LABUAN – Contractors across this duty-free island are struggling to take advantage of the reopening of the economy, as rising costs and the lack of building materials are threatening their business operations.
Local contractors here lamented that the increasing cost of building materials due to supply shortages is the biggest concern for their project management plans.
Labuan G1 Contractor Association president Chemat Mustapha said the lack of availability of building materials such as cement and stones was due to the recent review of export policy from Sabah and the closure of quarries due to the Covid-19 pandemic on the mainland.
“On the issue of stone supply, the Sabah Government needs a permit (issued by the Ministry of Energy and Natural Resources) from the main supplier before the supply is permitted to be exported to Labuan… the issuance of the permit takes time and (this) causes the delay in supply to Labuan,” he told Bernama.
Chemat said the new stone export policy to Labuan took effect in October this year.
“Prior to the review, Labuan importers (building materials companies) are using the K3 customs declaration form (Transportation of Goods Between Peninsular Malaysia, Sabah and Sarawak and transportation within the same territory).
“But now (effective October), they are required to use the K2 form – for export of goods from the country, of which the process of approval takes time… many government projects come to a standstill due to this delay,” he said.
Chemat also urged the Public Works Department to review the price of the project tender to account for the rising cost of building materials.
A local contractor, Sophian Said, said the unavailability of these building materials had caused his company’s projects to come to a standstill.
“The price of raw materials is rising dramatically, and traditional fixed-price contracts are not designed to account for this new reality,” he said.
Sophian said this trend is expected to continue until next year and would impact not only cost but also lead times, which subsequently would cause project delays and a difficulty in meeting scheduled requirements. – Bernama, November 10, 2021
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