Still in the red and with the end of the loan moratorium looming, construction industry players are crying for help.

Many firms still in the red as loan moratorium is set to end, says group head

PETALING JAYA: With the loan moratorium ending in a week’s time, businesses in the construction industry -- with affected cash flow -- are calling for government intervention.

The industry contributes 5% to the gross domestic product (GDP), along with 1.46 million jobs across 20 other sectors.

Although a majority have resumed operation during the recovery movement control order (MCO) period, affected companies say they still needed breathing room.

Master Builders Association Malaysia (MBAM) president Foo Chek Lee notes many businesses are still in the red as work only restarted in June and payments for work are still pending.

“With the moratorium for loans ending this month, many would face problems repaying loans.

“If the government wants to stimulate the economy, they have to push on construction.

“But the downstream effect is too big – from transport, cement, steel bars up to the makcik selling nasi lemak at the construction site,” he said, adding that shortage of workers is still apparent with the freeze on foreign workers still in force.

However, Foo said MBAM is liaising with Bank Negara to help their affected members.

Malaysian Bumiputera Contractors Association president Datuk Azman Yusoff pointed out that banks had been unhelpful to many of its members, who are contractors of various classes, that had sought assistance.

“They are not keen to even offer financial assistance to those who have projects. What more for those with no projects but in need of help?

“Some banks have also withdrawn credit facilities that were offered.

“We hope the government will intervene and tell the banks to help contractors to fund their projects for their business continuity,” he said.

During an engagement session with industry players and the government here yesterday, Works Minister Datuk Seri Fadillah Yusof noted calls for the government to step in and help.

“With the pandemic, companies’ cash flow has been affected and borrowers cannot service loans.

“They requested for the government to engage with banks so that relaxation can be given to lessen their loan payment, or for their credit facilities to have a longer repayment period.

“They also asked for the banks to not send demand letters and freeze their accounts or cancel their credit facilities.

“These are the voices we get from the industry players and we need to deliberate further,” he said.

Also present was Minister in the Prime Minister’s Department (Economic Affairs) Datuk Seri Mustapa Mohamed.

With the construction industry having three main components -- the government, government-linked companies (GLC) and the private sector, Fadillah said some leeway may be given for government projects.

“But what about GLC and the private sector? Government won’t be able to interfere on private projects because at times, it is bound by prior agreement.

“We are finding ways to facilitate so that the construction industry will go on and the contractors and players do not suffer,” he said.

To solve problems often faced by the construction industry, Fadillah said a high-level committee will be formed, involving government officials and industry players.

“After today, we will compile all the suggestions, views from industry players and put in a Cabinet note.

“Once there is a directive from the Cabinet, we will have the high-level committee meeting.

“From then on, we will work together with the industry players and all stakeholders in terms of policy, incentives to the industry players and also how we can solve discrepancies relating to practices, terms and conditions, and the rules and regulations involving the local authorities,” he added.

Mustapa noted that the committee will be led by the Works Minister and focus on solving problems, such as minimising red-tape and addressing the difference in rules among states and local councils.

“Such a permanent platform is necessary

If the government wants to stimulate the economy, they have to push on construction. But the downstream effect is too big – from transport, cement, steel bars up to the makcik selling nasi lemak at the construction site.

Foo Chek Lee

to reduce problems because the construction industry is the most important sector.

“When there is such a platform, we will have regular tracking, a proper secretariat and minuted meetings. Then we can see what has and has not been done.

“We want to listen. We facilitate and not frustrate,” he said, adding that in the second quarter of this year, the construction industry shrunk by 44.5%.

Meanwhile, Fadillah said in his speech that inspections by the Construction Industry Development Board (CIDB), from April 20 to Sept 20, on 7,590 construction sites nationwide found that 149 of them had not resumed operation, with 45 facing financial issues among other problems.

He added that the industry has a high dependency on foreign labour with 438,264 workers and that there was a low adoption of technology.

“There has also been a failure to obtain funding from financial institutions for projects affected by Covid-19, “he said.