Cement News

Rising cement and concrete prices to have ‘snowball effect’

JOHOR BARU: The continued spike in cement and concrete prices in the past two years is expected to have a “snowball effect” on various industries and beyond.

In a joint statement, the Johor Master Builders Association and Melaka Builders Association said the first victims to bear the brunt of the sudden soaring cost of construction materials were builders who undertook private projects.

Johor Master Builders Association president Kong Weng Keong said this also affects all associated manufacturers of building materials that depend heavily on the use of cement or concrete.

“As the construction industry is one of the critical industries in Malaysia, the soaring prices create a disastrous and far-reaching impact and is expected to result in snow-balling effects to the economy.

“Once the bidding prices of new projects increase significantly, the ripple effect may lead to the increase of house prices, which ultimately affects B40 and M40 groups in owning homes,” he said.

Meanwhile, Melaka Builders Association president Datuk Lim Hau Jan said both associations have proposed several measures to regulate the matter including issuing an “advance notice of price increase”.

“We suggest issuing a six-month to one-year advance notice before gradually increasing the prices of the building materials instead of increasing the price suddenly at one time without prior notice.

“We also propose that production and suppliers provide ‘lock-in price’ packages and maintain the negotiated price throughout the existing projects,” he said.

He added that manufacturers and suppliers should formulate a mechanism in order to control the range of each price increase to achieve awareness and mutually beneficial outcomes.

Lim hoped the government and professional bodies such as the Malaysian Institute of Architects (PAM) and Malaysia Institute of Engineers (IEM) could lead the advocacy and review the reactivation of the price variation clause in current construction contract forms.“Understanding that both PAM and IEM contract forms are the most adopted forms of contracts in the private sector, we propose a review of the current clause, which disallows the builders to make claims over the variants of material prices in practise.

“The government provided the allowance of price changes of variation of prices for government projects following a significant increase in the cost of building materials last year; the roles of PAM and IEM now become pivotal in reviewing the fairness of the clause mentioned.

“Our associations hope the government can look into the surge of cement prices so as to avoid unnecessary damage to public interest as well as the suffering,” he added.

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