KUCHING, Aug 29: Sarawak Housing and Real Estate Developers’ Association (Sheda) Kuching branch chairman Datuk Sim Kiang Chiok states that the Variation of Price (VOP) 2.0 under the Sarawakku Sayang Special Assistance (BKSS) 9.0 package will save a lot of contractors from going bankrupt or getting blacklisted by the government.
According to a press statement, Sim noted that the Premier of Sarawak, Datuk Patinggi Tan Sri Abang Johari Tun Openg, made a wise decision on the VOP 2.0 given the rising cost of construction materials.
He mentioned that the VOP 2.0 aims to compensate for the RM700 million increase in construction material prices for State-funded projects.
“This demonstrates that the government does not disregard contractors carrying out contract work despite rising material costs,” he said.
Sim went on to say that according to the Department of Statistics, most building materials recorded a price increase and have affected the construction cost.
“If this VOP is not allowed, we might have many contractors giving up on their contracts with the government as they are most likely facing rising costs that will affect their bottom line.
“Our State government will have to re-tender the works, and most likely, it will cost more to the government and the taxpayers.
“Re-tender exercise will also cost the government more time, and at this juncture, it is most likely that the new price will be much higher than just giving VOP,” he explained.
Because the VOP 2.0 is only for State government contracts and does not apply to private developers, Sim believes it will prevent many contractors from going bankrupt or being blacklisted by the government.
“This will save the construction industry from reducing the number of contractors in the market,” he added.
Furthermore, he also praised the State government’s initiative to extend the Letter of Acceptance (LOA) issued between Jan 1, 2021 and Dec 31, 2021 for a maximum of six months.
“This is a good move so that the contractors do not have to face a deduction of their Contract Sum by LAD (Liquefied Ascertained Damages) due to delay in contract completion.
“This could be because of Covid-19 restrictions and lockdowns, as well as a lack of materials and manpower,” Sim disclosed.
According to him, the increase in the minimum wage from RM1,200 to RM1,500 has significantly impacted the construction industry because it has increased labour costs, which cannot be claimed under the VOP.
“This increase in labour cost has to be absorbed by the contractors and can’t claim against the government contract,” he pointed out.
Moreover, he remarked that the State government’s continuation of the discount on electricity, water supply, and assessment rates is the perfect move to demonstrate that they genuinely care about the people and are assisting in lowering the cost of living.
“The economy still requires time to recover from the Covid-19 pandemic and the Ukraine-Russian war.
“Nevertheless, we are fortunate in Malaysia that our inflation is still under control due to our subsidies and price control over essential items,” Sim asserted. — DayakDaily
