Construction industry lost RM42 billion due to MCOs

The construction industry is estimated to have suffered a loss of RM42 billion throughout the implementation of the movement control order (MCO) periods from March 18 last year until now, the Dewan Rakyat was told today.

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

“Meanwhile the remaining RM24 billion was lost during the implementation of MCO 1.0 in 2020 which affected the implementation of construction work from March to July 2020,” he said during the ministers’ question time.

He was replying to Ahmad Nazlan Idris (BN-Jerantut) about the effect of the Covid-19 pandemic on the construction sector as well as the challenges faced and the works ministry’s initiatives to assist.

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

“However, the growth rate has increased by 40.3% in the second quarter of 2021,” he added.

He said the challenges faced by the construction sector included the rising cost of building materials, the cost of labour, the cost of the Labour Recalibration Programme as well as the cost of compliance with MCO SOPs which were fully borne by contractors.

Fadillah said the ministry 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 finance ministry.

“The government has also agreed to relax the recalibration conditions specifically for construction workers and has implemented an automatic extension of time for 60 days for all Public Work Department projects due to the implementation of MCO,” he said.