WHEN I first started working in the early 70s, as a fresh graduate with a government statutory body, I was earning a salary of RM850 a month, or the equivalent of RM10,000 a year.
The cheapest car then, a Mini Clubman, was only RM6,000. For someone staying with parents and with minimal spending on living expenses, the car could have been bought cash after working for a year.
I took a government loan to buy a Mini and I only paid RM80 a month. At that time a single-storey terrace house in Ampang Jaya was selling for around RM10,000. They were, therefore, more affordable. And that was in Kuala Lumpur.
It is very different now. A recent study by Khazanah Research Institute has found that houses were now less affordable. As expected, the developers have disagreed with the findings. Let us look at the facts.
A fresh graduate nowadays cannot hope to earn much more than RM2,500 a month. That is about three times the salary in the 70s. But, the cheapest terrace house in Kuala Lumpur is now selling at no less than RM400,000. In fact some are saying it is more like RM600,000 a unit. This means while a graduate’s salary has increased three times, house prices have jumped almost 40 to 60 times. Buying a house is almost out of the question. You may have to spend a lifetime paying the housing loan. The cost escalation is not just limited to the housing sector. The entire construction industry in the country has seen rising costs.
Why are our construction costs high? Is it because the industry is less efficient? Or is it because construction companies operate on too high margins? Has it got something to do with supply and demand?
Comparisons made in the study with other countries suggest that here we are less cost efficient. For example, we spend a longer time to build. In the Philippines, the study reported that some basic houses can be built in less than a month! Technology is definitely the deciding factor. Here, builders still shy from using cost-saving technologies like the Integrated Building System (IBS). Such technology is already widely used in the developed economies. Why? Because IBS uses much less labour. And, the quality is more assured because the parts are mostly fabricated in a factory.
Here, we are still happy using the labour intensive approach. This is because we are still able to source for inexpensive labour from nearby countries. What will happen when these countries improve their economic conditions? We may not enjoy the abundant immigrant labour as we do now. Are we prepared for this change?
Nowadays, developed countries are not just talking about using labour efficient construction technologies. They are also busy implementing material saving technologies. And, energy efficient technologies. Green design construction has increasingly become common in the developed economies. They invest heavily in construction research and development to bring such resource efficient technologies to the industry. In Malaysia, I believe this is what the Construction Industry Development Board is also doing.
But, the industry is unfortunately less responsive. Even the suggestion for houses to be first built before they are sold has met with strong resistance from the industry. This does not augur well for the future of the industry. Buyers are the ones who suffer when projects are abandoned, especially when monies are already paid and loans already committed.
The Construction Industry Transformation Programme blueprint, launched last month by Prime Minister Datuk Seri Najib Razak, provides positive recommendations for the nation’s construction sector. It is a comprehensive implementation plan which encompasses 18 initiatives, four strategic thrusts in Quality Safety and Professionalism, Environment Sustainability, Productivity as well as Internationalisation.
Najib had said the construction industry would be one of the key sectors that will propel Malaysia into prosperity and catapult it towards a high-income nation. What needs to be done now is to translate the plan into action. Implemented properly, it will go a long way in supporting the nation’s green economic ambitions.
The elements in the blueprint which spell out the strategies for sustainable construction will not only improve the safety and environmental record of the construction industry, it will also prepare the industry in good stead to compete for global construction projects.
It is time the industry recognises the importance of the blueprint. It is the recipe that the industry needs to transform for the betterment of the nation. The industry cannot forever remain complacent and be dependent on foreign labour.
The writer is a Fellow at Academy of Sciences Malaysia