Support package to help construction industry players in Malaysia during MCO 3.0

Kuala Lumpur, 2 July 2021 – The People’s Protection and Economic Recovery Package or PEMULIH worth RM150 billion has been launched by the YAB Prime Minister, Tan Sri Muhyiddin Yassin. The Ministry of Works (KKR) welcomes and fully supports the package. PEMULIH is an additional package of economic recovery long awaited  by practitioners in the construction industry.

The government procurement procedure is eased and this is expected to help drive the construction businesses that have been affected by the increase in building material prices, especially the B40 [below 40 per cent] group in the sector. The details are as follows:

• Allowance of price changes or variation of price (VoP) for work projects following a significant increase in the cost of building materials from 1 January to 31 December 2021;
• Assistance to local G1 to G4 contractors [not exceeding MYR200,000 and MYR3 Million respectively] to carry out small-scale work projects by ballot and quotation, with the use of new civil engineering and building work rate schedules as well as electrical work rate schedules; and
• Allowance of extension of time (EoT) or extension of contract of work projects or extension of contract period for supply and service contracts affected by the implementation of MCO.

The allowance of VoT for work projects is expected not only to help contractors  with material procurement, which subsequently impacted the finance of contractors, but also to trigger the process of demand and supply in the market. By helping local G1 to G4 contractors to carry out small-scale projects by ballot and quotation, contractors can perform the work more effectively because they get a more competitive price, as well as an opportunity to participate in the government procurement.

Read: VoP and EoT should also be applied to projects in private sector, MBAM hopes

Meanwhile, the EoT extension of the project will allow the contractor to reschedule the work to ensure timely completion. On the other hand, if the project is terminated, the financial impact to be borne by the government will be higher due to the time needed to appoint a new contractor, with a new price that is usually higher than the original contract.

– Construction+ Online

Source: Public Works Department