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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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