Posted on 07 Oct 2021
The variation of price (VOP) facility allowed for projects in the wake of rising building materials cost is effective until Dec 31, said Works Minister Datuk Seri Fadillah Yusof.
The VOP provision, which took effect from Jan 1, is aimed at addressing the increase in material costs during the Movement Control Order (MCO), Fadillah said in a written reply to a Parliamentary question.
For building construction and civil engineering works, the VOP covers mild steel round bars, high tensile deformed bars, crusher run, as well as water pipe and sewerage pipe.
The VOP also applies for mechanical and electrical works, covering copper cables, switchgears, transformers, generators, lighting protection systems and earthing systems, air-conditioning systems and motors (pump set).
“The rising costs were due, among others, to factory closures during the MCO period. This affected factory operations, including those which produce building materials, and subsequently impacted the execution of projects.
“However, through the National Recovery Plan where economic reopening in phases will allow factories to operate, the Ministry of Works anticipate subsequent production of the materials could stabilise prices,” said Fadillah (GPS-Petra Jaya).
He was responding to a question form Datuk Mohd Anuar Mohd Tahir (PH-Temerloh) on steps taken to address the rising costs of building materials which resulted in stalled projects especially among smaller contractors.
The government revived the VOP provision on building materials as part of the PEMULIH economic stimulus package announced in June. The then Prime Minister, Tan Sri Muhyiddin Yassin, said VOP will be allowed for projects affected by higher material costs.
On Sept 30, Fadillah told the Dewan Rakyat that the domestic construction industry suffered estimated losses of RM42 billion due to the MCO from March 2020 until Sept 2021. Of this, RM18 billion in losses occurred during MCO 3.0 from June to September.
Source:The Edge
