Builders worry about steel

Builders worry about steel

By LOONG TSE MIN

PETALING JAYA: Major builders' associations are urging the Government to curb what they say are “runaway steel prices.”

The associations are calling for the removal of price controls on steel bars and cement and allow the free market to determine their prices.

They also call for the removal of import controls that will allow more competitive pricing of construction materials, price fluctuation clauses for government projects and close monitoring of prices by the Domestic Trade and Consumer Affairs Ministry.

Recurring shortages and price fluctuations could interrupt construction schedules of projects under the Ninth Malaysia Plan, especially for low- and medium-cost housing, they said in a joint statement yesterday.

The associations said their members had reported that steel bar millers were now charging RM450 to RM550 above the controlled price per tonne. “Local builders are being forced to pay more than RM2,000 per tonne to keep up with construction schedules,” they said.

Patrick Wong (left) and Ng Seing Liong at the press conference.
This was higher than the cost of steel bars in neighbouring countries of Thailand, Singapore and Indonesia where market prices ranged from RM1,800 to RM1,900 per tonne, said Rehda president Ng Seing Liong.

The associations, together with The Associated Chinese Chambers of Commerce & Industry of Malaysia, had last week sent a memorandum to the Prime Minister's Department.

The four associations are Master Builders Association Malaysia (MBAM), Persatuan Kontraktor Melayu Malaysia (PKMM), Real Estate and Housing Developers’ Association (Rehda) and Persatuan Kontraktor India Malaysia.

On how a controlled-price item could be sold at higher prices, Ng said: “These charges are 'grey market prices' often in the form of handling costs or special-size requirements.”

In the memorandum, they had detailed their concerns and recommendations, MBAM president Patrick Wong told reporters.

On why the industry only made a formal complaint now, Wong said while grey market prices for construction materials had existed for some time, a sudden jump in such prices in recent months was too much for many builders to bear.

“Two months ago, members quoted that millers were charging RM200 to RM250 above the control price. Now, this has increased to RM450 to RM550 more per tonne, which is a 15% to 20% increase,” he said.

At present, 30% to 40% of construction jobs in the country were being delayed, as Class F contractors could not meet their profit margins, PKMM secretary-general Datuk Osman Abu Bakar said.

“If the issue is not resolved quickly, prices of new houses could also go up by 15% to 20%,” Ng said. Rehda had resolved to request for an increase in the price of low-cost houses to RM60,000 from RM42,000 and would submit a proposal to the Government this month, he said.