Absorb cost, builders told
25/06/2007 The Malay Mail By Pearl Lee

THE Master Builders Association Malaysia has come under flak for its ‘threat’ of wanting consumers to bear the rising cost of materials once the proposed automatic pricing mechanism for building materials is in place.

In his criticism of the MBAM, National House Buyers Association secretary-general Chang Kin Loong said it is not right for contractors to make consumers pay for any increase in prices of building materials.

”Developers should not just think about making excessive profits overnight.

“They (developers and contractors) should be good corporate citizens and try their level best to absorb the additional cost, a little, if not all,” Chang told The Malay Mail.

He was asked to respond to the statement by MBAM president Patrick Wong over the weekend that consumers will inevitably have to bear the cost should prices of building materials like steel and cement increase under the proposed mechanism.

Wong said as the mechanism would entail the implementation of quarterly price reviews, it would be a detriment to developing projects as they take around two to three years to complete.

The contractors would find themselves in a bind as the value of their contracts had been determined earlier, he added.

Chang believed that any hike in the price of a raw material should only have a corresponding effect on the price of the completed property, and not more.

”It’s akin to the teh tarik price increase theory. Should the price of condensed milk go up by 20 sen, restaurant operators should not go around charging consumers 20 sen more for a glass of teh tarik.”

Hence, should the price of a metric tonne of cement go up, the additional cost should be in accordance to the amount of cement used to build a house, and not the cost of the entire consignment of cement.

Chang, nevertheless, was optimistic, and believed that the Government would do the right thing by not imposing heavy sanctions on consumers.

He also said the prices of landed property are exorbitantly high, thus the Government should take steps to control them.

Chang added that some kind of intervention is necessary or else in years to come, everyone will only be living in apartments or condominiums as they cannot afford to service expensive housing loans.

”The prices of homes are beyond the reach of young achievers-to-be.”