local machinery. It will kill the local industry.
For example, last time when we did KLIA, we didn’t award the project directly to a foreigner. We used our own contractor to manage the project. Because of that, we reduced the construction cost from RM20 billion to RM10 billion. After that, we managed to transfer the technology. Now Malaysians can go anywhere to construct airports.
Likewise, our Smart Tunnel contract was awarded to a local. We learned the technology, and now we can do tunneling anywhere. For example, Gamuda went to Taiwan to do tunneling. This is a better way to do transfer of technology, instead of awarding the contract to outsiders and hoping that they will teach us. — Construction+ Online