Price watch: Builders hit as Singapore sucks up materials

Price watch: Builders hit as Singapore sucks up materials

Contractors in Johor want the government to impose a higher export duty on some construction materials. -NST

Thu, Jul 10, 2008
The New Straits Times

By Sim Bak Heng

JOHOR BARU, MALAYSIA: Contractors in Johor want the government to impose a higher export duty on some construction materials as manufacturers prefer to sell their products to Singapore rather than meet the local demand.

They said this would be a preventive measure to curb the selfish act of those who are lured by the strong foreign exchange across the Causeway.

Johor Master Builders Association adviser Tan Wee Hiong said the shortage for red bricks was critical, which also saw a drastic price hike.

He said the problem was not new but the robust development taking place in the construction sector had compounded the worsening situation.

"The Singapore currency is growing stronger by the day and the exchange rate is hitting RM2.40 for every S$1 any time now.

"As all transactions are in Singapore dollars or US dollars, manufacturers will give special preference to sell their products to Singaporeans rather than locals.

"Although manufacturers are free to sell their products to whoever they wish, they shoulder the social responsibility to take care of the interests in the country first before others," he said in an interview.

Among the other construction materials which are also sold to Singapore are cement and steel, although there are cases of sand being sold to the republic as well.

Checks showed there are five brick makers, three cement makers and one steel maker in Johor.

Almost all of them have a market in Singapore.

Meanwhile, Tan said the price of construction materials had gone up steeply over the months and this had jeopardised the cost structure for contractors.

He said this was because manufacturer of construction materials would hike the prices of their products as and when they liked, when a construction project was half way in progress.

"They are no longer bound by contract to maintain the prices during the course of a construction project.

"The price increase is not small, too. For instance, red bricks, which are priced at 22 sen each last February, now cost 33 sen each, an increase of about 50 per cent."

On the outlook for the construction industry, Tan said the sale of houses costing RM200,000 and below would be severely affected while the market for luxury units would only be affected slightly.