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Transformation of Malaysian construction industry
CIDB briefs media on IBS adoption in public / private sector projects.
PRODUCTIVITY, AS THE‘ primary engine of growth towards Malaysia’ s high-income target’, is one of 4 strategic thrusts embodied in the Construction Industry Transformation Plan( CITP), launched at International Construction Week 2015. Under this section, a key initiative, listed as P3, is“ accelerate adoption of IBS( Industrialised Building System), mechanisation and modern practices’, highlighted yet again at a recent specially-convened briefing for the media, complete with show-house tour and exhibits.
IBS in Brief Pleading the case for IBS, CIDB cited a number of benefits accruable from IBS absorption, i. e., reduction in site labour, less site materials, reduced construction waste, cleaner work environment, safer and speedier building rate and, in totality, lower construction costs. Further, to boost the viability of IBS and mechanisation by IBS component manufacturers / suppliers, a number of economic mechanisms recommended by CITP include:
• reduction in import duty for IBS manufacturing and installation equipment to reduce the cost burden for manufacturers / suppliers and increase the supply of IBS components;
• tax holiday for suppliers building new qualifying IBS manufacturing plants;
• provision of a working capital revolving fund to defray the upfront liquidity burden for contractors who have to provide up-front deposit for IBS component procurement;
• decoupling, i. e., separation of IBS procurement from the main contract, thereby relieving contractors of the burden of high financial outlays for purchases from suppliers, with the option for project owners and clients instead to fund and procure directly.
Current Status Notwithstanding the advantages of and incentives for IBS, its adoption rate in the construction industry is decidedly low, i. e.,( a) 24 % of public sector projects ≥RM10 million achieved 70 IBS Score( Source: ICU, JPM) and( b) 14 % of private sector projects achieved 50 IBS Score( Source: CIDB). CIDB cited a number of reasons for this shortfall including:
• cash flow issues for SME contractors in IBS procurement;
• lack of economy of scale resulting in high cost of components;
• chicken-and-egg situation of insufficient demand( for IBS components) and few IBS manufacturers / suppliers;
• contractors not equipped / experienced and / or trained for project management.
It is a scenario, CIDB believes, that warrants review and added measures, other than those above-mentioned, such as:
• establishment of IBS Promotion Fund, as announced in Budget 2016, to finance, e. g., acquisition of new / used IBS machinery, renovation of existing plant / factory, manpower development, etc.;
• economic mechanisms to propel IBS absorption, e. g., zero import duty on IBS machines and extended tax holiday( until 2020) for IBS manufacturers;
• for public sector, pre-approved plans( vetted by JKR) to have IBS even for ≥ RM5 million projects’
• higher plot ratio for developers adopting IBS.
At the end of the proverbial rainbow, CIDB’ s aspirations, insofar as IBS adoption, are for( a) 100 % of public projects ≥RM10 million achieving 70 IBS score and( b) 100 % of private projects ≥RM10 million with IBS score of 50. ■
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