Construction industry suffers RM42 billion losses due to MCO - Fadillah

Senior Works Minister Datuk Seri Fadillah Yusof said of the total, RM18 billion was the estimated loss during the MCO 3.0 period from June to September this year.

"While the remaining RM24 billion is a loss from the implementation of MCO 1.0 in 2020 which affected the implementation of construction work from March to July 2020," he said during the Minister's Question Time.

The minister was replying to Datuk Ahmad Nazlan Idris (BN-Jerantut) who asked the government to state the construction sector among those affected by the COVID-19 pandemic as well as the challenges faced and the Works Ministry's initiative to assist the sector.

Fadillah said the effects of the pandemic and the implementation of the MCO saw the growth rate of the construction sector declined by 19.4 per cent in 2020 and continued to decline by 10.4 per cent in the first quarter of 2021.

"However, the growth rate has increased by 40.3 per cent in the second quarter of 2021," he said.

The minister said among the challenges faced by the construction sector were the rising cost of building materials, cost of labour, cost of Labour Recalibration Programme as well as the cost of compliance with MCO standard operating procedures which must be fully borne by contractors.

Fadillah said the ministry, however, took note of the rising cost of building materials and had submitted a proposal to re-establish the provision for the calculation Variation of Price (VOP) clause to the Ministry of Finance.

"The government has also agreed to relax the recalibration conditions specifically for construction workers and has implemented an automatic Extension of Time (EOT) for 60 days for all JKR (Public Work Department) projects due to the implementation of MCO," he said.