Builders: Give 6 months lead time before raising prices

Published: 2008/07/
BT

The proposed price hike by Lafarge Malayan Cement from August 1 has trapped contractors in a cycle of continuous price increase, says the Master Builders Association Malaysia
MASTER Builders Association Malaysia (MBAM) has voiced its unhappiness over the proposed increase in cement prices by Lafarge Malayan Cement Sdn Bhd, saying it will hurt the construction industry badly.The price increase will take effect on August 1.MBAM president Ng Kee Leen said that cement manufacturers should consider providing the industry with at least six months lead time to allow contractors to allocate provisions to mitigate their cost."This announcement has trapped contractors in a cycle of continuous price increase," he said in a statement released in Kuala Lumpur yesterday.

Ng pointed out that it will be yet another increase in just two months, after the government lifted the ceiling price of cement on June 5.Cement prices rose 22 per cent from the RM10.90 under government price control to RM13.20 immediately after liberalisation.Lafarge's proposed increase will add another RM1 per 50kg to RM14.25, or 30 per cent."As it is, contractors are facing difficulties in controlling the cost of projects and committing to timely delivery. The cement price increase will add more pressure to cash-flow problems," Ng said."MBAM would like to caution that many small- and medium-sized contractors from Classes D, E and F may be forced to stop work, delay work, or even abandon projects as a result of the steep price increase of essential building materials, especially steel bars and cement."The government should take cognisance of this and act quickly."Ng said that although the cement liberalisation was announced last month, difficulties remained over its import because of logistics.He added that the scenario was the same for steel bars, of which prices had risen to an all-time high of RM4,100 a tonne.The liberalisation process of steel bars has not been well implemented, Ng said."It has been difficult to import steel bars into the country and there are still cases of Customs Department officers demanding approved permits and/or imposing import duty on certain steel bars."

MBAM will also ask that all items under HS Code 7214, all steel bars for construction use under Code 7214 and all steel bars for construction use under Codes MS 146 and BS 4449 be fully liberalised."If the situation continues to worsen, the government should step in and implement 15 per cent export tax on steel bars and billets, cement and clinkers, and ban exports of steel bars and clinkers to ensure building material manufacturers meet the needs of the local construction industry first."The 10 per cent import tax on cement should be waived as well because contractors and developers are already facing great pricing pressure, and any form of import tax relief will be appreciated,"