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| Developers face RM1.2b penalties [ 14/11/2002 ] |
PETALING JAYA: Housing developers may lose as much as RM1.2bil in late-delivery penalty charges if the current acute shortage of foreign workers in the sector is not addressed immediately, according to the Real Estate and Housing Developers’ Association Malaysia (Rehda).
Its president Datuk Jeffrey Ng Tiong Lip said that many developers were having difficulty starting or sustaining construction work and might not be able to meet their completion deadlines as stipulated in the sales and purchase agreements.
“Based on industry feedback, almost 3,500 or 90% of all projects are operating with only 30% to 40% of workforce,” he told a press conference at the association headquarters yesterday.
He said the labour shortage affected developers’ contractors directly and their inability to complete their jobs on time would result in them having to pay late delivery penalties to developers.
“The penalties will continue to accumulate with each day of delayed delivery. The impact is far-reaching, with many contractors likely to face financial difficulties,” he explained, adding that the consequential and spillover effects on the services and manufacturing sectors, including the banking system, could be damaging.
Under the sales and purchase agreements, developers have to complete and deliver their projects to purchasers within 24 months. Similarly, contractors are bound by deadlines and late delivery penalties under contracts with developers. The RM1.2bil in penalties was based on an estimated six months’ delay afflicting the industry.
Ng said despite the Home Ministry’s approval of 370,000 work permits, only 38,000 Indonesian workers had arrived in the country as at mid-October.
“We would like to stress that ministry approval is only the first step in bringing in foreign workers. It does not mean that the labour shortage problem has been overcome,” he said, adding that the recruitment process could last from four to six months.
Rehda has proposed that mass recruitment and fast-tracking the processing of foreign workers be carried out so that they could arrive in Malaysia within a maximum period of two months, he said.
Ng said that another reason for the delay was the high upfront costs of around RM3,500 per worker, which included agent’s fees, cost of passage and pre-departure accommodation, visa and permit fees and other incidentals like medical fees.
“Of that sum, around RM2,000 has to be borne by the workers and many potential workers do not have such financial capability,” he said.
He added that many developers and contractors were willing to pay the money in advance for the workers if they were allowed to recover such sums through deductions from the workers’ salaries. However, they were prohibited from doing so by law.
“I therefore urge the Government to urgently consider allowing financial advances to foreign workers to be deductible against their wages, so as to reduce the upfront cost burden,” he said.
Ng also said the increased capital cost of foreign labour recruitment had become a major financial burden for employers. At RM3,500 a worker, he said the capital outlay for the recruitment of 370,000 approved workers would be RM1.3bil.
In view of this, Ng said he hoped the Government would consider suspending the levy of 0.25% of the contract value of all projects over RM500,000 imposed by the Construction Industry Development Board.
Ng said that Rehda had asked developers to speed up projects as soon as they get sufficient workers so as to catch up with deadlines.
Source : The Star 14/11/2002 |
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