By Karen Bong and Ling Hui
KUCHING, Feb 8: The Sarawak government has introduced new incentives including advance payment for works contracts to help mitigate problems faced by contractors, especially companies with poor financial performance due to various reasons sometimes referred as “two dollar companies”, in a bid to prevent delayed projects.
Premier of Sarawak Datuk Patinggi Tan Sri Abang Johari Tun Openg announced that the regional government in its stance to safeguard the interest of the construction industry and the region’s economy has approved six new incentives.
“We will provide advance payment. This is to help those, sometimes this kind of company is (referred to as) ‘two dollar company’. The financial strength is not there, and we want to assist (when they face problems with their cash flow).
“Second, we will allow up to three payments to be made without the contract documents in the first four months of the contract period,” he said when officiating at the Seminar on New Initiatives to Enhance Sarawak’s Construction Industry at Borneo Convention Centre Kuching (BCCK) here today.
The other measures include lowering the rate of liquidated and ascertained damages imposed, lowering the minimum payment as well as other measures to alleviate projects majorly and adversely affected by price hikes, extension of time (EOT) for projects with progress of at least 60 per cent based on the works programme, and mutual termination subject to prevailing criteria imposed.
Abang Johari emphasised that these measures are effected to minimise or even eradicate critically delayed projects, to assist contractors’ project cash flows as well as to achieve a “win-win” situation for all parties under Sarawak government contracts.
This came after the Public Works Department (JKR) Sarawak had reported that as of Jan 27, 2023, out of 215 projects under construction, 34 projects are critically delayed, 29 projects are behind schedule, while only 149 projects are on schedule.
The government in its effort to improve the construction industry’s competitive edge is also currently working towards the development of strategies for industry players to become global solution providers.
This is due to the huge impact the industry has on the nation’s economy, with approximately 1.5 million people being employed under the sector with an expected annual growth of 5 per cent in the next three years.
“These initiatives have been undertaken to further assist in the recovery of the local construction industry and the timely delivery of projects in Sarawak,” he added.
“I have also advised SFS (State Financial Secretary’s Office), MIPD (Ministry of Infrastructure and Port Development) and JKR Sarawak to formulate further initiatives to support and enhance the project management and contract administration of projects,” he said.
While the support provided by the government may not be sufficient to alleviate the adverse effects of the Covid-19 pandemic, Abang Johari believes that the assistance rendered will reduce and minimise margin erosions in the industry.
“It is thus my most fervent hope that these new initiatives will be able to sustain the locally built industry and be in a better position to face future challenges,” he added.
Deputy Premier and MIPD Minister Datuk Amar Douglas Uggah Embas, Deputy Minister of Infrastructure Development Ir Aidel Lariwoo and Deputy Minister of Port Development Dato Majang Renggi were among those present. — DayakDaily
