CONSTRUCTION costs in Malaysia could rise by between 30 and 40 per cent following a surge in fuel prices driven by tensions in West Asia, industry leaders have warned.
President of the Malaysian Malay Contractors Association (PKMM) Mohd Rosdi Ab Aziz said the estimate is based on a rough calculation following an 80 sen increase per litre in diesel prices which took effect earlier this week.
Using sand as an example, he said the cost calculation for the material has shifted to RM8 per tonne, combined with logistics costs of around 50 sen per kilometre after the earlier restructuring of diesel subsidies.
According to Mohd Rosdi, the price of sand is likely to rise further as logistics expenses increase alongside higher operating costs for excavation machinery at the source.
“The construction sector is closely tied to diesel usage because nearly all machinery relies on this fuel.
“Therefore, the government should implement immediate interventions to control construction material prices from spiralling further due to rising fuel costs,” he said.
The Malaysian government recently increased the pump price of diesel in Peninsular Malaysia by 80 sen to RM3.92 per litre, a move announced by the Ministry of Finance.
Prime Minister Datuk Seri Anwar Ibrahim has meanwhile assured that the country’s petroleum supply remains sufficient at least until May despite ongoing tensions in West Asia, indicating that national stock levels are still stable.
To prevent leakages and fuel smuggling, Anwar has also tasked Deputy Prime Minister Datuk Seri Fadillah Yusof and the Ministry of Domestic Trade and Cost of Living with strengthening monitoring and enforcement against parties attempting to exploit the situation.
Separately, the president of the G1 Malaysia Contractors Association Tukiman Radion said that even though contractors are allowed to store diesel with permission from the domestic trade ministry, it does little to reduce the overall cost of construction projects.
He explained that stored diesel typically lasts only about a week, depending on the size and number of projects as well as the type of earthworks at construction sites.
“Ad hoc increases in fuel prices will have a ripple effect, not just on the construction industry, but across almost every sector in the country.
“The focus now is on whether the government will introduce a reciprocal approach based on current conditions, as it did with the previous diesel subsidy adjustments, or take another route.
“If such measures are not implemented, I fear construction costs will continue to rise in line with fuel price increases, and the burden will ultimately be passed on to end consumers,” he said.
Meanwhile, board member of the Akademi Binaan Malaysia Mohamed Fadzill Hassan, suggested that the industry gradually shift towards the use of electric trucks to reduce dependence on fossil fuels.
“However, this needs to be supported by a charging ecosystem and accessible replacement components, particularly batteries offered at reasonable prices,” he said. - March 14, 2026
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