Solidifying its position in the construction sector
Hard work takes Sabah’s Azam Jaya to the top
FROM undertaking small to medium-sized roadwork projects since its inception in 1987, Pembinaan Azam Jaya Sdn Bhd is now one of the leading construction companies in Sabah.
As a visionary, its founder and managing director Tan Sri Joseph Lo Tain Foh is not resting on his laurels and is set to take the company to greater heights. He tells Starbizweek he had to face various challenges when he started the company with a few partners.
But perseverance and hard work paid off and Azam Jaya is on expansion mode, he says. Some of its milestones over the course of its 35 years in the construction industry include being the first construction company in Sabah to introduce the use of bored piling technology in road construction for building retention walls in 1994.
In 2001, the company secured its first flyover project to construct three flyovers and upgrade roads in Karamunsing, Kota Kinabalu.
Azam Jaya is also the first to undertake a tunnel project in Sabah in 2011 and is one of the contractors for the ongoing Pan Borneo Highway Project, among its other projects in the state.
So, what’s next on the cards? Lo says with its current undertaking of five ongoing projects, the company’s total order book stands at Rm700mil.
“These projects will keep us busy until 2023. In the meantime, we are constantly on the lookout for opportunities to replenish our order book.
“Sabah has a lot of potential in terms of infrastructure, as we still have a lot more to do for the state’s development. Hence, we continue to focus on the state. However, if there are opportunities in Sarawak or in Peninsular Malaysia, we may consider it.
“Furthermore, with the relocation of Indonesia’s capital city to Kalimantan, our proximity to Kalimantan has presented us with an array of new opportunities for infrastructure projects as we foresee a spillover effect on Sabah. The development of Kalimantan has caught our interest.
“Our experience and expertise will be an advantage in securing future projects in Sabah and beyond,” he notes.
On its current projects, he says there are several and all are located in Sabah. These projects comprise of road upgrading projects in Jalan Sepanggar and Jalan UMS which includes the construction of four flyovers at Jalan Kingfisher interchange, Jalan UMS interchange, Rampayan interchange and Jalan Sepanggar (Indah Permai) interchange worth a total of Rm356.9mil.
Besides that, Lo says there is also a road upgrading project in Jalan Lintas which includes the construction of three flyovers worth Rm293mil, a joint-venture project with Katata Construction (Sabah) Sdn Bhd for road upgrading in Kota Belud, Sabah and a road construction project from Kampung Sungai Pukul to Kampung Sungai Bergosong in Sebatik, Tawau.
At the same time, he adds that the Pan Borneo Highway Project where it is involved in the planning, construction and development of a 21.7-km highway from Putatan to Inanam (WP06) is one of the company’s largest projects with a contract value of Rm788.4mil.
Elaborating on the Pan Borneo project, which connects both Sabah and Sarawak, Lo says: “For the Sabah section, there remain 19 packages from Phase 1 that have yet to be awarded. There will be a number of companies contending for the 19 packages before the year ends.
“In terms of success rate, we are confident of getting a few of the 19 packages remaining from Phase 1 of the project. As reflected in our portfolio, we have been able to secure most of the high contract value projects,” he explains.
As to Azam Jaya’s strength in the construction business, Lo notes that as a Sabah-based company, it has been active in the state’s transformation for the past 35 years.
Besides having a proven track record of successfully completed projects due to its experienced and dedicated management teams, Azam Jaya, he says, also possesses the technical knowledge and experience to provide total road infrastructure construction services.
He says having established a strong relationship with its major clients such as JKR Sabah, the company is able to maintain stable business relationships with its contractors and suppliers, and has stayed in a positive liquidity position while carrying out road infrastructure and construction projects.
On another note, Lo says the fluctuation of material prices and the uncertainty of the government’s regulation on the recruitment of foreign workers continue to be a conundrum for the construction industry.
So, has the shortage of labour impacted Azam Jaya? And what measures have been taken by the company to deal with this issue?
Currently, he says 40% of the total labour workforce are locals, while the bulk of 60% are foreigners.
“It is a common practice in the construction segment to have a higher number of foreign workers. However, we have always encouraged young talents to join our company and get hands-on experience of the industry through our Protege programme.
“As such, we also have plans to work together with local and private universities in Sabah and invite their students to learn more about the industry.
“This would, in turn, attract new local talent into the industry,” Lo adds.
On the rising material prices and how Azam Jaya has been coping, he says due to the fluctuation of raw material prices, most of the industry players nationwide have been appealing to the government to step in and control the price hike.
Fortunately, he says, the Sabah state government has agreed to reinstate the Special Provisions to the Conditions of Contract (VOP) clause to certain materials such as concrete and asphalt.
Lo says: “It has been a difficult period for contractors, as we have to bear the brunt of the cost.
“The ever-increasing material prices will only force contractors and developers to lose their projects. On the other end, while we absorb the costs, it will eat into our margins.
“Fortunately, the government has come out with a list of materials in accordance with the VOP for civil engineering works.”
“As we get our material locally and internationally, we also supply the materials to our subcontractors at a cost price as we want to ensure that the quality is constant across our projects.
“Hence, we bear the highest risk of the fluctuation of material prices,” he adds.
“Our experience and expertise will be an advantage in securing future projects in Sabah and beyond.” Tan Sri Joseph Lo Tain Foh