KUANTAN: The government has agreed in principle to implement the Variation of Prices (VOP) clause to help contractors nationwide to cushion the impact of the targeted subsidy approach, Finance Minister II Datuk Seri Amir Hamzah Azizan said.
The Finance ministry, he said, has held discussions with the Works Ministry and Construction Industry Development Board (CIDB) to fine-tune a suitable mechanism to help the contractors complete their projects within the given duration.
"We understand when we (government) made the targeted diesel subsidy, there might be some increase (in prices) felt by the contractors for their existing cost.
"So for government contract projects the Finance ministry is in the midst of discussing with the Works ministry and CIDB to make the necessary adjustments for VOP to be given to the contractors.
"Discussions are ongoing and we only had our meeting last week so give us some time. We have to look into the data provided by CIDB on how the increased diesel prices have impacted the contractors.
"If the government can identify an increase (price) with proper justification then we will give the VOP. In principle we will give but it has to be looked into comprehensively....how and where the price increase occurred and we have to validate with the data provided by CIDB," he said.
Amir Hamzah said this to reporters after opening the G1 contractors (tender not exceeding RM200,000) convention on the challenges and to face the current era at the International Islamic University Malaysia (IIUM) campus in Indera Mahkota here today.
He was if the government planned to introduce the VOP to help contractors cope with the targeted subsidy approach.
On July 4, Works Minister Datuk Seri Alexander Nanta Linggi said the ministry was aware about the impact on construction industry costs and were holding talks with the relevant ministries, especially the Finance Ministry.